Bill Text: IA SSB1223 | 2019-2020 | 88th General Assembly | Introduced
Bill Title: A bill for an act modifying provisions applicable to certain service contract providers regulated by the commissioner of insurance, providing fees, making penalties applicable, making an appropriation, and including effective date provisions.
Spectrum: Committee Bill
Status: (N/A - Dead) 2019-03-06 - Subcommittee recommends amendment and passage. [SSB1223 Detail]
Download: Iowa-2019-SSB1223-Introduced.html
Senate
Study
Bill
1223
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
COMMERCE
BILL
BY
CHAIRPERSON
CHAPMAN)
A
BILL
FOR
An
Act
modifying
provisions
applicable
to
certain
service
1
contract
providers
regulated
by
the
commissioner
of
2
insurance,
providing
fees,
making
penalties
applicable,
3
making
an
appropriation,
and
including
effective
date
4
provisions.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
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Section
1.
Section
523C.1,
Code
2019,
is
amended
to
read
as
1
follows:
2
523C.1
Definitions.
3
As
used
in
this
chapter
,
unless
the
context
otherwise
4
requires:
5
1.
“Commissioner”
means
the
commissioner
of
insurance.
6
2.
“Custodial
account”
means
an
account
established
by
7
agreement
between
a
licensed
service
company
and
a
custodian
8
under
section
523C.5
.
9
3.
“Custodial
agreement”
means
an
agreement
entered
into
10
between
a
licensed
service
company
and
a
custodian
under
11
section
523C.5
.
12
4.
“Custodian”
means
an
institution
meeting
the
requirements
13
established
by
the
commissioner
which
institution
has
entered
14
into
a
custodial
agreement
or
reserve
account
agreement
with
a
15
licensed
service
company.
16
5.
“Depository”
means
an
institution
designated
by
the
17
commissioner
as
an
authorized
custodian
for
purposes
of
18
sections
523C.5
and
523C.11
.
19
6.
2.
“Licensed
service
company”
means
a
service
company
20
which
is
licensed
by
the
commissioner
pursuant
to
this
chapter
.
21
3.
“Maintenance
agreement”
means
a
contract
of
any
duration
22
that
provides
for
scheduled
maintenance
to
property.
23
4.
“Motor
vehicle”
means
any
self-propelled
vehicle
subject
24
to
registration
under
chapter
321.
25
5.
“Motor
vehicle
manufacturer”
means
any
of
the
following:
26
a.
A
person
who
manufactures
or
produces
motor
vehicles
27
and
sells
the
motor
vehicles
under
the
person’s
trade
name
or
28
label.
29
b.
A
person
who
is
a
wholly
owned
subsidiary
of
any
person
30
who
manufactures
or
produces
motor
vehicles.
31
c.
A
person
who
holds
a
one
hundred
percent
ownership
32
interest
in
another
person
who
manufactures
or
produces
motor
33
vehicles.
34
d.
A
person
who
does
not
manufacture
or
produce
motor
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_____
vehicles,
but
for
which
motor
vehicles
are
sold
under
the
1
person’s
trade
name
or
label.
2
e.
A
person
who
manufactures
or
produces
motor
vehicles,
3
but
the
motor
vehicles
are
sold
under
the
trade
name
or
label
4
of
another
person.
5
f.
A
person
who
does
not
manufacture
or
produce
motor
6
vehicles,
but
who
licenses
the
use
of
the
person’s
trade
name
7
or
label
to
another
person
pursuant
to
a
written
contract,
who
8
then
sells
motor
vehicles
under
the
trade
name
or
label
of
the
9
licensor.
10
6.
