November 17, 2019
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_h1379__
HB 1379

1
A bill to be entitled
2An act relating to warranty associations; amending s.
3628.4615, F.S., relating to specialty insurers; conforming
4a cross-reference; amending s. 634.011, F.S.; revising the
5definition of the term "motor vehicle service agreement";
6amending s. 634.031, F.S.; providing penalties for certain
7licensure violations; amending s. 634.041, F.S., relating
8to qualifications for licensure; conforming cross-
9references; amending s. 634.095, F.S.; prohibiting service
10agreement companies from issuing certain deceptive
11advertisements, operating without a subsisting license, or
12remitting premiums to a person other than the obligated
13service agreement company; amending s. 634.121, F.S.;
14deleting a requirement that certain service agreement
15forms be approved by the Office of Insurance Regulation of
16the Financial Services Commission; amending s. 634.1213,
17F.S.; authorizing the office to order a service agreement
18company to stop using forms that do not comply with
19specified requirements; amending s. 634.137, F.S.;
20deleting a schedule for the submissions of certain
21reports; amending s. 634.141, F.S.; providing guidelines
22for the office to use in determining whether to examine a
23company; amending s. 634.1815, F.S.; requiring certain
24rebates to be approved by the company issuing a service
25agreement; amending s. 634.282, F.S.; clarifying
26provisions relating to the refund of excess premiums or
27charges; requiring that a consumer receive a sample copy
28of the service agreement prior to the sale of a service
29agreement; amending s. 634.301, F.S.; revising certain
30definitions relating home warranties; amending s. 634.303,
31F.S.; providing that it is a first-degree misdemeanor for
32a person without a subsisting license to provide or offer
33to provide home warranties; amending s. 634.308, F.S.;
34providing an exception to certain grounds for licensure
35suspension or revocation; amending s. 634.312, F.S.;
36deleting a requirement that certain home warranty
37agreement forms be approved by the office; amending s.
38634.3123, F.S.; authorizing the office to order a home
39warranty association to stop using forms that do not
40comply with specified requirements; amending s. 634.314,
41F.S.; providing guidelines for the office to use in
42determining whether to examine an association; amending s.
43634.3205, F.S.; requiring certain rebates to be approved
44by the association issuing a service agreement; amending
45s. 634.336, F.S.; requiring that a consumer receive a
46sample copy of the service agreement prior to the sale of
47a service agreement; amending s. 634.344, F.S.;
48prohibiting certain coercive actions relating to the sale
49of a home warranty in connection with the lending of
50money; amending s. 634.401, F.S.; redefining the term
51"indemnify"; amending s. 634.403, F.S.; providing that it
52is a first-degree misdemeanor for a person without a
53subsisting license to provide or offer to provide service
54warranties; amending s. 634.406, F.S., relating to
55financial requirements; conforming a cross-reference;
56amending s. 634.414, F.S.; deleting a requirement that
57certain service warranty forms be approved by the office;
58deleting certain requirements relating to the display of
59the issuing association's name on literature; amending s.
60634.4145, F.S.; authorizing the office to order a service
61warranty association to stop using forms that do not
62comply with specified requirements; amending s. 634.415,
63F.S.; deleting a requirement that associations file
64certain quarterly statements and special reports; amending
65s. 634.416, F.S.; providing guidelines for the office to
66use in determining whether to examine an service warranty
67association; amending s. 634.4225, F.S.; requiring certain
68rebates to be approved by the association issuing a
69service warranty; amending s. 634.436, F.S.; requiring
70that a consumer receive a sample copy of the service
71agreement prior to the sale of a service agreement;
72amending s. 634.136, F.S.; deleting certain provisions
73requiring records to be maintained by motor vehicle
74service contract companies; amending s. 634.313, F.S.;
75deleting certain requirements for reports relating to
76taxes on premiums; repealing s. 634.1216, F.S., relating
77to required rate filings; repealing s. 634.3126, F.S.,
78relating to required rate filings; providing an effective
79date.
80
81Be It Enacted by the Legislature of the State of Florida:
82
83     Section 1.  Paragraph (b) of subsection (1) of section
84628.4615, Florida Statutes, is amended to read:
85     628.4615  Specialty insurers; acquisition of controlling
86stock, ownership interest, assets, or control; merger or
87consolidation.-
88     (1)  For the purposes of this section, the term "specialty
89insurer" means any person holding a license or certificate of
90authority as:
91     (b)  A home warranty association authorized to issue "home
92warranties" as those terms are defined in s. 634.301(3) and (4);
93     Section 2.  Subsection (8) of section 634.011, Florida
94Statutes, is amended to read:
95     634.011  Definitions.-As used in this part, the term:
96     (8)  "Motor vehicle service agreement" or "service
97agreement" means any contract or agreement indemnifying the
98service agreement holder for the motor vehicle listed on the
99service agreement and arising out of the ownership, operation,
100and use of the motor vehicle against loss caused by failure of
101any mechanical or other component part, or any mechanical or
102other component part that does not function as it was originally
103intended; however, nothing in this part shall prohibit or affect
104the giving, free of charge, of the usual performance guarantees
105by manufacturers or dealers in connection with the sale of motor
106vehicles. Transactions exempt under s. 624.125 are expressly
107excluded from this definition and are exempt from the provisions
108of this part. Service agreements that are sold to persons other
109than consumers are excluded from this definition and are exempt
110from regulation under the Florida Insurance Code. The term
111"motor vehicle service agreement" includes any contract or
112agreement that provides:
113     (a)  For the coverage or protection defined in this
114subsection and which is issued or provided in conjunction with
115an additive product applied to the motor vehicle that is the
116subject of such contract or agreement;
117     (b)  For payment of vehicle protection expenses.
118     1.a.  "Vehicle protection expenses" means a preestablished
119flat amount payable for the loss of or damage to a vehicle or
120expenses incurred by the service agreement holder for loss or
121damage to a covered vehicle, including, but not limited to,
122applicable deductibles under a motor vehicle insurance policy;
123temporary vehicle rental expenses; expenses for a replacement
124vehicle that is at least the same year, make, and model of the
125stolen motor vehicle; sales taxes or registration fees for a
126replacement vehicle that is at least the same year, make, and
127model of the stolen vehicle; or other incidental expenses
128specified in the agreement.
