HB 1379

1	A bill to be entitled
2	An act relating to warranty associations; amending s.
3	628.4615, F.S., relating to specialty insurers; conforming
4	a cross-reference; amending s. 634.011, F.S.; revising the
5	definition of the term "motor vehicle service agreement";
6	amending s. 634.031, F.S.; providing penalties for certain
7	licensure violations; amending s. 634.041, F.S., relating
8	to qualifications for licensure; conforming cross-
9	references; amending s. 634.095, F.S.; prohibiting service
10	agreement companies from issuing certain deceptive
11	advertisements, operating without a subsisting license, or
12	remitting premiums to a person other than the obligated
13	service agreement company; amending s. 634.121, F.S.;
14	deleting a requirement that certain service agreement
15	forms be approved by the Office of Insurance Regulation of
16	the Financial Services Commission; amending s. 634.1213,
17	F.S.; authorizing the office to order a service agreement
18	company to stop using forms that do not comply with
19	specified requirements; amending s. 634.137, F.S.;
20	deleting a schedule for the submissions of certain
21	reports; amending s. 634.141, F.S.; providing guidelines
22	for the office to use in determining whether to examine a
23	company; amending s. 634.1815, F.S.; requiring certain
24	rebates to be approved by the company issuing a service
25	agreement; amending s. 634.282, F.S.; clarifying
26	provisions relating to the refund of excess premiums or
27	charges; requiring that a consumer receive a sample copy
28	of the service agreement prior to the sale of a service
29	agreement; amending s. 634.301, F.S.; revising certain
30	definitions relating home warranties; amending s. 634.303,
31	F.S.; providing that it is a first-degree misdemeanor for
32	a person without a subsisting license to provide or offer
33	to provide home warranties; amending s. 634.308, F.S.;
34	providing an exception to certain grounds for licensure
35	suspension or revocation; amending s. 634.312, F.S.;
36	deleting a requirement that certain home warranty
37	agreement forms be approved by the office; amending s.
38	634.3123, F.S.; authorizing the office to order a home
39	warranty association to stop using forms that do not
40	comply with specified requirements; amending s. 634.314,
41	F.S.; providing guidelines for the office to use in
42	determining whether to examine an association; amending s.
43	634.3205, F.S.; requiring certain rebates to be approved
44	by the association issuing a service agreement; amending
45	s. 634.336, F.S.; requiring that a consumer receive a
46	sample copy of the service agreement prior to the sale of
47	a service agreement; amending s. 634.344, F.S.;
48	prohibiting certain coercive actions relating to the sale
49	of a home warranty in connection with the lending of
50	money; amending s. 634.401, F.S.; redefining the term
51	"indemnify"; amending s. 634.403, F.S.; providing that it
52	is a first-degree misdemeanor for a person without a
53	subsisting license to provide or offer to provide service
54	warranties; amending s. 634.406, F.S., relating to
55	financial requirements; conforming a cross-reference;
56	amending s. 634.414, F.S.; deleting a requirement that
57	certain service warranty forms be approved by the office;
58	deleting certain requirements relating to the display of
59	the issuing association's name on literature; amending s.
60	634.4145, F.S.; authorizing the office to order a service
61	warranty association to stop using forms that do not
62	comply with specified requirements; amending s. 634.415,
63	F.S.; deleting a requirement that associations file
64	certain quarterly statements and special reports; amending
65	s. 634.416, F.S.; providing guidelines for the office to
66	use in determining whether to examine an service warranty
67	association; amending s. 634.4225, F.S.; requiring certain
68	rebates to be approved by the association issuing a
69	service warranty; amending s. 634.436, F.S.; requiring
70	that a consumer receive a sample copy of the service
71	agreement prior to the sale of a service agreement;
72	amending s. 634.136, F.S.; deleting certain provisions
73	requiring records to be maintained by motor vehicle
74	service contract companies; amending s. 634.313, F.S.;
75	deleting certain requirements for reports relating to
76	taxes on premiums; repealing s. 634.1216, F.S., relating
77	to required rate filings; repealing s. 634.3126, F.S.,
78	relating to required rate filings; providing an effective
79	date.
80
81	Be It Enacted by the Legislature of the State of Florida:
82
83	Section 1.  Paragraph (b) of subsection (1) of section
84	628.4615, Florida Statutes, is amended to read:
85	628.4615  Specialty insurers; acquisition of controlling
86	stock, ownership interest, assets, or control; merger or
87	consolidation.-
88	(1)  For the purposes of this section, the term "specialty
89	insurer" means any person holding a license or certificate of
90	authority as:
91	(b)  A home warranty association authorized to issue "home
92	warranties" as those terms are defined in s. 634.301(3) and (4);
93	Section 2.  Subsection (8) of section 634.011, Florida
94	Statutes, is amended to read:
95	634.011  Definitions.-As used in this part, the term:
96	(8)  "Motor vehicle service agreement" or "service
97	agreement" means any contract or agreement indemnifying the
98	service agreement holder for the motor vehicle listed on the
99	service agreement and arising out of the ownership, operation,
100	and use of the motor vehicle against loss caused by failure of
101	any mechanical or other component part, or any mechanical or
102	other component part that does not function as it was originally
103	intended; however, nothing in this part shall prohibit or affect
104	the giving, free of charge, of the usual performance guarantees
105	by manufacturers or dealers in connection with the sale of motor
106	vehicles. Transactions exempt under s. 624.125 are expressly
107	excluded from this definition and are exempt from the provisions
108	of this part. Service agreements that are sold to persons other
109	than consumers are excluded from this definition and are exempt
110	from regulation under the Florida Insurance Code. The term
111	"motor vehicle service agreement" includes any contract or
112	agreement that provides:
113	(a)  For the coverage or protection defined in this
114	subsection and which is issued or provided in conjunction with
115	an additive product applied to the motor vehicle that is the
116	subject of such contract or agreement;
117	(b)  For payment of vehicle protection expenses.
118	1.a.  "Vehicle protection expenses" means a preestablished
119	flat amount payable for the loss of or damage to a vehicle or
120	expenses incurred by the service agreement holder for loss or
121	damage to a covered vehicle, including, but not limited to,
122	applicable deductibles under a motor vehicle insurance policy;
123	temporary vehicle rental expenses; expenses for a replacement
124	vehicle that is at least the same year, make, and model of the
125	stolen motor vehicle; sales taxes or registration fees for a
126	replacement vehicle that is at least the same year, make, and
127	model of the stolen vehicle; or other incidental expenses
128	specified in the agreement.
