NAC616B.439. Letter of credit: Requirements.

     1. A letter of credit submitted by a self-insured employer to meet the requirements for his or her deposit pursuant to NAC 616B.436 must:

     (a) Include a clause stating that no document other than the demand for payment under the terms of the letter is necessary for payment.

     (b) Be irrevocable.

     (c) Be valid for at least 1 year. The letter must not expire unless written notice is given by the issuer. It must be renewable automatically, unless the issuer gives written notice to the Commissioner and the employer at least 90 days before the expiration date.

     (d) Be issued by a bank chartered by this State or a bank that is a member of the United States Federal Reserve System and has been approved by the Commissioner.

     (e) Include a clause stating that it is not subject to any conditions or qualifications outside the letter. The letter may be the individual obligation of the financial institution issuing it, but must not be contingent upon the institution’s ability to perfect any lien or security interest. The letter must not contain references to any other agreements, documents or persons.

     (f) Include a clause stating that the obligation of the financial institution under the letter is not contingent upon reimbursement.

     2. The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations. If such a section is present it must be marked clearly to indicate that the information is for internal identification only, and does not affect the terms of the letter or the financial institution’s obligations under the letter.

     (Added to NAC by Comm’r of Insurance, eff. 1-4-91; A by R139-99, 1-27-2000)