“Motor
vehicle
service
contract”
means
a
contract
or
11
agreement
given
for
consideration
over
and
above
the
lease
12
or
purchase
price
of
a
new
or
used
motor
vehicle
having
a
13
gross
vehicle
weight
rating
of
less
than
sixteen
thousand
14
pounds,
that
undertakes
to
perform
the
repair,
replacement,
15
or
maintenance
of
the
motor
vehicle,
or
indemnification
for
16
such
repair,
replacement,
or
maintenance,
for
the
operation
17
or
structural
failure
of
the
motor
vehicle
due
to
a
defect
18
in
materials,
workmanship,
or
normal
wear
and
tear,
with
or
19
without
additional
provisions
for
the
incidental
payment
20
of
indemnity
under
limited
circumstances,
including
but
21
not
limited
to
motor
vehicle
towing,
rental,
emergency
road
22
service,
and
road
hazard
protection.
“Motor
vehicle
service
23
contract”
also
includes
a
contract
or
agreement
sold
for
24
separate
consideration
for
a
specific
duration
that
provides
25
for
any
of
the
following
services
or
products:
26
a.
The
repair
or
replacement
of
motor
vehicle
tires
or
27
wheels
that
are
damaged
as
a
result
of
contact
with
road
28
hazards,
including
but
not
limited
to
potholes,
rocks,
wood
29
debris,
metal
parts,
glass,
plastic,
curbs,
or
composite
30
scraps.
31
b.
The
removal
of
dents
or
creases
on
a
motor
vehicle
32
under
a
process
that
does
not
use
paint
or
affect
the
existing
33
paint
finish,
and
without
sanding,
bonding,
or
replacing
motor
34
vehicle
body
panels.
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c.
The
repair
or
replacement
of
motor
vehicle
windshields
1
that
are
damaged
as
a
result
of
contact
with
road
hazards.
2
d.
The
replacement
of
motor
vehicle
keys
or
key
fobs
in
the
3
event
that
such
device
becomes
inoperable,
lost,
or
stolen.
4
e.
Any
other
service
or
product
approved
by
the
5
commissioner.
6
7.
“Premium”
means
the
consideration
paid
to
an
insurer
for
7
a
reimbursement
insurance
policy.
8
7.
8.
“Record”
means
the
same
as
defined
in
section
516E.1
9
information
stored
or
preserved
in
any
medium,
including
in
10
an
electronic
or
paper
format.
A
“record”
includes
but
is
11
not
limited
to
documents,
books,
publications,
accounts,
12
correspondence,
memoranda,
agreements,
computer
files,
film,
13
microfilm,
photographs,
and
audio
or
visual
tapes
.
14
9.
“Reimbursement
insurance
policy”
means
a
contractual
15
liability
insurance
policy
issued
to
a
service
company
that
16
either
provides
reimbursement
to
a
service
company
under
the
17
terms
of
insured
service
contracts
issued
or
sold
by
the
18
service
company
or,
in
the
event
of
nonperformance
by
the
19
service
company,
pays,
on
behalf
of
the
service
company,
all
20
covered
contractual
obligations
incurred
by
the
service
company
21
under
the
terms
of
the
insured
service
contracts
issued
or
sold
22
by
the
service
company.
23
8.
“Reserve
account
agreement”
means
an
agreement
entered
24
into
between
a
licensed
service
company
and
a
depository
under
25
section
523C.11
.
26
9.
10.
“Residential
service
contract”
means
a
contract
or
27
agreement
between
a
residential
customer
and
a
service
company
28
which
undertakes,
for
a
predetermined
fee
and
for
a
specified
29
any
period
of
time,
to
service,
maintain,
repair,
or
replace
,
30
or
indemnify
expenses
for
all
or
any
part
of
the
operational
or
31
structural
components,
appliances,
or
electrical,
mechanical,
32
plumbing,
heating,
cooling,
or
air-conditioning
systems
of
33
residential
property
containing
not
more
than
four
dwelling
34
units
in
the
state
which
fails
due
to
normal
wear
or
tear
or
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inherent
defect.
“Residential
service
contract”
also
includes
1
a
contract
which
provides
for
the
service,
repair,
replacement,
2
or
maintenance
of
property
for
damage
resulting
from
power
3
surges,
roof
leakage,
and
accidental
damage
from
repair
work
.
4
10.
12.