129	b.  "Vehicle protection product" means a product or system
130	installed or applied to a motor vehicle or designed to prevent
131	the theft of the motor vehicle or assist in the recovery of the
132	stolen motor vehicle.
133	2.  Vehicle protection expenses shall be payable in the
134	event of loss or damage to the vehicle as a result of the
135	failure of the vehicle protection product to prevent the theft
136	of the motor vehicle or to assist in the recovery of the stolen
137	motor vehicle. Vehicle protection expenses covered under the
138	agreement shall be clearly stated in the service agreement form,
139	unless the agreement provides for the payment of a
140	preestablished flat amount, in which case the service agreement
141	form shall clearly identify such amount.
142	3.  Motor vehicle service agreements providing for the
143	payment of vehicle protection expenses shall either:
144	a.  Reimburse a service agreement holder for the following
145	expenses, at a minimum: deductibles applicable to comprehensive
146	coverage under the service agreement holder's motor vehicle
147	insurance policy; temporary vehicle rental expenses; sales taxes
148	and registration fees on a replacement vehicle that is at least
149	the same year, make, and model of the stolen motor vehicle; and
150	the difference between the benefits paid to the service
151	agreement holder for the stolen vehicle under the service
152	agreement holder's comprehensive coverage and the actual cost of
153	a replacement vehicle that is at least the same year, make, and
154	model of the stolen motor vehicle; or
155	b.  Pay a preestablished flat amount to the service
156	agreement holder.
157
158	Payments shall not duplicate any benefits or expenses paid to
159	the service agreement holder by the insurer providing
160	comprehensive coverage under a motor vehicle insurance policy
161	covering the stolen motor vehicle; however, the payment of
162	vehicle protection expenses at a preestablished flat amount of
163	$5,000 or less does not duplicate any benefits or expenses
164	payable under any comprehensive motor vehicle insurance policy;
165	or
166	(c)1.  For the payment for paintless dent-removal services
167	provided by a company whose primary business is providing such
168	services.
169	2.  "Paintless dent-removal" means the process of removing
170	dents, dings, and creases, including hail damage, from a vehicle
171	without affecting the existing paint finish, but does not
172	include services that involve the replacement of vehicle body
173	panels or sanding, bonding, or painting.
174	Section 3.  Subsection (7) is added to section 634.031,
175	Florida Statutes, to read:
176	634.031  License required.-
177	(7)  Any person who violates this section commits, in
178	addition to any other violation, a misdemeanor of the first
179	degree, punishable as provided in s. 775.082 or s. 775.083.
180	Section 4.  Paragraph (b) of subsection (8) and paragraph
181	(b) of subsection (11) of section 634.041, Florida Statutes, are
182	amended to read:
183	634.041  Qualifications for license.-To qualify for and
184	hold a license to issue service agreements in this state, a
185	service agreement company must be in compliance with this part,
186	with applicable rules of the commission, with related sections
187	of the Florida Insurance Code, and with its charter powers and
188	must comply with the following:
189	(8)
190	(b)  A service agreement company does not have to establish
191	and maintain an unearned premium reserve if it purchases and
192	maintains contractual liability insurance in accordance with the
193	following:
194	1.  The insurance covers 100 percent of its claim exposure
195	and is obtained from an insurer approved by the office which
196	holds a certificate of authority to do business within this
197	state.
198	2.  If the service agreement company does not meet its
199	contractual obligations, the contractual liability insurance
200	policy binds its issuer to pay or cause to be paid to the
201	service agreement holder all legitimate claims and cancellation
202	refunds for all service agreements issued by the service
203	agreement company while the policy was in effect. This
204	requirement also applies to those service agreements for which
205	no premium has been remitted to the insurer.
206	3.  If the issuer of the contractual liability policy is
207	fulfilling the service agreements covered by the contractual
208	liability policy and the service agreement holder cancels the
209	service agreement, the issuer must make a full refund of
210	unearned premium to the consumer, subject to the cancellation
211	fee provisions of s. 634.121(3)(5). The sales representative and
212	agent must refund to the contractual liability policy issuer
213	their unearned pro rata commission.
214	4.  The policy may not be canceled, terminated, or
215	nonrenewed by the insurer or the service agreement company
216	unless a 90-day written notice thereof has been given to the
217	office by the insurer before the date of the cancellation,
218	termination, or nonrenewal.
219	5.  The service agreement company must provide the office
220	with the claims statistics.
221
222	All funds or premiums remitted to an insurer by a motor vehicle
223	service agreement company under this part shall remain in the
224	care, custody, and control of the insurer and shall be counted
225	as an asset of the insurer; provided, however, this requirement
226	does not apply when the insurer and the motor vehicle service
227	agreement company are affiliated companies and members of an
228	insurance holding company system. If the motor vehicle service
229	agreement company chooses to comply with this paragraph but also
230	maintains a reserve to pay claims, such reserve shall only be
231	considered an asset of the covered motor vehicle service
232	agreement company and may not be simultaneously counted as an
233	asset of any other entity.
234	(11)
235	(b)  Notwithstanding any other requirement of this part, a
236	service agreement company maintaining an unearned premium
237	reserve on all service agreements in accordance with paragraph
238	(8)(a) may offer service agreements providing vehicle protection
239	expenses if it maintains contractual liability insurance only on
240	all service agreements providing vehicle protection expenses and
241	continues to maintain the 50-percent reserve for all service
242	agreements not providing vehicle protection expenses. A service
243	agreement company maintaining contractual liability insurance
244	for all service agreements providing vehicle protection expenses
245	and the 50-percent reserve for all other service agreements
246	must, in the service agreement register as required under s.
247	634.136(2)(4), distinguish between insured service agreements
248	providing vehicle protection expenses and service agreements not
249	providing vehicle protection expenses.
