# Title 26.1 — Insurance

## Chapter 26.1-22 — State Fire and Tornado Fund

### § 26.1-22-01. Definitions.

As used in this chapter:
1. "Fund" means the state fire and tornado fund.
2. "Indirect loss" means a loss in income or the additional expenses incurred because of
a property loss.
3. "International peace garden" means an entity located upon the international boundary
line between the United States and Canada used and maintained as a memorial to
commemorate the long-existing relationship of peace and good will between the
people and the governments of the United States and Canada and to further
international peace among the nations of the world.
4. "North Dakota insurance reserve fund" means the public risk pool established under
section 26.1-23.1-01 regardless of any name change or dissolution and
reincorporation if the risk pool continues to provide coverage to a majority of eligible
political subdivisions in the state.
5. "Office" means the office of management and budget.
6. "Permanent contents" refers only to such public property, either owned or leased,
usually kept or used in or about public buildings insured in the fund, and to all public
personal property usually kept or used in or about all buildings used for public
purposes, or within one hundred feet [30.48 meters] of all such buildings, or while on
sidewalks, streets, alleys, yards, detached platforms, and in or on railway cars. The
term includes similar property owned by an international peace garden or a winter
show. The term does not include automobiles, trucks, tractors, road machinery, or
similar property used principally outside such buildings.
7. "Political subdivision" means a county, township, park district, school district, city, or
any other unit of local government which is created either by statute or by the
Constitution of North Dakota for local government or other public purposes.
8. "Replacement cost" is the cost to replace a building or its permanent contents with a
similar structure of like materials or a similar product at current prices.
9. "State agency" means a state board, bureau, commission, department, agency,
industry, or institution and the international peace garden.
10. "Winter show" means an agricultural exhibition sponsored each year in March by a
nonprofit corporation.
### § 26.1-22-02. State fire and tornado fund - Office of management and budget -

Continuing appropriation.
1. There is created in the state treasury the state fire and tornado fund to insure state
agencies, political subdivisions, and winter shows against direct and indirect losses
under this chapter. The fund consists of all assessments, interest, investment
earnings, and other income collected under this chapter.
2. The office shall manage the fund. The office may use any information on file in the
state fire marshal program and may delegate responsibilities according to a contract
for administrative services from the North Dakota insurance reserve fund or another
entity to assist with the management of the fund. A contract for administrative services
must have a two-year term ending on June thirtieth of odd-numbered years, and the
contract may not be terminated except at the end of the two-year term. If either party
does not anticipate renewing the contract for another two-year term, notice must be
given by September thirtieth of the even-numbered year during the two-year term.
3. Moneys in the fund are appropriated to the office on a continuing basis for paying
claims against the fund for losses, including loss adjustment expenses; contracting for
services under subsection 2; paying loss prevention inspection and rating inspection
expenses to determine the proper assessment rates for property insured by the fund;
and paying reinsurance expenses under section 26.1-22-21.

### § 26.1-22-02.1. Insurance against indirect losses.

The office shall provide, upon request of an entity insured under the fund, coverage for an
indirect loss arising out of a peril insured against by the fund. The coverage provided by the
fund must be an amount that is subject to the underwriting guidelines developed by the office.
### § 26.1-22-03. Employment of assistants - Expenditures from fund - Continuing

appropriation.
Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-03.1. North Dakota insurance reserve fund - Producers - Commission.

The North Dakota insurance reserve fund may use the services of producers licensed under
this title to assist policyholders. Any commission paid to a producer under this section must be
paid out of the assessment income of the fund and must be assessed against the policyholders
that benefit from the producer.
### § 26.1-22-04. Investment of fund.

Investment of the fund is under the supervision of the state investment board in accordance
with chapter 21-10.
### § 26.1-22-05. Public, international peace garden, and winter show buildings insurable in

fund.
Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-06. Commissioner to adopt guidelines on insurable values.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-06.1. Replacement cost appraisal required on state-owned property.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-07. Certain property of state and of Bank of North Dakota excepted.

Repealed by S.L. 1989, ch. 357, § 3.
### § 26.1-22-08. Townships and school districts have option as to insurance on certain

property.
Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-09. Buildings reported to office - Replacement cost appraisal.