129     b.  "Vehicle protection product" means a product or system
130installed or applied to a motor vehicle or designed to prevent
131the theft of the motor vehicle or assist in the recovery of the
132stolen motor vehicle.
133     2.  Vehicle protection expenses shall be payable in the
134event of loss or damage to the vehicle as a result of the
135failure of the vehicle protection product to prevent the theft
136of the motor vehicle or to assist in the recovery of the stolen
137motor vehicle. Vehicle protection expenses covered under the
138agreement shall be clearly stated in the service agreement form,
139unless the agreement provides for the payment of a
140preestablished flat amount, in which case the service agreement
141form shall clearly identify such amount.
142     3.  Motor vehicle service agreements providing for the
143payment of vehicle protection expenses shall either:
144     a.  Reimburse a service agreement holder for the following
145expenses, at a minimum: deductibles applicable to comprehensive
146coverage under the service agreement holder's motor vehicle
147insurance policy; temporary vehicle rental expenses; sales taxes
148and registration fees on a replacement vehicle that is at least
149the same year, make, and model of the stolen motor vehicle; and
150the difference between the benefits paid to the service
151agreement holder for the stolen vehicle under the service
152agreement holder's comprehensive coverage and the actual cost of
153a replacement vehicle that is at least the same year, make, and
154model of the stolen motor vehicle; or
155     b.  Pay a preestablished flat amount to the service
156agreement holder.
157
158Payments shall not duplicate any benefits or expenses paid to
159the service agreement holder by the insurer providing
160comprehensive coverage under a motor vehicle insurance policy
161covering the stolen motor vehicle; however, the payment of
162vehicle protection expenses at a preestablished flat amount of
163$5,000 or less does not duplicate any benefits or expenses
164payable under any comprehensive motor vehicle insurance policy;
165or
166     (c)1.  For the payment for paintless dent-removal services
167provided by a company whose primary business is providing such
168services.
169     2.  "Paintless dent-removal" means the process of removing
170dents, dings, and creases, including hail damage, from a vehicle
171without affecting the existing paint finish, but does not
172include services that involve the replacement of vehicle body
173panels or sanding, bonding, or painting.
174     Section 3.  Subsection (7) is added to section 634.031,
175Florida Statutes, to read:
176     634.031  License required.-
177     (7)  Any person who violates this section commits, in
178addition to any other violation, a misdemeanor of the first
179degree, 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
182amended to read:
183     634.041  Qualifications for license.-To qualify for and
184hold a license to issue service agreements in this state, a
185service agreement company must be in compliance with this part,
186with applicable rules of the commission, with related sections
187of the Florida Insurance Code, and with its charter powers and
188must comply with the following:
189     (8)
190     (b)  A service agreement company does not have to establish
191and maintain an unearned premium reserve if it purchases and
192maintains contractual liability insurance in accordance with the
193following:
194     1.  The insurance covers 100 percent of its claim exposure
195and is obtained from an insurer approved by the office which
196holds a certificate of authority to do business within this
197state.
198     2.  If the service agreement company does not meet its
199contractual obligations, the contractual liability insurance
200policy binds its issuer to pay or cause to be paid to the
201service agreement holder all legitimate claims and cancellation
202refunds for all service agreements issued by the service
203agreement company while the policy was in effect. This
204requirement also applies to those service agreements for which
205no premium has been remitted to the insurer.
206     3.  If the issuer of the contractual liability policy is
207fulfilling the service agreements covered by the contractual
208liability policy and the service agreement holder cancels the
209service agreement, the issuer must make a full refund of
210unearned premium to the consumer, subject to the cancellation
211fee provisions of s. 634.121(3)(5). The sales representative and
212agent must refund to the contractual liability policy issuer
213their unearned pro rata commission.
214     4.  The policy may not be canceled, terminated, or
215nonrenewed by the insurer or the service agreement company
216unless a 90-day written notice thereof has been given to the
217office by the insurer before the date of the cancellation,
218termination, or nonrenewal.
219     5.  The service agreement company must provide the office
220with the claims statistics.
221
222All funds or premiums remitted to an insurer by a motor vehicle
223service agreement company under this part shall remain in the
224care, custody, and control of the insurer and shall be counted
225as an asset of the insurer; provided, however, this requirement
226does not apply when the insurer and the motor vehicle service
227agreement company are affiliated companies and members of an
228insurance holding company system. If the motor vehicle service
229agreement company chooses to comply with this paragraph but also
230maintains a reserve to pay claims, such reserve shall only be
231considered an asset of the covered motor vehicle service
232agreement company and may not be simultaneously counted as an
233asset of any other entity.
234     (11)
235     (b)  Notwithstanding any other requirement of this part, a
236service agreement company maintaining an unearned premium
237reserve on all service agreements in accordance with paragraph
238(8)(a) may offer service agreements providing vehicle protection
239expenses if it maintains contractual liability insurance only on
240all service agreements providing vehicle protection expenses and
241continues to maintain the 50-percent reserve for all service
242agreements not providing vehicle protection expenses. A service
243agreement company maintaining contractual liability insurance
244for all service agreements providing vehicle protection expenses
245and the 50-percent reserve for all other service agreements
246must, in the service agreement register as required under s.
247634.136(2)(4), distinguish between insured service agreements
248providing vehicle protection expenses and service agreements not
249providing vehicle protection expenses.