250	Section 5.  Paragraph (d) is added to subsection (3) of
251	section 634.095, Florida Statutes, and subsection (7) is added
252	to that section, to read:
253	634.095  Prohibited acts.-Any service agreement company or
254	salesperson that engages in one or more of the following acts
255	is, in addition to any applicable denial, suspension,
256	revocation, or refusal to renew or continue any appointment or
257	license, guilty of a misdemeanor of the second degree,
258	punishable as provided in s. 775.082 or s. 775.083:
259	(3)  Issuing or causing to be issued any advertisement
260	which:
261	(d)  Is false, deceptive, or misleading with respect to:
262	1.  The service agreement company's affiliation with a
263	motor vehicle manufacturer;
264	2.  The service agreement company's possession of
265	information regarding a motor vehicle owner's current motor
266	vehicle manufacturer's original equipment warranty;
267	3.  The expiration of a motor vehicle owner's current motor
268	vehicle manufacturer's original equipment warranty; or
269	4.  Any requirement that the motor vehicle owner register
270	for a new motor vehicle service agreement with the company in
271	order to maintain coverage under the current motor vehicle
272	service agreement or manufacturer's original equipment warranty.
273	(7)  Remitting premiums received on motor vehicle service
274	agreements sold to any person other than the licensed service
275	agreement company that is obligated to perform under such
276	agreement, if the agreement between such company and the
277	salesperson requires that premiums be submitted directly to the
278	service agreement company.
279	Section 6.  Section 634.121, Florida Statutes, is amended
280	to read:
281	634.121  Filing of Forms, required procedures, provisions.-
282	(1)  A service agreement form or related form may not be
283	issued or used in this state unless it has been filed with and
284	approved by the office. Upon application for a license, the
285	office shall require the applicant to submit for approval each
286	brochure, pamphlet, circular, form letter, advertisement, or
287	other sales literature or advertising communication addressed or
288	intended for distribution. The office shall disapprove any
289	document which is untrue, deceptive, or misleading or which
290	contains misrepresentations or omissions of material facts.
291	(a)  After an application has been approved, a licensee is
292	not required to submit brochures or advertisement to the office
293	for approval; however, a licensee may not have published, and a
294	person may not publish, any brochure or advertisement which is
295	untrue, deceptive, or misleading or which contains
296	misrepresentations or omissions of material fact.
297	(b)  For purposes of this section, brochures and
298	advertising includes, but is not limited to, any report,
299	circular, public announcement, certificate, or other printed
300	matter or advertising material which is designed or used to
301	solicit or induce any persons to enter into any motor vehicle
302	service agreement.
303	(c)  The office shall disapprove any service agreement form
304	providing vehicle protection expenses which does not clearly
305	indicate either the method for calculating the benefit to be
306	paid or provided to the service agreement holder or the
307	preestablished flat amount payable pursuant to the terms of the
308	service agreement. All service agreement forms providing vehicle
309	protection expenses shall clearly indicate the term of the
310	service agreement, whether new or used cars are eligible for the
311	vehicle protection product, and that the service agreement
312	holder may not make any claim against the Florida Insurance
313	Guarantee Association for vehicle protection expenses. The
314	service agreement shall be provided to a service agreement
315	holder on a form that provides only vehicle protection expenses.
316	A service agreement form providing vehicle protection expenses
317	must state that the service agreement holder must have in force
318	at the time of loss comprehensive motor vehicle insurance
319	coverage as a condition precedent to requesting payment of
320	vehicle protection expenses.
321	(2)  Every filing required under this section must be made
322	not less than 30 days in advance of issuance or use. At the
323	expiration of 30 days from the date of filing, a form so filed
324	becomes approved unless prior thereto it has been affirmatively
325	disapproved by written notice of the office. The office may
326	extend by not more than an additional 15 days the period within
327	which it may affirmatively approve or disapprove any form by
328	giving notice of extension before the expiration of the initial
329	30-day period. At the expiration of any period as so extended
330	and in the absence of prior affirmative disapproval, the form
331	becomes approved.
332	(1)(3)  Before the sale of any service agreement, written
333	notice must be given to the prospective purchaser by the service
334	agreement company or its agent or salesperson, on an office-
335	approved form, that purchase of the service agreement is not
336	required in order to purchase or obtain financing for a motor
337	vehicle.
338	(2)(4)  All motor vehicle service agreements are assignable
339	in a consumer transaction and must contain a statement in
340	conspicuous, boldfaced type, informing the purchaser of the
341	service agreement of her or his right to assign it to a
342	subsequent retail purchaser of the motor vehicle covered by the
343	service agreement and all conditions on such right of transfer.
344	The assignment must occur within a period of time specified in
345	the agreement, which period may not expire earlier than 15 days
346	after the date of the sale or transfer of the motor vehicle. The
347	service agreement company may charge an assignment fee not to
348	exceed $40.
349	(3)(5)(a)  Each service agreement must contain a
350	cancellation provision. Any service agreement is cancelable by
351	the purchaser within 60 days after purchase. The refund must be
352	100 percent of the gross premium paid, less any claims paid on
353	the agreement. A reasonable administrative fee may be charged
354	not to exceed 5 percent of the gross premium paid by the
355	agreement holder.
356	(b)  After the service agreement has been in effect for 60
357	days, it may not be canceled by the insurer or service agreement
358	company unless:
359	1.  There has been a material misrepresentation or fraud at
360	the time of sale of the service agreement;
361	2.  The agreement holder has failed to maintain the motor
362	vehicle as prescribed by the manufacturer;
363	3.  The odometer has been tampered with or disabled and the
364	agreement holder has failed to repair the odometer; or
365	4.  For nonpayment of premium by the agreement holder, in
366	which case the service agreement company shall provide the
367	agreement holder notice of cancellation by certified mail.
368
369	If the service agreement is canceled by the insurer or service
370	agreement company, the return of premium must not be less than
371	100 percent of the paid unearned pro rata premium, less any
372	claims paid on the agreement. If, after 60 days, the service
373	agreement is canceled by the service agreement holder, the
374	insurer or service agreement company shall return directly to
375	the agreement holder not less than 90 percent of the unearned
376	pro rata premium, less any claims paid on the agreement. The
377	service agreement company remains responsible for full refunds
378	to the consumer on canceled service agreements. However, the
379	salesperson and agent are responsible for the refund of the
380	unearned pro rata commission. A service agreement company may
381	effectuate refunds through the issuing salesperson or agent.
382	(4)(6)  If the service agreement is canceled, pursuant to
383	an order of liquidation, the salesperson or agent is responsible
384	for refunding, and must refund, to the receiver the unearned pro
385	rata commission.
