                                 CODE OF VIRGINIA

PURPOSE OF DEPOSITS; ENFORCEMENT OF LIEN (§ 38.2-1046)

A. An insurer&#8217;s deposits required by &#xA7; 38.2-1045 shall be held as a
special fund in trust for the insurer&#8217;s liabilities which are incurred or
which may be incurred as a result of a loss sustained by (i) this Commonwealth
or any of its political subdivisions, (ii) any citizen or inhabitant of this
Commonwealth, or (iii) any other person owning property in this Commonwealth,
when the insurer fails to meet its obligations incurred in this Commonwealth.
Policyholders, without preference, shall have a lien on the deposits for the
amounts due or which may become due as a result of any failure of the insurer to
meet its obligations. General creditors, without preference, shall be entitled
to have a similar lien on the deposits which shall be subordinate to the claims
of the policyholders.

B. Whenever any such insurer becomes insolvent or bankrupt, or makes an
assignment for the benefit of its creditors, any person given a lien by this
section may file a bill in the Circuit Court of the City of Richmond for the
benefit of himself and all others given a lien by this section to subject such
securities as may be on deposit with the State Treasurer or its agent to the
payment of the liens thereon. The State Treasurer shall be made a party to such
suit and a copy of such bill shall be served upon the Commissioner of Insurance
as if he were a party to such suit. The funds shall be distributed by the court.

HISTORY: Code 1950, § 38-50; 1952, c. 317, § 38.1-110; 1981, c. 208; 1986, c.
562; 1988, c. 298; 1992, c. 20; 1995, c. 60.