250     Section 5.  Paragraph (d) is added to subsection (3) of
251section 634.095, Florida Statutes, and subsection (7) is added
252to that section, to read:
253     634.095  Prohibited acts.-Any service agreement company or
254salesperson that engages in one or more of the following acts
255is, in addition to any applicable denial, suspension,
256revocation, or refusal to renew or continue any appointment or
257license, guilty of a misdemeanor of the second degree,
258punishable as provided in s. 775.082 or s. 775.083:
259     (3)  Issuing or causing to be issued any advertisement
260which:
261     (d)  Is false, deceptive, or misleading with respect to:
262     1.  The service agreement company's affiliation with a
263motor vehicle manufacturer;
264     2.  The service agreement company's possession of
265information regarding a motor vehicle owner's current motor
266vehicle manufacturer's original equipment warranty;
267     3.  The expiration of a motor vehicle owner's current motor
268vehicle manufacturer's original equipment warranty; or
269     4.  Any requirement that the motor vehicle owner register
270for a new motor vehicle service agreement with the company in
271order to maintain coverage under the current motor vehicle
272service agreement or manufacturer's original equipment warranty.
273     (7)  Remitting premiums received on motor vehicle service
274agreements sold to any person other than the licensed service
275agreement company that is obligated to perform under such
276agreement, if the agreement between such company and the
277salesperson requires that premiums be submitted directly to the
278service agreement company.
279     Section 6.  Section 634.121, Florida Statutes, is amended
280to read:
281     634.121  Filing of Forms, required procedures, provisions.-
282     (1)  A service agreement form or related form may not be
283issued or used in this state unless it has been filed with and
284approved by the office. Upon application for a license, the
285office shall require the applicant to submit for approval each
286brochure, pamphlet, circular, form letter, advertisement, or
287other sales literature or advertising communication addressed or
288intended for distribution. The office shall disapprove any
289document which is untrue, deceptive, or misleading or which
290contains misrepresentations or omissions of material facts.
291     (a)  After an application has been approved, a licensee is
292not required to submit brochures or advertisement to the office
293for approval; however, a licensee may not have published, and a
294person may not publish, any brochure or advertisement which is
295untrue, deceptive, or misleading or which contains
296misrepresentations or omissions of material fact.
297     (b)  For purposes of this section, brochures and
298advertising includes, but is not limited to, any report,
299circular, public announcement, certificate, or other printed
300matter or advertising material which is designed or used to
301solicit or induce any persons to enter into any motor vehicle
302service agreement.
303     (c)  The office shall disapprove any service agreement form
304providing vehicle protection expenses which does not clearly
305indicate either the method for calculating the benefit to be
306paid or provided to the service agreement holder or the
307preestablished flat amount payable pursuant to the terms of the
308service agreement. All service agreement forms providing vehicle
309protection expenses shall clearly indicate the term of the
310service agreement, whether new or used cars are eligible for the
311vehicle protection product, and that the service agreement
312holder may not make any claim against the Florida Insurance
313Guarantee Association for vehicle protection expenses. The
314service agreement shall be provided to a service agreement
315holder on a form that provides only vehicle protection expenses.
316A service agreement form providing vehicle protection expenses
317must state that the service agreement holder must have in force
318at the time of loss comprehensive motor vehicle insurance
319coverage as a condition precedent to requesting payment of
320vehicle protection expenses.
321     (2)  Every filing required under this section must be made
322not less than 30 days in advance of issuance or use. At the
323expiration of 30 days from the date of filing, a form so filed
324becomes approved unless prior thereto it has been affirmatively
325disapproved by written notice of the office. The office may
326extend by not more than an additional 15 days the period within
327which it may affirmatively approve or disapprove any form by
328giving notice of extension before the expiration of the initial
32930-day period. At the expiration of any period as so extended
330and in the absence of prior affirmative disapproval, the form
331becomes approved.
332     (1)(3)  Before the sale of any service agreement, written
333notice must be given to the prospective purchaser by the service
334agreement company or its agent or salesperson, on an office-
335approved form, that purchase of the service agreement is not
336required in order to purchase or obtain financing for a motor
337vehicle.
338     (2)(4)  All motor vehicle service agreements are assignable
339in a consumer transaction and must contain a statement in
340conspicuous, boldfaced type, informing the purchaser of the
341service agreement of her or his right to assign it to a
342subsequent retail purchaser of the motor vehicle covered by the
343service agreement and all conditions on such right of transfer.
344The assignment must occur within a period of time specified in
345the agreement, which period may not expire earlier than 15 days
346after the date of the sale or transfer of the motor vehicle. The
347service agreement company may charge an assignment fee not to
348exceed $40.
349     (3)(5)(a)  Each service agreement must contain a
350cancellation provision. Any service agreement is cancelable by
351the purchaser within 60 days after purchase. The refund must be
352100 percent of the gross premium paid, less any claims paid on
353the agreement. A reasonable administrative fee may be charged
354not to exceed 5 percent of the gross premium paid by the
355agreement holder.
356     (b)  After the service agreement has been in effect for 60
357days, it may not be canceled by the insurer or service agreement
358company unless:
359     1.  There has been a material misrepresentation or fraud at
360the time of sale of the service agreement;
361     2.  The agreement holder has failed to maintain the motor
362vehicle as prescribed by the manufacturer;
363     3.  The odometer has been tampered with or disabled and the
364agreement holder has failed to repair the odometer; or
365     4.  For nonpayment of premium by the agreement holder, in
366which case the service agreement company shall provide the
367agreement holder notice of cancellation by certified mail.
368
369If the service agreement is canceled by the insurer or service
370agreement company, the return of premium must not be less than
371100 percent of the paid unearned pro rata premium, less any
372claims paid on the agreement. If, after 60 days, the service
373agreement is canceled by the service agreement holder, the
374insurer or service agreement company shall return directly to
375the agreement holder not less than 90 percent of the unearned
376pro rata premium, less any claims paid on the agreement. The
377service agreement company remains responsible for full refunds
378to the consumer on canceled service agreements. However, the
379salesperson and agent are responsible for the refund of the
380unearned pro rata commission. A service agreement company may
381effectuate refunds through the issuing salesperson or agent.
382     (4)(6)  If the service agreement is canceled, pursuant to
383an order of liquidation, the salesperson or agent is responsible
384for refunding, and must refund, to the receiver the unearned pro
385rata commission.