386	(5)(7)  If a service agreement company violates any lawful
387	order of the office or fails to meet its contractual obligations
388	under this part, upon notice from the office, the sales
389	representative or agent must refund to the service agreement
390	holder the unearned pro rata commission, unless the sales
391	representative or agent has made other arrangements,
392	satisfactory to the office, with the service agreement holder.
393	(6)(8)  Each service agreement, which includes a copy of
394	the application form, must be mailed or delivered to the
395	agreement holder within 45 days after the date of purchase.
396	(7)(9)  Each service agreement form must contain in
397	conspicuous, boldfaced type any statement or clause that places
398	restrictions or limitations on the benefits offered or disclose
399	such restrictions or limitations in regular type in a section of
400	the service agreement containing a conspicuous, boldfaced type
401	heading.
402	(8)(10)  If an insurer or service agreement company intends
403	to use or require the use of remanufactured or used replacement
404	parts, each service agreement form as well as all service
405	agreement brochures must contain in conspicuous, boldfaced type
406	a statement to that effect.
407	(9)(11)  Each service agreement form as well as all service
408	agreement company sales brochures must clearly identify the
409	name, address, and Florida license number of the licensed
410	insurer or service agreement company.
411	(10)(12)  If a service agreement contains a rental car
412	provision, it must disclose the terms and conditions of this
413	benefit in conspicuous, boldfaced type or disclose such
414	restrictions or limitations in regular type in a section of the
415	service agreement containing a conspicuous, boldfaced type
416	heading.
417	Section 7.  Section 634.1213, Florida Statutes, is amended
418	to read:
419	634.1213  Noncompliant forms Grounds for disapproval.-The
420	office may order a service agreement company to stop using
421	disapprove any service agreement form that or service agreement
422	company sales brochures filed under s. 634.121, or withdraw any
423	previous approval thereof, if the form or brochure:
424	(1)  Is in any respect in violation of or does not comply
425	with this part, any applicable provision of the Florida
426	Insurance Code, or any applicable rule of the office commission.
427	(2)  Contains or incorporates by reference when such
428	incorporation is otherwise permissible, any inconsistent,
429	ambiguous, or misleading clauses, or exceptions and conditions
430	which deceptively affect the risk purported to be assumed in the
431	general coverage of the service agreement.
432	(3)  Has any title, heading, or other indication of its
433	provisions which is misleading.
434	(4)  Is printed or otherwise reproduced in such manner as
435	to render any material provision of the form substantially
436	illegible.
437	(5)  Contains any provision which is unfair or inequitable
438	or which encourages misrepresentation.
439	(6)  Contains any provision which makes it difficult to
440	determine the actual insurer or service agreement company
441	issuing the form.
442	(7)  Contains any provision for reducing claim payments due
443	to depreciation of parts, except for marine engines.
444	Section 8.  Subsection (1) of section 634.137, Florida
445	Statutes, is amended to read:
446	634.137  Financial and statistical reporting requirements.-
447	(1)  By March 1 of each year, each service agreement
448	company shall submit to the office annual financial reports on
449	forms prescribed by the commission and furnished by the office
450	as follows:
451	(a)  Reports for a period ending December 31 are due by
452	March 1.
453	(b)  Reports for a period ending March 31 are due by May
454	15.
455	(c)  Reports for a period ending June 30 are due by August
456	15.
457	(d)  Reports for a period ending September 30 are due by
458	November 15.
459	Section 9.  Section 634.141, Florida Statutes, is amended
460	to read:
461	634.141  Examination of companies.-
462	(1)  Motor vehicle service agreement companies licensed
463	under this part may shall be subject to periodic examination by
464	the office in the same manner and subject to the same terms and
465	conditions as applies to insurers under part II of chapter 624.
466	The commission may by rule establish provisions whereby a
467	company may be exempted from examination.
468	(2)  The office shall determine whether to conduct an
469	examination of a company by considering:
470	(a)  The amount of time that the company has been
471	continuously licensed and operating under the same management
472	and control.
473	(b)  The company's history of compliance with applicable
474	law.
475	(c)  The number of consumer complaints against the company.
476	(d)  The financial condition of the company, demonstrated
477	by the financial reports submitted pursuant to s. 634.137.
478	Section 10.  Paragraph (b) of subsection (1) of section
479	634.1815, Florida Statutes, is amended to read:
480	634.1815  Rebating; when allowed.-
481	(1)  No salesperson shall rebate any portion of his or her
482	commission except as follows:
483	(b)  The rebate shall be in accordance with a rebating
484	schedule filed with and approved by the salesperson with the
485	service agreement company issuing the service agreement to which
486	the rebate applies. The service agreement company shall maintain
487	a copy of all rebating schedules for a period of 3 years.
488	Section 11.  Subsection (13) of section 634.282, Florida
489	Statutes, is amended, and subsection (17) is added to that
490	section, to read:
491	634.282  Unfair methods of competition and unfair or
492	deceptive acts or practices defined.-The following methods,
493	acts, or practices are defined as unfair methods of competition
494	and unfair or deceptive acts or practices:
495	(13)  ILLEGAL DEALINGS IN PREMIUMS; EXCESS OR REDUCED
496	CHARGES FOR MOTOR VEHICLE SERVICE AGREEMENTS.-
497	(a)  Knowingly collecting any sum as a premium or charge
498	for a motor vehicle service agreement, which is not then
499	provided, or is not in due course to be provided, subject to
500	acceptance of the risk by a service agreement company or an
501	insurer, by a motor vehicle service agreement issued by a
502	service agreement company or an insurer as permitted by this
503	part.
504	(b)  Knowingly collecting as a premium or charge for a
505	motor vehicle service agreement any sum in excess of or less
506	than the premium or charge applicable to such motor vehicle
507	service agreement, in accordance with the applicable
508	classifications and rates as filed with the office, and as
509	specified in the motor vehicle service agreement. However, there
510	is no violation of this subsection if excess premiums or charges
511	are refunded to the service agreement holder within 45 days
512	after receipt of the agreement by the service agreement company
513	or if the licensed sales representative's commission is reduced
514	by the amount of any premium undercharge.
515	(17)  FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO
516	SALE.-Failing to provide a consumer with a complete sample copy
517	of the terms and conditions of the service agreement prior to
518	the time of sale upon a request for the same by the consumer. A
519	service agreement company may comply with this subsection by
520	providing the consumer with a sample copy of the terms and
521	conditions of the service agreement or by directing the consumer
522	to a website that displays a complete sample of the terms and
523	conditions of the service agreement.