“Service
company”
means
a
person
who
issues
and
5
performs,
or
arranges
to
perform,
is
contractually
obligated
to
6
perform
services
pursuant
to
a
motor
vehicle
service
contract
7
or
residential
service
contract.
8
13.
“Service
contract”
means
a
motor
vehicle
service
9
contract
or
residential
service
contract.
10
14.
“Warranty”
means
a
statement
made
solely
by
the
11
manufacturer,
importer,
or
seller
of
property
or
services
12
without
consideration,
that
is
not
negotiated
or
separated
from
13
the
sale
of
the
product
and
is
incidental
to
the
sale
of
the
14
product,
and
that
guarantees
indemnity
for
defective
parts,
15
mechanical
or
electrical
breakdown,
and
labor
or
other
remedial
16
measures,
such
as
repair
or
replacement
of
the
property
or
17
repetition
of
services.
18
Sec.
2.
Section
523C.2,
Code
2019,
is
amended
to
read
as
19
follows:
20
523C.2
License
required.
21
1.
A
person
shall
not
issue
a
,
offer
for
sale,
or
sell
a
22
motor
vehicle
service
contract
or
residential
service
contract
23
or
undertake
or
arrange
to
perform
services
pursuant
to
a
24
residential
service
contract
in
this
state
unless
the
person
25
is
a
corporation
or
other
form
of
organization
approved
by
the
26
commissioner
by
rule
and
is
a
licensed
as
a
service
company
27
under
this
chapter
.
28
2.
The
licensure
requirements
of
this
chapter
shall
not
29
apply
to
any
person
who
provides
support
services
or
works
30
under
the
direction
of
a
licensed
service
company
in
connection
31
with
the
issuance,
offer
for
sale,
or
sale
of
a
service
32
contract
in
this
state,
including
but
not
limited
to
a
person
33
who
provides
marketing,
administrative,
or
technical
support.
34
Sec.
3.
Section
523C.3,
Code
2019,
is
amended
to
read
as
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follows:
1
523C.3
Application
for
license.
2
1.
Application
for
a
license
as
a
service
company
shall
3
be
made
to
and
filed
with
the
commissioner
on
forms
approved
4
by
the
commissioner
and
shall
include
all
of
the
following
5
information:
6
a.
The
name
and
principal
address
of
the
applicant.
7
b.
The
state
of
incorporation
of
the
applicant.
8
c.
The
name
and
address
of
the
applicant’s
registered
agent
9
for
service
of
process
within
Iowa.
10
d.
A
certificate
of
good
standing
for
the
applicant
issued
11
by
the
secretary
of
state
and
dated
not
more
than
thirty
days
12
prior
to
the
date
of
the
application.
13
e.
Evidence
of
compliance
with
section
523C.5.
14
f.
A
copy
of
each
motor
vehicle
service
contract
form
to
be
15
used
or
issued
in
this
state,
if
applicable.
16
g.
A
copy
of
each
residential
service
contract
form
to
be
17
used
or
issued
in
this
state,
if
applicable.
18
2.
The
application
shall
be
accompanied
by
all
of
the
19
following:
20
a.
A
certificate
of
good
standing
for
the
applicant
issued
21
by
the
secretary
of
state
and
dated
not
more
than
thirty
days
22
prior
to
the
date
of
the
application.
23
b.
A
surety
bond,
a
copy
of
the
receipt
from
the
treasurer
24
of
state
that
a
cash
deposit
has
been
made,
or
a
copy
of
a
25
custodial
agreement
as
provided
in
section
523C.5
.
26
c.
A
copy
of
the
most
recent
financial
statement,
including
27
balance
sheets
and
related
statements
of
income,
of
the
28
applicant,
prepared
in
accordance
with
generally
accepted
29
accounting
principles,
audited
by
a
certified
public
accountant
30
and
dated
not
more
than
twelve
months
prior
to
the
date
of
the
31
application.
32
d.