386     (5)(7)  If a service agreement company violates any lawful
387order of the office or fails to meet its contractual obligations
388under this part, upon notice from the office, the sales
389representative or agent must refund to the service agreement
390holder the unearned pro rata commission, unless the sales
391representative or agent has made other arrangements,
392satisfactory to the office, with the service agreement holder.
393     (6)(8)  Each service agreement, which includes a copy of
394the application form, must be mailed or delivered to the
395agreement holder within 45 days after the date of purchase.
396     (7)(9)  Each service agreement form must contain in
397conspicuous, boldfaced type any statement or clause that places
398restrictions or limitations on the benefits offered or disclose
399such restrictions or limitations in regular type in a section of
400the service agreement containing a conspicuous, boldfaced type
401heading.
402     (8)(10)  If an insurer or service agreement company intends
403to use or require the use of remanufactured or used replacement
404parts, each service agreement form as well as all service
405agreement brochures must contain in conspicuous, boldfaced type
406a statement to that effect.
407     (9)(11)  Each service agreement form as well as all service
408agreement company sales brochures must clearly identify the
409name, address, and Florida license number of the licensed
410insurer or service agreement company.
411     (10)(12)  If a service agreement contains a rental car
412provision, it must disclose the terms and conditions of this
413benefit in conspicuous, boldfaced type or disclose such
414restrictions or limitations in regular type in a section of the
415service agreement containing a conspicuous, boldfaced type
416heading.
417     Section 7.  Section 634.1213, Florida Statutes, is amended
418to read:
419     634.1213  Noncompliant forms Grounds for disapproval.-The
420office may order a service agreement company to stop using
421disapprove any service agreement form that or service agreement
422company sales brochures filed under s. 634.121, or withdraw any
423previous approval thereof, if the form or brochure:
424     (1)  Is in any respect in violation of or does not comply
425with this part, any applicable provision of the Florida
426Insurance Code, or any applicable rule of the office commission.
427     (2)  Contains or incorporates by reference when such
428incorporation is otherwise permissible, any inconsistent,
429ambiguous, or misleading clauses, or exceptions and conditions
430which deceptively affect the risk purported to be assumed in the
431general coverage of the service agreement.
432     (3)  Has any title, heading, or other indication of its
433provisions which is misleading.
434     (4)  Is printed or otherwise reproduced in such manner as
435to render any material provision of the form substantially
436illegible.
437     (5)  Contains any provision which is unfair or inequitable
438or which encourages misrepresentation.
439     (6)  Contains any provision which makes it difficult to
440determine the actual insurer or service agreement company
441issuing the form.
442     (7)  Contains any provision for reducing claim payments due
443to depreciation of parts, except for marine engines.
444     Section 8.  Subsection (1) of section 634.137, Florida
445Statutes, is amended to read:
446     634.137  Financial and statistical reporting requirements.-
447     (1)  By March 1 of each year, each service agreement
448company shall submit to the office annual financial reports on
449forms prescribed by the commission and furnished by the office
450as follows:
451     (a)  Reports for a period ending December 31 are due by
452March 1.
453     (b)  Reports for a period ending March 31 are due by May
45415.
455     (c)  Reports for a period ending June 30 are due by August
45615.
457     (d)  Reports for a period ending September 30 are due by
458November 15.
459     Section 9.  Section 634.141, Florida Statutes, is amended
460to read:
461     634.141  Examination of companies.-
462     (1)  Motor vehicle service agreement companies licensed
463under this part may shall be subject to periodic examination by
464the office in the same manner and subject to the same terms and
465conditions as applies to insurers under part II of chapter 624.
466The commission may by rule establish provisions whereby a
467company may be exempted from examination.
468     (2)  The office shall determine whether to conduct an
469examination of a company by considering:
470     (a)  The amount of time that the company has been
471continuously licensed and operating under the same management
472and control.
473     (b)  The company's history of compliance with applicable
474law.
475     (c)  The number of consumer complaints against the company.
476     (d)  The financial condition of the company, demonstrated
477by the financial reports submitted pursuant to s. 634.137.
478     Section 10.  Paragraph (b) of subsection (1) of section
479634.1815, Florida Statutes, is amended to read:
480     634.1815  Rebating; when allowed.-
481     (1)  No salesperson shall rebate any portion of his or her
482commission except as follows:
483     (b)  The rebate shall be in accordance with a rebating
484schedule filed with and approved by the salesperson with the
485service agreement company issuing the service agreement to which
486the rebate applies. The service agreement company shall maintain
487a copy of all rebating schedules for a period of 3 years.
488     Section 11.  Subsection (13) of section 634.282, Florida
489Statutes, is amended, and subsection (17) is added to that
490section, to read:
491     634.282  Unfair methods of competition and unfair or
492deceptive acts or practices defined.-The following methods,
493acts, or practices are defined as unfair methods of competition
494and unfair or deceptive acts or practices:
495     (13)  ILLEGAL DEALINGS IN PREMIUMS; EXCESS OR REDUCED
496CHARGES FOR MOTOR VEHICLE SERVICE AGREEMENTS.-
497     (a)  Knowingly collecting any sum as a premium or charge
498for a motor vehicle service agreement, which is not then
499provided, or is not in due course to be provided, subject to
500acceptance of the risk by a service agreement company or an
501insurer, by a motor vehicle service agreement issued by a
502service agreement company or an insurer as permitted by this
503part.
504     (b)  Knowingly collecting as a premium or charge for a
505motor vehicle service agreement any sum in excess of or less
506than the premium or charge applicable to such motor vehicle
507service agreement, in accordance with the applicable
508classifications and rates as filed with the office, and as
509specified in the motor vehicle service agreement. However, there
510is no violation of this subsection if excess premiums or charges
511are refunded to the service agreement holder within 45 days
512after receipt of the agreement by the service agreement company
513or if the licensed sales representative's commission is reduced
514by the amount of any premium undercharge.