1. In each odd-numbered year, or upon application for insurance, every state agency,
political subdivision, and winter show insured under the fund shall report to the office
the insurable value of each building, excluding buildings insured by private insurance
companies, and the value of the fixtures and permanent contents insured under the
fund, excluding fixtures and permanent contents insured by private insurance
companies. State agencies, political subdivisions, and winter shows shall report any
additional information required by the office to administer this chapter. The office shall
provide forms for reporting.
2. Once every six years, each state agency insured under the fund shall obtain a
replacement cost appraisal on all buildings, fixtures, and permanent contents under
the agency's custody which are insured under this chapter. The office shall determine
the manner of conducting the appraisal. Annually, except for any year an appraisal is
conducted, each state agency insured under the fund shall adjust the appraised value
as required by the office and the amount must be considered the replacement value. If
an appraisal results in a substantial premium increase the office determines may not
be paid through existing agency appropriations, the amount must be considered an
earned receivable of the fund, and the agency shall seek a deficiency or general
appropriation sufficient for payment during the next legislative session.

### § 26.1-22-10. Insurance for buildings and personal property - Additional coverage -

Township and school district property.
1. Upon application, the office shall provide for insurance against loss by fire, lightning,
inherent explosion, windstorm, cyclone, tornado and hail, explosions, riot attending a
strike, aircraft, smoke, vehicles, or may insure any other risks of direct physical loss,
subject to the restrictions and exclusions determined by the office.
a. Insurance under this section applies to all buildings owned by state agencies,
political subdivisions, and winter shows, and the fixtures and permanent contents
in the buildings.
b. Insurance coverage under this section may not exceed the insurable value of the
property.
c. State-owned buildings constructed after 1939 and fixtures and permanent
contents insured under this chapter must be insured at replacement cost unless
the office approves an alternate value.
d. The office may allow property to be insured on a blanket basis.
2. An insurance policy under this chapter must include the name of the insured, the
location and description of the insured property, the amount of insurance coverage,
and the amount of the assessment.
3. In lieu of or in addition to the coverage under this section, a state agency, political
subdivision, or winter show may purchase insurance from an authorized insurance
company for all:
a. Buildings and the contents of the buildings owned by the state mill and elevator
association.
b. Public buildings owned by a political subdivision.
c. Public libraries owned by the state or a political subdivision for damage through
vandalism.
4. The office shall develop guidelines to be used by state agencies, political subdivisions,
and winter shows to determine insurable values of property for insurance coverage
and indirect loss coverage under this chapter.
5. This chapter does not apply to the property of any township or school district located
outside of the incorporated limits of a city unless the township or school district
requests and applies for insurance coverage under this chapter. The application must
be approved in writing by the office to be effective.
6. A state agency, political subdivision, or winter show may not make payments, enter
contracts, or incur debt for insurance on buildings, fixtures, or permanent contents
except as provided under this chapter.
7. If the insurance is canceled under section 26.1-22-16, the state agency, political
subdivision, or winter show may procure insurance from any authorized insurance
company.
8. If a disagreement or dispute arises under this section, the office and the state agency,
political subdivision, or winter show shall settle the disagreement or dispute under
section 26.1-22-11.
### § 26.1-22-10.1. State-owned property - Insured at replacement cost.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-10.2. School district - Leased property - Insurability.

Expired under S.L. 2015, ch. 155, § 6.
### § 26.1-22-11. Arbitration of value or loss.

1. If the office and the state agency, political subdivision, or winter show having custody
of any property disagree about the insurable value of the property or the amount of
loss insured, the office and the state agency, political subdivision, or winter show may
agree to have the value or loss determined by a competent, disinterested contractor,
architect, experienced appraiser, appraisal company, or a member of those respective

professional boards at the expense of the state agency, political subdivision, or winter
show owning the property.
2. If the office and the state agency, political subdivision, or winter show are unable to
resolve a disagreement under subsection 1, the determination must be arbitrated as
provided in this subsection.
a. The office and the state agency, political subdivision, or winter show having
custody of the property each shall select one competent, disinterested contractor,
architect, experienced appraiser, appraisal company, or a member of those
respective professional boards. The two selected arbitrators shall select a third
arbitrator with similar qualifications.
b. The three arbitrators shall determine the insurable value of the property or the
amount of loss insured within thirty days after the selection of the first two
arbitrators. Upon determination by a majority of the arbitrators, the arbitrators
shall notify the parties of the determination in writing. The determination is binding
on both parties.
c. Each party to the dispute shall pay the expenses of the arbitrator chosen by the
party. The expenses of the third arbitrator must be paid equally by both parties to
the dispute.
d. While the value is being determined under this section, property must continue to
be valued in the same amount as previously determined, or in case of new
buildings or property, in the amount determined by the office.
3. This section applies to existing property, new construction, and property with a change
in value.
### § 26.1-22-12. Policy fee.