An
affidavit
of
an
authorized
officer
of
the
service
33
company
stating
the
number
of
contracts
issued
by
the
service
34
company
in
the
preceding
calendar
year,
and
stating
that
the
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net
worth
of
the
service
company
satisfies
the
requirements
of
1
section
523C.6
.
2
e.
a.
A
license
fee
in
the
amount
of
two
five
hundred
fifty
3
dollars.
4
b.
If
applicable,
a
fee
in
the
amount
of
fifty
dollars
5
for
each
motor
vehicle
service
contract
form
submitted
in
an
6
application
as
provided
in
subsection
1,
paragraph
“f”
.
7
3.
If
the
application
contains
the
required
information
and
8
is
accompanied
by
the
items
set
forth
in
subsection
2
,
and
if
9
the
net
worth
requirements
of
section
523C.6
are
satisfied,
as
10
evidenced
by
the
audited
financial
statements,
the
commissioner
11
shall
issue
the
license.
If
the
form
of
application
is
not
12
properly
completed
or
if
the
required
accompanying
documents
13
are
not
furnished
or
in
proper
form,
the
commissioner
shall
14
not
issue
the
license
and
shall
give
the
applicant
written
15
notice
of
the
grounds
for
not
issuing
the
license.
A
notice
16
of
license
denial
shall
be
accompanied
by
a
refund
of
fifty
17
percent
of
the
fee
submitted
with
the
application.
18
4.
Fees
collected
under
this
section
shall
be
deposited
as
19
provided
in
section
505.7
523C.24
.
20
Sec.
4.
Section
523C.4,
Code
2019,
is
amended
to
read
as
21
follows:
22
523C.4
License
expiration
and
renewal.
23
1.
Each
license
issued
under
this
chapter
shall
expire
24
on
June
30
next
be
valid
for
a
period
of
one
year
and
shall
25
be
renewed
by
August
31
of
each
year
following
the
date
of
26
issuance.
If
the
service
company
maintains
in
force
the
surety
27
bond
described
in
section
523C.5
and
if
its
license
is
not
28
subject
to
or
under
suspension
or
revocation
under
section
29
523C.9
,
its
license
shall
be
renewed
by
the
commissioner
upon
30
receipt
by
the
commissioner
on
or
before
the
expiration
date
31
of
a
renewal
application
accompanied
by
the
items
required
by
32
section
523C.3,
subsection
2
,
paragraphs
“b”,
“c”,
“d”,
and
“e”
,
33
and
section
523C.15
.
34
2.
An
application
for
renewal
shall
include
the
information
35
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required
for
an
initial
license
as
described
in
section
523C.3,
1
subsection
1.
2
3.
The
renewal
application
shall
be
accompanied
by
all
of
3
the
following:
4
a.
A
license
renewal
fee
in
the
amount
of
five
hundred
5
dollars.
6
b.
If
applicable,
a
fee
in
the
amount
of
three
percent
of
7
the
aggregate
amount
of
payments
the
licensee
received
for
the
8
sale
or
issuance
of
residential
service
contracts
in
this
state
9
during
the
preceding
fiscal
year,
provided
that
such
fee
shall
10
be
no
less
than
one
hundred
dollars
and
no
greater
than
fifty
11
thousand
dollars.
12
c.
If
applicable,
a
fee
in
the
amount
of
fifty
dollars
13
for
each
motor
vehicle
service
contract
form
submitted
in
a
14
renewal
application
as
provided
in
section
523C.3,
subsection
15
1,
paragraph
“f”
.
16
4.
If
the
commissioner
denies
renewal
of
the
license,
the
17
denial
shall
be
in
writing
setting
forth
the
grounds
for
denial
18
and
shall
be
accompanied
by
a
refund
of
fifty
percent
of
the
19
license
renewal
fee.
20
5.
In
addition
to
the
annual
license
renewal
requirements
21
as
provided
in
this
section,
a
licensee
shall
report
to
the
22
commissioner
any
material
change
in
information
submitted
by
23
the
licensee
in
its
initial
license
application
which
has
24
not
been
reported
to
the
commissioner,
including
a
change
in
25
contact
information,
a
change
in
ownership,
or
any
other
change
26
which
substantially
affects
the
licensee’s
operations
in
this
27
state.