515     (17)  FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO
516SALE.-Failing to provide a consumer with a complete sample copy
517of the terms and conditions of the service agreement prior to
518the time of sale upon a request for the same by the consumer. A
519service agreement company may comply with this subsection by
520providing the consumer with a sample copy of the terms and
521conditions of the service agreement or by directing the consumer
522to a website that displays a complete sample of the terms and
523conditions of the service agreement.
524
525No provision of this section shall be deemed to prohibit a
526service agreement company or a licensed insurer from giving to
527service agreement holders, prospective service agreement
528holders, and others for the purpose of advertising, any article
529of merchandise having a value of not more than $25.
530     Section 12.  Section 634.301, Florida Statutes, as amended
531by section 1 of chapter 2007-235, Laws of Florida, is amended to
532read:
533     634.301  Definitions.-As used in this part, the term:
534     (1)  "Gross written premiums" means the total amount of
535premiums, paid for the entire period of the home warranty,
536inclusive of commissions, for which the association is obligated
537under home warranties issued.
538     (2)  "Home improvement" means major remodeling, enclosure
539of a garage, addition of a room, addition of a pool, and other
540like items that add value to the residential property. The term
541does not include normal maintenance for items such as painting,
542reroofing, and other like items subject to normal wear and tear.
543     (2)(3)  "Home warranty" or "warranty" means any contract or
544agreement:
545     (a)  Offered in connection with the sale of residential
546property;
547     (b)  Offered in connection with a loan of $5,000 or more
548which is secured by residential property that is the subject of
549the warranty, but not in connection with the sale of such
550property;
551     (c)  Offered in connection with a home improvement of
552$7,500 or more for residential property that is the subject of
553the warranty, but not in connection with the sale of such
554property; or
555     (d)  Offered in connection with a home inspection service
556as defined under s. 468.8311(4) or a mold assessment as defined
557under s. 468.8411(3);
558
559whereby a person undertakes to indemnify the warranty holder
560against the cost of repair or replacement, or actually furnishes
561repair or replacement, of any structural component or appliance
562of a home, necessitated by wear and tear or an inherent defect
563of any such structural component or appliance or necessitated by
564the failure of an inspection to detect the likelihood of any
565such loss. However, this part does not prohibit the giving of
566usual performance guarantees by either the builder of a home or
567the manufacturer or seller of an appliance, as long as no
568identifiable charge is made for such guarantee. This part does
569not permit the provision of indemnification against
570consequential damages arising from the failure of any structural
571component or appliance of a home, which practice constitutes the
572transaction of insurance subject to all requirements of the
573insurance code. This part does not apply to service contracts
574entered into between consumers and nonprofit organizations or
575cooperatives the members of which consist of condominium
576associations and condominium owners and which perform repairs
577and maintenance for appliances or maintenance of the residential
578property. This part does not apply to a contract or agreement
579offered in connection with a sale of residential property by a
580warranty association in compliance with part III, provided such
581contract or agreement only relates to the systems and appliances
582of the covered residential property and does not cover any
583structural component of the residential property.
584     (3)(4)  "Home warranty association" means any corporation
585or any other organization, other than an authorized insurer,
586issuing home warranties.
587     (4)(5)  "Impaired" means having liabilities in excess of
588assets.
589     (5)(6)  "Insolvent" means the inability of a corporation to
590pay its debts as they become due in the usual course of its
591business.
592     (6)(7)  "Insurance code" means the Florida Insurance Code.
593     (7)(8)  "Insurer" means any property or casualty insurer
594duly authorized to transact such business in this state.
595     (8)(9)  "Listing period" means the period of time
596residential property is listed for sale with a licensed real
597estate broker, beginning on the date the residence is first
598listed for sale and ending on either the date the sale of the
599residence is closed, the date the residence is taken off the
600market, or the date the listing contract with the real estate
601broker expires.
602     (9)(10)  "Net assets" means the amount by which the total
603statutory assets of an association exceed the total liabilities
604of the association.
605     (10)(11)  "Person" includes an individual, company,
606corporation, association, insurer, agent, and every other legal
607entity.
608     (11)(12)  "Premium" means the total consideration received,
609or to be received, by an insurer or home warranty association
610for or related to the issuance and delivery of any binder or
611warranty, including any charges designated as assessments or
612fees for policies, surveys, inspections, or service or any other
613charges.
614     (12)(13)  "Sales representative" means any person with whom
615an insurer or home inspection or warranty association has a
616contract and who is utilized by such insurer or association for
617the purpose of selling or issuing home warranties. The term
618includes all employees of an insurer or association engaged
619directly in the sale or issuance of home warranties.
620     (13)(14)  "Structural component" means the roof, plumbing
621system, electrical system, foundation, basement, walls,
622ceilings, or floors of a home.
623     Section 13.  Subsection (4) is added to section 634.303,
624Florida Statutes, to read:
625     634.303  License required.-
626     (4)  Any person who provides, offers to provide, or holds
627oneself out as providing or offering to provide home warranties
628in this state or from this state without holding a subsisting
629license commits, in addition to any other violation, a
630misdemeanor of the first degree, punishable as provided in s.
631775.082 or s. 775.083.
632     Section 14.  Paragraph (f) of subsection (2) of section
633634.308, 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
636suspended, revoked, or not renewed if it is determined that such
637association:
638     (f)  Has issued warranty contracts which renewal contracts
639provide that the cost of renewal exceeds the then-current cost
640for new warranty contracts, unless the increase is supported by
641the claims history or claims cost data, or impose a fee for
642inspection of the premises.
643     Section 15.  Section 634.312, Florida Statutes, is amended
644to read:
645     634.312  Forms; required provisions and procedures Filing;
646approval of forms.-
647     (1)  No warranty form or related form shall be issued or
648used in this state unless it has been filed with and approved by
649the office. Also upon application for a license, the office
650shall require the applicant to submit for approval each
651brochure, pamphlet, circular, form letter, advertisement, or
652other sales literature or advertising communication addressed or
653intended for distribution. Approval of the application
654constitutes approval of such documents, unless the applicant has
655consented otherwise in writing. The office shall disapprove any
656document which is untrue, deceptive, or misleading or which
657contains misrepresentations or omissions of material facts.