524
525	No provision of this section shall be deemed to prohibit a
526	service agreement company or a licensed insurer from giving to
527	service agreement holders, prospective service agreement
528	holders, and others for the purpose of advertising, any article
529	of merchandise having a value of not more than $25.
530	Section 12.  Section 634.301, Florida Statutes, as amended
531	by section 1 of chapter 2007-235, Laws of Florida, is amended to
532	read:
533	634.301  Definitions.-As used in this part, the term:
534	(1)  "Gross written premiums" means the total amount of
535	premiums, paid for the entire period of the home warranty,
536	inclusive of commissions, for which the association is obligated
537	under home warranties issued.
538	(2)  "Home improvement" means major remodeling, enclosure
539	of a garage, addition of a room, addition of a pool, and other
540	like items that add value to the residential property. The term
541	does not include normal maintenance for items such as painting,
542	reroofing, and other like items subject to normal wear and tear.
543	(2)(3)  "Home warranty" or "warranty" means any contract or
544	agreement:
545	(a)  Offered in connection with the sale of residential
546	property;
547	(b)  Offered in connection with a loan of $5,000 or more
548	which is secured by residential property that is the subject of
549	the warranty, but not in connection with the sale of such
550	property;
551	(c)  Offered in connection with a home improvement of
552	$7,500 or more for residential property that is the subject of
553	the warranty, but not in connection with the sale of such
554	property; or
555	(d)  Offered in connection with a home inspection service
556	as defined under s. 468.8311(4) or a mold assessment as defined
557	under s. 468.8411(3);
558
559	whereby a person undertakes to indemnify the warranty holder
560	against the cost of repair or replacement, or actually furnishes
561	repair or replacement, of any structural component or appliance
562	of a home, necessitated by wear and tear or an inherent defect
563	of any such structural component or appliance or necessitated by
564	the failure of an inspection to detect the likelihood of any
565	such loss. However, this part does not prohibit the giving of
566	usual performance guarantees by either the builder of a home or
567	the manufacturer or seller of an appliance, as long as no
568	identifiable charge is made for such guarantee. This part does
569	not permit the provision of indemnification against
570	consequential damages arising from the failure of any structural
571	component or appliance of a home, which practice constitutes the
572	transaction of insurance subject to all requirements of the
573	insurance code. This part does not apply to service contracts
574	entered into between consumers and nonprofit organizations or
575	cooperatives the members of which consist of condominium
576	associations and condominium owners and which perform repairs
577	and maintenance for appliances or maintenance of the residential
578	property. This part does not apply to a contract or agreement
579	offered in connection with a sale of residential property by a
580	warranty association in compliance with part III, provided such
581	contract or agreement only relates to the systems and appliances
582	of the covered residential property and does not cover any
583	structural component of the residential property.
584	(3)(4)  "Home warranty association" means any corporation
585	or any other organization, other than an authorized insurer,
586	issuing home warranties.
587	(4)(5)  "Impaired" means having liabilities in excess of
588	assets.
589	(5)(6)  "Insolvent" means the inability of a corporation to
590	pay its debts as they become due in the usual course of its
591	business.
592	(6)(7)  "Insurance code" means the Florida Insurance Code.
593	(7)(8)  "Insurer" means any property or casualty insurer
594	duly authorized to transact such business in this state.
595	(8)(9)  "Listing period" means the period of time
596	residential property is listed for sale with a licensed real
597	estate broker, beginning on the date the residence is first
598	listed for sale and ending on either the date the sale of the
599	residence is closed, the date the residence is taken off the
600	market, or the date the listing contract with the real estate
601	broker expires.
602	(9)(10)  "Net assets" means the amount by which the total
603	statutory assets of an association exceed the total liabilities
604	of the association.
605	(10)(11)  "Person" includes an individual, company,
606	corporation, association, insurer, agent, and every other legal
607	entity.
608	(11)(12)  "Premium" means the total consideration received,
609	or to be received, by an insurer or home warranty association
610	for or related to the issuance and delivery of any binder or
611	warranty, including any charges designated as assessments or
612	fees for policies, surveys, inspections, or service or any other
613	charges.
614	(12)(13)  "Sales representative" means any person with whom
615	an insurer or home inspection or warranty association has a
616	contract and who is utilized by such insurer or association for
617	the purpose of selling or issuing home warranties. The term
618	includes all employees of an insurer or association engaged
619	directly in the sale or issuance of home warranties.
620	(13)(14)  "Structural component" means the roof, plumbing
621	system, electrical system, foundation, basement, walls,
622	ceilings, or floors of a home.
623	Section 13.  Subsection (4) is added to section 634.303,
624	Florida Statutes, to read:
625	634.303  License required.-
626	(4)  Any person who provides, offers to provide, or holds
627	oneself out as providing or offering to provide home warranties
628	in this state or from this state without holding a subsisting
629	license commits, in addition to any other violation, a
630	misdemeanor of the first degree, punishable as provided in s.
631	775.082 or s. 775.083.
632	Section 14.  Paragraph (f) of subsection (2) of section
633	634.308, Florida Statutes, is amended to read:
634	634.308  Grounds for suspension or revocation of license.-
635	(2)  The license of any home warranty association shall be
636	suspended, revoked, or not renewed if it is determined that such
637	association:
638	(f)  Has issued warranty contracts which renewal contracts
639	provide that the cost of renewal exceeds the then-current cost
640	for new warranty contracts, unless the increase is supported by
641	the claims history or claims cost data, or impose a fee for
642	inspection of the premises.
643	Section 15.  Section 634.312, Florida Statutes, is amended
644	to read:
645	634.312  Forms; required provisions and procedures Filing;
646	approval of forms.-
647	(1)  No warranty form or related form shall be issued or
648	used in this state unless it has been filed with and approved by
649	the office. Also upon application for a license, the office
650	shall require the applicant to submit for approval each
651	brochure, pamphlet, circular, form letter, advertisement, or
652	other sales literature or advertising communication addressed or
653	intended for distribution. Approval of the application
654	constitutes approval of such documents, unless the applicant has
655	consented otherwise in writing. The office shall disapprove any
656	document which is untrue, deceptive, or misleading or which
657	contains misrepresentations or omissions of material facts.
