P.R. Laws tit. 26, § 1006

2019-02-20 00:00:00+00
§ 1006. Defense of action by unauthorized insurer

(1) Before an unauthorized insurer shall file or cause to be filed any pleading in any proceeding instituted against it under § 1005 of this title, the insurer shall either:

(a) Deposit with the court in which the proceeding is pending cash or securities or file with the court a bond with good and sufficient sureties, to be approved by the court, in an amount fixed by the court as sufficient to secure the payment of any final judgment which may be rendered in such proceedings, or

(b) procure a certificate of authority to transact insurance in Puerto Rico.

(2) The court in any proceeding in which service is made as provided in § 1005 of this title, in its discretion may order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with subsection (1) of this section and to defend such proceeding.

(3) Nothing in this section shall be construed to prevent an insurer from filing a motion to quash a writ or to set aside service thereof on the ground that the insurer has not done any of the acts enumerated in subsection (1) of § 1005 of this title.

(4) In any such action against an unauthorized insurer, if the insurer has failed for thirty days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract of insurance, and it appears to the court that such refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include such fee in any judgment that may be rendered in such action. Such fee shall not exceed fifty percent (50%) of the amount which the court finds the plaintiff is entitled to recover against the insurer, but in no event less than one hundred dollars. Failure of an insurer to defend any such action shall be deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause.

(5) This section shall not apply as to any insurance contract lawfully issued by an unauthorized insurer as a surplus line coverage pursuant to this chapter.

History —Ins. Code § 10.060.