658     (a)  After an application has been approved, a licensee is
659not required to submit brochures or advertisement to the office
660for approval; however, a licensee may not have published, and a
661person may not publish, any brochure or advertisement which is
662untrue, deceptive, or misleading or which contains
663misrepresentations or omissions of material fact.
664     (b)  For purposes of this section, brochures and
665advertising includes, but is not limited to, any report,
666circular, public announcement, certificate, or other printed
667matter or advertising material which is designed or used to
668solicit or induce any persons to enter into any home warranty
669agreement.
670     (2)  Every such filing shall be made not less than 30 days
671in advance of issuance or use. At the expiration of 30 days from
672date of filing, a form so filed shall be deemed approved unless
673prior thereto it has been affirmatively approved or disapproved
674by written order of the office.
675     (3)  The office shall not approve any such form that
676imposes a fee for inspection of the premises.
677     (1)(4)  All home warranty contracts are assignable in a
678consumer transaction and must contain a statement informing the
679purchaser of the home warranty of her or his right to assign it,
680at least within 15 days from the date the home is sold or
681transferred, to a subsequent retail purchaser of the home
682covered by the home warranty and all conditions on such right of
683transfer. The home warranty company may charge an assignment fee
684not to exceed $40. Home warranty assignments include, but are
685not limited to, the assignment from a home builder who purchased
686the home warranty to a subsequent home purchaser.
687     (2)(5)  Subject to the insurer's or home warranty
688association's requirement as to payment of premium, every home
689warranty shall be mailed or delivered to the warranty holder not
690later than 45 days after the effectuation of coverage, and the
691application is part of the warranty contract document.
692     (3)(6)  All home warranty contracts must state in
693conspicuous, boldfaced type that the home warranty may not
694provide listing period coverage free of charge.
695     (4)(7)  All home warranty contracts must disclose any
696exclusions, restrictions, or limitations on the benefits offered
697or the coverage provided by the home warranty contract in
698boldfaced type, and must contain, in boldfaced type, a statement
699on the front page of the contract substantially similar to the
700following: "Certain items and events are not covered by this
701contract. Please refer to the exclusions listed on page .... of
702this document."
703     (5)(8)  Each home warranty contract shall contain a
704cancellation provision. Any home warranty agreement may be
705canceled by the purchaser within 10 days after purchase. The
706refund must be 100 percent of the gross premium paid, less any
707claims paid on the agreement. A reasonable administrative fee
708may be charged, not to exceed 5 percent of the gross premium
709paid by the warranty agreement holder. After the home warranty
710agreement has been in effect for 10 days, if the contract is
711canceled by the warranty holder, a return of premium shall be
712based upon 90 percent of unearned pro rata premium less any
713claims that have been paid. If the contract is canceled by the
714association for any reason other than for fraud or
715misrepresentation, a return of premium shall be based upon 100
716percent of unearned pro rata premium, less any claims paid on
717the agreement.
718     Section 16.  Section 634.3123, Florida Statutes, is amended
719to read:
720     634.3123  Noncompliant Grounds for disapproval of forms.-
721The office may order a home warranty association to stop using
722any contract shall disapprove any form that filed under s.
723634.312 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
726incorporation is otherwise permissible, any inconsistent,
727ambiguous, or misleading clauses or exceptions or conditions
728which deceptively affect the risk purported to be assumed in the
729general coverage of the contract.
730     (3)  Has any title, heading, or other indication of its
731provisions which is misleading.
732     (4)  Is printed or otherwise reproduced in such a manner as
733to render any material provision of the form illegible.
734     (5)  Provides that the cost of renewal exceeds the then-
735current cost for new warranty contracts, unless the increase is
736supported by the claims history or claims cost data, or impose a
737fee for inspection of the premises.
738     Section 17.  Section 634.314, Florida Statutes, is amended
739to read:
740     634.314  Examination of associations.-
741     (1)  Home warranty associations licensed under this part
742may shall be subject to periodic examinations by the office, in
743the same manner and subject to the same terms and conditions as
744apply to insurers under part II of chapter 624 of the insurance
745code.
746     (2)  The office shall determine whether to conduct an
747examination of a home warranty association by considering:
748     (a)  The amount of time that the association has been
749continuously licensed and operating under the same management
750and control.
751     (b)  The association's history of compliance with
752applicable law.
753     (c)  The number of consumer complaints against the
754association.
755     (d)  The financial condition of the association,
756demonstrated by the financial reports submitted pursuant to s.
757634.313.
758     Section 18.  Paragraph (b) of subsection (1) of section
759634.3205, Florida Statutes, is amended to read:
760     634.3205  Rebating; when allowed.-
761     (1)  No sales representative shall rebate any portion of
762his or her commission except as follows:
763     (b)  The rebate shall be in accordance with a rebating
764schedule filed with and approved by the sales representative
765with the home warranty association issuing the home warranty to
766which the rebate applies. The home warranty association shall
767maintain a copy of all rebating schedules for a period of 3
768years.
769     Section 19.  Subsection (8) of section 634.336, Florida
770Statutes, is amended, and subsection (9) is added to that
771section, to read:
772     634.336  Unfair methods of competition and unfair or
773deceptive acts or practices defined.-The following methods,
774acts, or practices are defined as unfair methods of competition
775and unfair or deceptive acts or practices:
776     (8)  COERCION OF DEBTORS.-When a home warranty is sold as
777authorized by s. 634.301(3)(b):
778     (a)  Requiring, as a condition precedent or condition
779subsequent to the lending of the money or the extension of the
780credit or any renewal thereof, that the person to whom such
781credit 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
784SALE.-Failing to provide a consumer with a complete sample copy
785of the terms and conditions of the home warranty contract prior
786to the time of sale upon a request for the same by the consumer.
787A home warranty association may comply with this subsection by
788providing the consumer with a sample copy of the terms and
789conditions of the home warranty contract or by directing the
790consumer to a website that displays a complete sample of the
791terms and conditions of the contract.