658	(a)  After an application has been approved, a licensee is
659	not required to submit brochures or advertisement to the office
660	for approval; however, a licensee may not have published, and a
661	person may not publish, any brochure or advertisement which is
662	untrue, deceptive, or misleading or which contains
663	misrepresentations or omissions of material fact.
664	(b)  For purposes of this section, brochures and
665	advertising includes, but is not limited to, any report,
666	circular, public announcement, certificate, or other printed
667	matter or advertising material which is designed or used to
668	solicit or induce any persons to enter into any home warranty
669	agreement.
670	(2)  Every such filing shall be made not less than 30 days
671	in advance of issuance or use. At the expiration of 30 days from
672	date of filing, a form so filed shall be deemed approved unless
673	prior thereto it has been affirmatively approved or disapproved
674	by written order of the office.
675	(3)  The office shall not approve any such form that
676	imposes a fee for inspection of the premises.
677	(1)(4)  All home warranty contracts are assignable in a
678	consumer transaction and must contain a statement informing the
679	purchaser of the home warranty of her or his right to assign it,
680	at least within 15 days from the date the home is sold or
681	transferred, to a subsequent retail purchaser of the home
682	covered by the home warranty and all conditions on such right of
683	transfer. The home warranty company may charge an assignment fee
684	not to exceed $40. Home warranty assignments include, but are
685	not limited to, the assignment from a home builder who purchased
686	the home warranty to a subsequent home purchaser.
687	(2)(5)  Subject to the insurer's or home warranty
688	association's requirement as to payment of premium, every home
689	warranty shall be mailed or delivered to the warranty holder not
690	later than 45 days after the effectuation of coverage, and the
691	application is part of the warranty contract document.
692	(3)(6)  All home warranty contracts must state in
693	conspicuous, boldfaced type that the home warranty may not
694	provide listing period coverage free of charge.
695	(4)(7)  All home warranty contracts must disclose any
696	exclusions, restrictions, or limitations on the benefits offered
697	or the coverage provided by the home warranty contract in
698	boldfaced type, and must contain, in boldfaced type, a statement
699	on the front page of the contract substantially similar to the
700	following: "Certain items and events are not covered by this
701	contract. Please refer to the exclusions listed on page .... of
702	this document."
703	(5)(8)  Each home warranty contract shall contain a
704	cancellation provision. Any home warranty agreement may be
705	canceled by the purchaser within 10 days after purchase. The
706	refund must be 100 percent of the gross premium paid, less any
707	claims paid on the agreement. A reasonable administrative fee
708	may be charged, not to exceed 5 percent of the gross premium
709	paid by the warranty agreement holder. After the home warranty
710	agreement has been in effect for 10 days, if the contract is
711	canceled by the warranty holder, a return of premium shall be
712	based upon 90 percent of unearned pro rata premium less any
713	claims that have been paid. If the contract is canceled by the
714	association for any reason other than for fraud or
715	misrepresentation, a return of premium shall be based upon 100
716	percent of unearned pro rata premium, less any claims paid on
717	the agreement.
718	Section 16.  Section 634.3123, Florida Statutes, is amended
719	to read:
720	634.3123  Noncompliant Grounds for disapproval of forms.-
721	The office may order a home warranty association to stop using
722	any contract shall disapprove any form that filed under s.
723	634.312 or withdraw any previous approval if the form:
724	(1)  Is in violation of or does not comply with this part.
725	(2)  Contains or incorporates by reference, when such
726	incorporation is otherwise permissible, any inconsistent,
727	ambiguous, or misleading clauses or exceptions or conditions
728	which deceptively affect the risk purported to be assumed in the
729	general coverage of the contract.
730	(3)  Has any title, heading, or other indication of its
731	provisions which is misleading.
732	(4)  Is printed or otherwise reproduced in such a manner as
733	to render any material provision of the form illegible.
734	(5)  Provides that the cost of renewal exceeds the then-
735	current cost for new warranty contracts, unless the increase is
736	supported by the claims history or claims cost data, or impose a
737	fee for inspection of the premises.
738	Section 17.  Section 634.314, Florida Statutes, is amended
739	to read:
740	634.314  Examination of associations.-
741	(1)  Home warranty associations licensed under this part
742	may shall be subject to periodic examinations by the office, in
743	the same manner and subject to the same terms and conditions as
744	apply to insurers under part II of chapter 624 of the insurance
745	code.
746	(2)  The office shall determine whether to conduct an
747	examination of a home warranty association by considering:
748	(a)  The amount of time that the association has been
749	continuously licensed and operating under the same management
750	and control.
751	(b)  The association's history of compliance with
752	applicable law.
753	(c)  The number of consumer complaints against the
754	association.
755	(d)  The financial condition of the association,
756	demonstrated by the financial reports submitted pursuant to s.
757	634.313.
758	Section 18.  Paragraph (b) of subsection (1) of section
759	634.3205, Florida Statutes, is amended to read:
760	634.3205  Rebating; when allowed.-
761	(1)  No sales representative shall rebate any portion of
762	his or her commission except as follows:
763	(b)  The rebate shall be in accordance with a rebating
764	schedule filed with and approved by the sales representative
765	with the home warranty association issuing the home warranty to
766	which the rebate applies. The home warranty association shall
767	maintain a copy of all rebating schedules for a period of 3
768	years.
769	Section 19.  Subsection (8) of section 634.336, Florida
770	Statutes, is amended, and subsection (9) is added to that
771	section, to read:
772	634.336  Unfair methods of competition and unfair or
773	deceptive acts or practices defined.-The following methods,
774	acts, or practices are defined as unfair methods of competition
775	and unfair or deceptive acts or practices:
776	(8)  COERCION OF DEBTORS.-When a home warranty is sold as
777	authorized by s. 634.301(3)(b):
778	(a)  Requiring, as a condition precedent or condition
779	subsequent to the lending of the money or the extension of the
780	credit or any renewal thereof, that the person to whom such
781	credit is extended purchase a home warranty; or
782	(b)  Failing to provide the advice required by s. 634.344.
783	(9)  FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO
784	SALE.-Failing to provide a consumer with a complete sample copy
785	of the terms and conditions of the home warranty contract prior
786	to the time of sale upon a request for the same by the consumer.
787	A home warranty association may comply with this subsection by
788	providing the consumer with a sample copy of the terms and
789	conditions of the home warranty contract or by directing the
790	consumer to a website that displays a complete sample of the
791	terms and conditions of the contract.