Repealed by S.L. 1989, ch. 357, § 3.
### § 26.1-22-13. Reserve balance - Payment of loss.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-14. Assessments - Collections - Minimum fund balance - Bond and borrowing

authorization.
1. Upon providing insurance coverage under this chapter, the office shall certify to the
insured the amount of the assessment. The state agency, political subdivision, or
winter show shall submit to the office the payment of the assessment within sixty days
after the date of the certification. The office shall deposit the assessments in the fund.
2. If the assessment is not paid within sixty days after the date of the certification, the
attorney general and the state's attorney of the relevant county shall bring appropriate
actions to enforce the collection of the assessment upon request of the office. A
judgment obtained under this section must include an interest rate of six percent per
year.
3. If the fund balance is less than twelve million dollars, the office shall levy an
assessment on every policy in force with the fund to increase the fund balance of the
fund to twelve million dollars calculated as follows:
a. The eighty or ninety percent coinsurance rate for each eligible insured property,
the full rate for policies providing coverage against indirect losses, and the full
rate for properties that are not eligible for the eighty or ninety percent coinsurance
rate, must be applied to the amount of insurance provided in each policy to
determine the tentative assessment against each policy.
b. The total of all tentative assessments is the sum of the amounts calculated under
subdivision a.
c. The percentage of the assessment needed to increase the fund balance to twelve
million dollars must be calculated and collected on each policy. The assessments
may not exceed sixty percent of the rates set by the insurance services office for
insured property unless the fund balance is less than three million dollars.

d. A fractional percent must be rounded up to the next whole percent.
4. If the fund balance is less than two million dollars due to a catastrophe, disaster, or a
succession of catastrophes or disasters, the office may issue anticipation bonds or
borrow from the Bank of North Dakota to provide the amount needed to increase the
fund balance to two million dollars upon approval from the industrial commission.
a. The term of the anticipation bonds or loan may not exceed twenty years.
b. The office shall levy an assessment on all policies in force under the fund to
repay the anticipation bonds or loan.
### § 26.1-22-15. Collection of premiums and assessments.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-16. Unreasonably hazardous risks - Mitigation - Insurance cancellation.

If the office finds any risk is unreasonably hazardous, the office may require the state
agency, political subdivision, or winter show having control of the risk to mitigate or remove the
extra hazard. If the state agency, political subdivision, or winter show fails to mitigate or remove
the extra hazard within six months after notification from the office, the office may cancel the
insurance on the renewal upon thirty days' notice. A cancellation may not be made by the office
for property under the industrial commission's custody without the approval of the industrial
commission. If a disagreement or dispute arises under this section, the office and the state
agency, political subdivision, or winter show shall settle the disagreement or dispute under
section 26.1-22-11.
### § 26.1-22-17. Losses - Limitation.

1. All losses by the perils insured against under this chapter must be paid out of the fund
in an amount not exceeding the amount of the insurance upon any particular risk. The
loss upon any building or property insured in the fund, whether totally destroyed or
partially damaged by the perils, must be adjusted by the office, authorized adjuster, or
adjusting company. All loss adjustment expenses must be included as part of the loss
and must be paid from the fund.
2. Immediately after an event causing loss or damage, the insured shall notify the office
in a manner prescribed by the office. The notification must include a description of the
property, the amount of insurance carried, the probable amount of loss or damage,
and the probable cause of loss or damage. The insured may not disturb the property
except as provided in the policy until the office or the office's agent has adjusted the
loss or has given notice that the information on which the adjustment is to be made
has been secured.
3. Allowances for loss or damage must be paid from the fund.
### § 26.1-22-18. Arbitration of loss.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-19. Repair or replacement of destroyed buildings.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-20. Replacement of policies.

Repealed by S.L. 1989, ch. 357, § 3.
### § 26.1-22-21. Excess loss reinsurance - Insurance broker of record.

1. The office shall procure and shall keep in force excess loss reinsurance naming the
fund as the reinsured. The excess loss reinsurance must be in an amount and for a
period determined by the office to be sufficient for the fund. The reinsurance contract
must reimburse the fund for losses incurred by the fund under policies issued by the
fund and arising out of each occurrence of a covered cause of loss and include at least
a sixty-day cancellation notice.

2. The cost of the excess loss reinsurance must be paid out of the assessment income of
the fund and must be assessed against the policyholders that benefit from the
reinsurance. Excess loss reinsurance must be written only by a company or
companies authorized to do business within this state. The contract must be
countersigned by a licensed North Dakota resident insurance producer.
3. The office may contract for insurance broker of record services to assist in procuring
excess loss reinsurance. The insurance broker must be licensed and authorized to do
business in the state.
### § 26.1-22-21.1. Insurance broker of record.

Repealed by S.L. 2025, ch. 275, § 17.
### § 26.1-22-22. Waiver of subrogation rights during construction.

The office may waive any right of the fund to recover for damage sustained by any structure
as a result of fire or explosion caused by a contractor, its employees or agents, in the
performance of a contract for the alteration of, or the construction of an addition to, a building
insured under the fund.