792     Section 20.  Section 634.344, Florida Statutes, is amended
793to read:
794     634.344  Coercion of debtor prohibited.-
795     (1)  When a home warranty is sold in connection with the
796lending of money as authorized by s. 634.301(3)(b), a no person
797may not require, as a condition precedent or condition
798subsequent to the lending of the money or the extension of the
799credit or any renewal thereof, that the person to whom such
800money or credit is extended purchase a home warranty.
801     (2)  When a home warranty is purchased in connection with
802the lending of money as authorized by s. 634.301(3)(b), the
803insurer or home warranty association or the sales representative
804of the insurer or home warranty association shall advise the
805borrower or purchaser in writing that Florida law prohibits the
806lender from requiring the purchase of a home warranty as a
807condition precedent or condition subsequent to the making of the
808loan.
809     Section 21.  Subsection (5) of section 634.401, Florida
810Statutes, is amended to read:
811     634.401  Definitions.-As used in this part, the term:
812     (5)  "Indemnify" means to undertake repair or replacement
813of a consumer product, or pay compensation for such repair or
814replacement by cash, check, store credit, gift card, or other
815similar means, in return for the payment of a segregated
816premium, when such consumer product suffers operational failure.
817     Section 22.  Subsection (5) is added to section 634.403,
818Florida Statutes, to read:
819     634.403  License required.-
820     (5)  Any person who provides, offers to provide, or holds
821oneself out as providing or offering to provide a service
822warranty in this state or from this state without holding a
823subsisting license commits, in addition to any other violation,
824a misdemeanor of the first degree, punishable as provided in s.
825775.082 or s. 775.083.
826     Section 23.  Paragraph (e) of subsection (3) of section
827634.406, Florida Statutes, is amended to read:
828     634.406  Financial requirements.-
829     (3)  An association will not be required to establish an
830unearned premium reserve if it has purchased contractual
831liability insurance which demonstrates to the satisfaction of
832the office that 100 percent of its claim exposure is covered by
833such policy. The contractual liability insurance shall be
834obtained from an insurer that holds a certificate of authority
835to do business within the state. For the purposes of this
836subsection, the contractual liability policy shall contain the
837following provisions:
838     (e)  In the event the issuer of the contractual liability
839policy is fulfilling the service warranty covered by policy and
840in the event the service warranty holder cancels the service
841warranty, it is the responsibility of the contractual liability
842policy issuer to effectuate a full refund of unearned premium to
843the consumer. This refund shall be subject to the cancellation
844fee provisions of s. 634.414(3). The salesperson or agent shall
845refund to the contractual liability policy issuer the unearned
846pro rata commission.
847     Section 24.  Section 634.414, Florida Statutes, is amended
848to read:
849     634.414  Cancelation provisions required Filing; approval
850of forms.-
851     (1)  No service warranty form or related form shall be
852issued or used in this state unless it has been filed with and
853approved by the office. Upon application for a license, the
854office shall require the applicant to submit for approval each
855brochure, pamphlet, circular, form letter, advertisement, or
856other sales literature or advertising communication addressed or
857intended for distribution. The office shall disapprove any
858document which is untrue, deceptive, or misleading or which
859contains misrepresentations or omissions of material facts.
860     (a)  After an application has been approved, a licensee is
861not required to submit brochures or advertisement to the office
862for approval; however, a licensee may not have published, and a
863person may not publish, any brochure or advertisement which is
864untrue, deceptive, or misleading or which contains
865misrepresentations or omissions of material fact.
866     (b)  For purposes of this section, brochures and
867advertising includes, but is not limited to, any report,
868circular, public announcement, certificate, or other printed
869matter or advertising material which is designed or used to
870solicit or induce any persons to enter into any service warranty
871agreement.
872     (2)  Each filing shall be made not less than 30 days in
873advance of its issuance or use. At the expiration of 30 days
874from date of filing, a form so filed shall be deemed approved
875unless prior thereto it has been affirmatively disapproved by
876written order of the office.
877     (3)  Each service warranty contract shall contain a
878cancellation provision. If In the event the contract is canceled
879by the warranty holder, return of premium shall be based upon no
880less than 90 percent of unearned pro rata premium less any
881claims that have been paid or less the cost of repairs made on
882behalf of the warranty holder. If In the event the contract is
883canceled by the association, return of premium shall be based
884upon 100 percent of unearned pro rata premium, less any claims
885paid or the cost of repairs made on behalf of the warranty
886holder.
887     (4)  The name of the service warranty association issuing
888the contract must be more prominent than any other company name
889or program name on the service warranty form or sales brochure.
890     Section 25.  Section 634.4145, Florida Statutes, is amended
891to read:
892     634.4145  Noncompliant Grounds for disapproval of forms.-
893The office may order a service warranty association to stop
894using any contract shall disapprove any form that filed under s.
895634.414 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
899substantially illegible; or
900     (4)  Contains provisions which are unfair or inequitable or
901which encourage misrepresentation.
902     Section 26.  Section 634.415, Florida Statutes, is amended
903to read:
904     634.415  Tax on premiums; annual statement; reports;
905quarterly statements.-
906     (1)  In addition to the license fees provided in this part
907for service warranty associations and license taxes as provided
908in the insurance code as to insurers, each such association and
909insurer shall, annually on or before March 1, file with the
910office its annual statement, in the form prescribed by the
911commission, showing all premiums or assessments received by it
912in connection with the issuance of service warranties in this
913state during the preceding calendar year and using accounting
914principles which will enable the office to ascertain whether the
915financial requirements set forth in s. 634.406 have been
916satisfied.
917     (2)  The gross amount of premiums and assessments is
918subject to the sales tax imposed by s. 212.0506.
919     (3)  The office may levy a fine of up to $100 a day for
920each day an association neglects to file the annual statement in
921the form and within the time provided by this part. The amount
922of the fine shall be established by rules adopted by the
923commission. The office shall deposit all sums collected by it
924under this section to the credit of the Insurance Regulatory
925Trust Fund.