792	Section 20.  Section 634.344, Florida Statutes, is amended
793	to read:
794	634.344  Coercion of debtor prohibited.-
795	(1)  When a home warranty is sold in connection with the
796	lending of money as authorized by s. 634.301(3)(b), a no person
797	may not require, as a condition precedent or condition
798	subsequent to the lending of the money or the extension of the
799	credit or any renewal thereof, that the person to whom such
800	money or credit is extended purchase a home warranty.
801	(2)  When a home warranty is purchased in connection with
802	the lending of money as authorized by s. 634.301(3)(b), the
803	insurer or home warranty association or the sales representative
804	of the insurer or home warranty association shall advise the
805	borrower or purchaser in writing that Florida law prohibits the
806	lender from requiring the purchase of a home warranty as a
807	condition precedent or condition subsequent to the making of the
808	loan.
809	Section 21.  Subsection (5) of section 634.401, Florida
810	Statutes, is amended to read:
811	634.401  Definitions.-As used in this part, the term:
812	(5)  "Indemnify" means to undertake repair or replacement
813	of a consumer product, or pay compensation for such repair or
814	replacement by cash, check, store credit, gift card, or other
815	similar means, in return for the payment of a segregated
816	premium, when such consumer product suffers operational failure.
817	Section 22.  Subsection (5) is added to section 634.403,
818	Florida Statutes, to read:
819	634.403  License required.-
820	(5)  Any person who provides, offers to provide, or holds
821	oneself out as providing or offering to provide a service
822	warranty in this state or from this state without holding a
823	subsisting license commits, in addition to any other violation,
824	a misdemeanor of the first degree, punishable as provided in s.
825	775.082 or s. 775.083.
826	Section 23.  Paragraph (e) of subsection (3) of section
827	634.406, Florida Statutes, is amended to read:
828	634.406  Financial requirements.-
829	(3)  An association will not be required to establish an
830	unearned premium reserve if it has purchased contractual
831	liability insurance which demonstrates to the satisfaction of
832	the office that 100 percent of its claim exposure is covered by
833	such policy. The contractual liability insurance shall be
834	obtained from an insurer that holds a certificate of authority
835	to do business within the state. For the purposes of this
836	subsection, the contractual liability policy shall contain the
837	following provisions:
838	(e)  In the event the issuer of the contractual liability
839	policy is fulfilling the service warranty covered by policy and
840	in the event the service warranty holder cancels the service
841	warranty, it is the responsibility of the contractual liability
842	policy issuer to effectuate a full refund of unearned premium to
843	the consumer. This refund shall be subject to the cancellation
844	fee provisions of s. 634.414(3). The salesperson or agent shall
845	refund to the contractual liability policy issuer the unearned
846	pro rata commission.
847	Section 24.  Section 634.414, Florida Statutes, is amended
848	to read:
849	634.414  Cancelation provisions required Filing; approval
850	of forms.-
851	(1)  No service warranty form or related form shall be
852	issued or used in this state unless it has been filed with and
853	approved by the office. Upon application for a license, the
854	office shall require the applicant to submit for approval each
855	brochure, pamphlet, circular, form letter, advertisement, or
856	other sales literature or advertising communication addressed or
857	intended for distribution. The office shall disapprove any
858	document which is untrue, deceptive, or misleading or which
859	contains misrepresentations or omissions of material facts.
860	(a)  After an application has been approved, a licensee is
861	not required to submit brochures or advertisement to the office
862	for approval; however, a licensee may not have published, and a
863	person may not publish, any brochure or advertisement which is
864	untrue, deceptive, or misleading or which contains
865	misrepresentations or omissions of material fact.
866	(b)  For purposes of this section, brochures and
867	advertising includes, but is not limited to, any report,
868	circular, public announcement, certificate, or other printed
869	matter or advertising material which is designed or used to
870	solicit or induce any persons to enter into any service warranty
871	agreement.
872	(2)  Each filing shall be made not less than 30 days in
873	advance of its issuance or use. At the expiration of 30 days
874	from date of filing, a form so filed shall be deemed approved
875	unless prior thereto it has been affirmatively disapproved by
876	written order of the office.
877	(3)  Each service warranty contract shall contain a
878	cancellation provision. If In the event the contract is canceled
879	by the warranty holder, return of premium shall be based upon no
880	less than 90 percent of unearned pro rata premium less any
881	claims that have been paid or less the cost of repairs made on
882	behalf of the warranty holder. If In the event the contract is
883	canceled by the association, return of premium shall be based
884	upon 100 percent of unearned pro rata premium, less any claims
885	paid or the cost of repairs made on behalf of the warranty
886	holder.
887	(4)  The name of the service warranty association issuing
888	the contract must be more prominent than any other company name
889	or program name on the service warranty form or sales brochure.
890	Section 25.  Section 634.4145, Florida Statutes, is amended
891	to read:
892	634.4145  Noncompliant Grounds for disapproval of forms.-
893	The office may order a service warranty association to stop
894	using any contract shall disapprove any form that filed under s.
895	634.414 if the form:
896	(1)  Violates this part;
897	(2)  Is misleading in any respect;
898	(3)  Is reproduced so that any material provision is
899	substantially illegible; or
900	(4)  Contains provisions which are unfair or inequitable or
901	which encourage misrepresentation.
902	Section 26.  Section 634.415, Florida Statutes, is amended
903	to read:
904	634.415  Tax on premiums; annual statement; reports;
905	quarterly statements.-
906	(1)  In addition to the license fees provided in this part
907	for service warranty associations and license taxes as provided
908	in the insurance code as to insurers, each such association and
909	insurer shall, annually on or before March 1, file with the
910	office its annual statement, in the form prescribed by the
911	commission, showing all premiums or assessments received by it
912	in connection with the issuance of service warranties in this
913	state during the preceding calendar year and using accounting
914	principles which will enable the office to ascertain whether the
915	financial requirements set forth in s. 634.406 have been
916	satisfied.
917	(2)  The gross amount of premiums and assessments is
918	subject to the sales tax imposed by s. 212.0506.
919	(3)  The office may levy a fine of up to $100 a day for
920	each day an association neglects to file the annual statement in
921	the form and within the time provided by this part. The amount
922	of the fine shall be established by rules adopted by the
923	commission. The office shall deposit all sums collected by it
924	under this section to the credit of the Insurance Regulatory
925	Trust Fund.
926	(4)  In addition to an annual statement, the office may
927	require of licensees, under oath and in the form prescribed by
928	it, quarterly statements or special reports which it deems
929	necessary to the proper supervision of licensees under this
930	part. For manufacturers as defined in s. 634.401, the office
931	shall require only the annual audited financial statements of
932	the warranty operations and corporate reports as filed by the
933	manufacturer with the Securities and Exchange Commission,
934	provided that the office may require additional reporting by
935	manufacturers upon a showing by the office that annual reporting
936	is insufficient to protect the interest of purchasers of service
937	warranty agreements in this state or fails to provide sufficient
938	proof of the financial status required by this part.
939	(4)(5)  The office may suspend or revoke the license of a
940	service warranty association failing to file its annual
941	statement or quarterly report when due.
942	(5)(6)  The commission may by rule require each service
943	warranty association to submit to the office, as the commission
944	may designate, all or part of the information contained in the
945	financial statements and reports required by this section in a
946	computer-readable form compatible with the electronic data
947	processing system specified by the office.
948	Section 27.  Section 634.416, Florida Statutes, is amended
949	to read:
950	634.416  Examination of associations.-
951	(1)(a)  Service warranty associations licensed under this
952	part may be are subject to periodic examination by the office,
953	in the same manner and subject to the same terms and conditions
954	that apply to insurers under part II of chapter 624.
955	(b)  The office shall determine whether to conduct an
956	examination of a service warranty association by considering:
957	1.  The amount of time that the association has been
958	continuously licensed and operating under the same management
959	and control.
960	2.  The association's history of compliance with applicable
961	law.
962	3.  The number of consumer complaints against the
963	association.
964	4.  The financial condition of the association,
965	demonstrated by the financial reports submitted pursuant to s.
966	634.313.
967	(2)  However, The rate charged a service warranty
968	association by the office for examination may be adjusted to
969	reflect the amount collected for the Form 10-K filing fee as
970	provided in this section.
971	(3)  On or before May 1 of each year, an association may
972	submit to the office the Form 10-K, as filed with the United
973	States Securities and Exchange Commission pursuant to the
974	Securities Exchange Act of 1934, as amended. Upon receipt and
975	review of the most current Form 10-K, the office may waive the
976	examination requirement; if the office determines not to waive
977	the examination, such examination will be limited to that
978	examination necessary to ensure compliance with this part. The
979	Form 10-K shall be accompanied by a filing fee of $2,000 to be
980	deposited into the Insurance Regulatory Trust Fund.
981	(4)(2)  The office is not required to examine an
982	association that has less than $20,000 in gross written premiums
983	as reflected in its most recent annual statement. The office may
984	examine such an association if it has reason to believe that the
985	association may be in violation of this part or is otherwise in
986	an unsound financial condition. If the office examines an
987	association that has less than $20,000 in gross written
988	premiums, the examination fee may not exceed 5 percent of the
989	gross written premiums of the association.
990	Section 28.  Paragraph (b) of subsection (1) of section
991	634.4225, Florida Statutes, is amended to read:
992	634.4225  Rebating; when allowed.-
993	(1)  No sales representative shall rebate any portion of
994	his or her commission except as follows:
995	(b)  The rebate shall be in accordance with a rebating
996	schedule filed with and approved by the sales representative
997	with the association issuing the service warranty to which the
998	rebate applies. The association shall maintain a copy of all
999	rebating schedules for a period of 3 years.
1000	Section 29.  Subsection (9) is added to section 634.436,
1001	Florida Statutes, to read:
1002	634.436  Unfair methods of competition and unfair or
1003	deceptive acts or practices defined.-The following methods,
1004	acts, or practices are defined as unfair methods of competition
1005	and unfair or deceptive acts or practices:
1006	(9)  FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO
1007	SALE.-Failing to provide a consumer with a complete sample copy
1008	of the terms and conditions of the service warranty prior to
1009	before the time of sale upon a request for the same by the
1010	consumer. A service warranty association may comply with this
1011	subsection by providing the consumer with a sample copy of the
1012	terms and conditions of the warranty contract or by directing
1013	the consumer to a website that displays a complete sample of the
1014	terms and conditions of the contract.
1015	Section 30.  Subsections (2), (3), (4), and (5) of section
1016	634.136, Florida Statutes, are amended to read:
1017	634.136  Office records required.-Each licensed motor
1018	vehicle service contract company, as a minimum requirement for
1019	permanent office records, shall maintain:
1020	(2)  Memorandum journals showing the blank service
1021	agreement forms issued to the company salespersons and recording
1022	the delivery of the forms to the dealer.
1023	(3)  Memorandum journals showing the service contract forms
1024	received by the motor vehicle dealers and indicating the
1025	disposition of the forms by the dealer.
1026	(2)(4)  A detailed service agreement register, in numerical
1027	order by service agreement number, of agreements in force, which
1028	register shall include the following information: service
1029	agreement number, date of issue, issuing dealer, name of
1030	agreement holder, whether the agreement is covered by
1031	contractual liability insurance or the unearned premium reserve
1032	account, description of motor vehicle, service agreement period
1033	and mileage, gross premium, commission to salespersons,
1034	commission to dealer, and net premium.
1035	(3)(5)  A detailed claims register, in numerical order by
1036	service agreement number, which register shall include the
1037	following information: service agreement number, date of issue,
1038	date of claim, type of claim, issuing dealer, amount of claim,
1039	date claim paid, and, if applicable, disposition other than
1040	payment and reason therefor.
1041	Section 31.  Subsections (4) and (5) of section 634.313,
1042	Florida Statutes, are amended to read:
1043	634.313  Tax on premiums; annual statement; reports.-
1044	(4)  In addition to an annual statement, the office may
1045	require of licensees, under oath and in the form prescribed by
1046	it, such additional regular or special reports as it may deem
1047	necessary to the proper supervision of licensees under this
1048	part.
1049	(4)(5)  The commission may by rule require each home
1050	warranty association to submit to the office, as the commission
1051	may designate, all or part of the information contained in the
1052	financial reports required by this section in a computer-
1053	readable form compatible with the electronic data processing
1054	system specified by the office.
1055	Section 32.  Sections 634.1216 and 634.3126, Florida
1056	Statutes, are repealed.
1057	Section 33.  This act shall take effect July 1, 2010.

CODING: Words stricken are deletions; words underlined are additions.