926     (4)  In addition to an annual statement, the office may
927require of licensees, under oath and in the form prescribed by
928it, quarterly statements or special reports which it deems
929necessary to the proper supervision of licensees under this
930part. For manufacturers as defined in s. 634.401, the office
931shall require only the annual audited financial statements of
932the warranty operations and corporate reports as filed by the
933manufacturer with the Securities and Exchange Commission,
934provided that the office may require additional reporting by
935manufacturers upon a showing by the office that annual reporting
936is insufficient to protect the interest of purchasers of service
937warranty agreements in this state or fails to provide sufficient
938proof of the financial status required by this part.
939     (4)(5)  The office may suspend or revoke the license of a
940service warranty association failing to file its annual
941statement or quarterly report when due.
942     (5)(6)  The commission may by rule require each service
943warranty association to submit to the office, as the commission
944may designate, all or part of the information contained in the
945financial statements and reports required by this section in a
946computer-readable form compatible with the electronic data
947processing system specified by the office.
948     Section 27.  Section 634.416, Florida Statutes, is amended
949to read:
950     634.416  Examination of associations.-
951     (1)(a)  Service warranty associations licensed under this
952part may be are subject to periodic examination by the office,
953in the same manner and subject to the same terms and conditions
954that apply to insurers under part II of chapter 624.
955     (b)  The office shall determine whether to conduct an
956examination of a service warranty association by considering:
957     1.  The amount of time that the association has been
958continuously licensed and operating under the same management
959and control.
960     2.  The association's history of compliance with applicable
961law.
962     3.  The number of consumer complaints against the
963association.
964     4.  The financial condition of the association,
965demonstrated by the financial reports submitted pursuant to s.
966634.313.
967     (2)  However, The rate charged a service warranty
968association by the office for examination may be adjusted to
969reflect the amount collected for the Form 10-K filing fee as
970provided in this section.
971     (3)  On or before May 1 of each year, an association may
972submit to the office the Form 10-K, as filed with the United
973States Securities and Exchange Commission pursuant to the
974Securities Exchange Act of 1934, as amended. Upon receipt and
975review of the most current Form 10-K, the office may waive the
976examination requirement; if the office determines not to waive
977the examination, such examination will be limited to that
978examination necessary to ensure compliance with this part. The
979Form 10-K shall be accompanied by a filing fee of $2,000 to be
980deposited into the Insurance Regulatory Trust Fund.
981     (4)(2)  The office is not required to examine an
982association that has less than $20,000 in gross written premiums
983as reflected in its most recent annual statement. The office may
984examine such an association if it has reason to believe that the
985association may be in violation of this part or is otherwise in
986an unsound financial condition. If the office examines an
987association that has less than $20,000 in gross written
988premiums, the examination fee may not exceed 5 percent of the
989gross written premiums of the association.
990     Section 28.  Paragraph (b) of subsection (1) of section
991634.4225, Florida Statutes, is amended to read:
992     634.4225  Rebating; when allowed.-
993     (1)  No sales representative shall rebate any portion of
994his or her commission except as follows:
995     (b)  The rebate shall be in accordance with a rebating
996schedule filed with and approved by the sales representative
997with the association issuing the service warranty to which the
998rebate applies. The association shall maintain a copy of all
999rebating schedules for a period of 3 years.
1000     Section 29.  Subsection (9) is added to section 634.436,
1001Florida Statutes, to read:
1002     634.436  Unfair methods of competition and unfair or
1003deceptive acts or practices defined.-The following methods,
1004acts, or practices are defined as unfair methods of competition
1005and unfair or deceptive acts or practices:
1006     (9)  FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO
1007SALE.-Failing to provide a consumer with a complete sample copy
1008of the terms and conditions of the service warranty prior to
1009before the time of sale upon a request for the same by the
1010consumer. A service warranty association may comply with this
1011subsection by providing the consumer with a sample copy of the
1012terms and conditions of the warranty contract or by directing
1013the consumer to a website that displays a complete sample of the
1014terms and conditions of the contract.
1015     Section 30.  Subsections (2), (3), (4), and (5) of section
1016634.136, Florida Statutes, are amended to read:
1017     634.136  Office records required.-Each licensed motor
1018vehicle service contract company, as a minimum requirement for
1019permanent office records, shall maintain:
1020     (2)  Memorandum journals showing the blank service
1021agreement forms issued to the company salespersons and recording
1022the delivery of the forms to the dealer.
1023     (3)  Memorandum journals showing the service contract forms
1024received by the motor vehicle dealers and indicating the
1025disposition of the forms by the dealer.
1026     (2)(4)  A detailed service agreement register, in numerical
1027order by service agreement number, of agreements in force, which
1028register shall include the following information: service
1029agreement number, date of issue, issuing dealer, name of
1030agreement holder, whether the agreement is covered by
1031contractual liability insurance or the unearned premium reserve
1032account, description of motor vehicle, service agreement period
1033and mileage, gross premium, commission to salespersons,
1034commission to dealer, and net premium.
1035     (3)(5)  A detailed claims register, in numerical order by
1036service agreement number, which register shall include the
1037following information: service agreement number, date of issue,
1038date of claim, type of claim, issuing dealer, amount of claim,
1039date claim paid, and, if applicable, disposition other than
1040payment and reason therefor.
1041     Section 31.  Subsections (4) and (5) of section 634.313,
1042Florida 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
1045require of licensees, under oath and in the form prescribed by
1046it, such additional regular or special reports as it may deem
1047necessary to the proper supervision of licensees under this
1048part.
1049     (4)(5)  The commission may by rule require each home
1050warranty association to submit to the office, as the commission
1051may designate, all or part of the information contained in the
1052financial reports required by this section in a computer-
1053readable form compatible with the electronic data processing
1054system specified by the office.
1055     Section 32.  Sections 634.1216 and 634.3126, Florida
1056Statutes, are repealed.
1057     Section 33.  This act shall take effect July 1, 2010.


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