28
Sec.
5.
Section
523C.5,
Code
2019,
is
amended
by
striking
29
the
section
and
inserting
in
lieu
thereof
the
following:
30
523C.5
Financial
responsibility
——
demonstration
31
requirements.
32
In
order
to
assure
the
faithful
performance
of
a
service
33
company’s
obligations
to
its
contract
holders
in
this
state,
34
a
licensed
service
company
shall
demonstrate
financial
35
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26
S.F.
_____
responsibility
to
the
commissioner
by
satisfying
one
of
the
1
following,
as
evidenced
by
the
service
company:
2
1.
Insuring
all
motor
vehicle
service
contracts
and
3
residential
service
contracts
offered
for
sale
in
this
state
4
under
a
reimbursement
insurance
policy
that
complies
with
5
section
523C.6.
6
2.
Doing
both
of
the
following:
7
a.
Maintaining
a
funded
reserve
account
for
the
service
8
company’s
obligations
under
any
issued
and
outstanding
service
9
contracts
in
this
state,
in
an
amount
no
less
than
forty
10
percent
of
gross
consideration
received,
less
claims
paid,
for
11
the
sale
of
all
service
contracts
issued
and
in
force
in
this
12
state.
The
reserve
account
shall
be
subject
to
examination
and
13
review
by
the
commissioner.
14
b.
Placing
in
trust
with
the
commissioner
a
financial
15
security
deposit
in
an
amount
no
less
than
five
percent
of
16
the
gross
consideration
received
by
the
service
company,
17
less
claims
paid,
for
the
sale
of
all
motor
vehicle
service
18
contracts
and
residential
service
contracts
issued
and
in
force
19
in
this
state,
but
not
less
than
twenty-five
thousand
dollars,
20
consisting
of
one
of
the
following:
21
(1)
Cash.
22
(2)
Securities
of
the
type
eligible
for
deposit
by
insurers
23
authorized
to
transact
business
in
this
state.
24
(3)
Certificates
of
deposit.
25
(4)
Another
form
of
security
as
prescribed
by
the
26
commissioner
by
rule.
27
3.
Doing
both
of
the
following:
28
a.
Maintaining,
on
its
own
or
together
with
a
parent
29
company,
a
minimum
net
worth
or
stockholders’
equity
of
one
30
hundred
million
dollars
or
more.
31
b.
Upon
request
from
the
commissioner,
providing
either:
32
(1)
A
copy
of
the
service
company’s
financial
statements.
33
(2)
If
the
service
company’s
financial
statements
are
34
consolidated
with
those
of
its
parent
company,
a
copy
of
the
35
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_____
parent
company’s
most
recent
form
10-K
or
form
20-F
filed
with
1
the
federal
securities
and
exchange
commission
within
the
last
2
calendar
year,
or
if
the
parent
company
does
not
file
with
3
the
federal
securities
and
exchange
commission,
a
copy
of
the
4
parent
company’s
audited
financial
statements
showing
a
net
5
worth
of
at
least
one
hundred
million
dollars.
If
the
service
6
company’s
financial
statements
are
consolidated
with
those
of
7
its
parent
company,
the
service
company
shall
also
provide
a
8
copy
of
a
written
agreement
by
the
parent
company
guaranteeing
9
the
obligations
of
the
service
company
under
motor
vehicle
10
service
contracts
and
residential
service
contracts
issued
and
11
outstanding
by
the
service
company
in
this
state.
12
Sec.
6.
Section
523C.6,
Code
2019,
is
amended
by
striking
13
the
section
and
inserting
in
lieu
thereof
the
following:
14
523C.6
Reimbursement
insurance
policy
requirements
——
insurer
15
qualifications.
16
1.
Requirements.
A
reimbursement
insurance
policy
insuring
17
a
motor
vehicle
service
contract
or
residential
service
18
contract
issued,
sold,
or
offered
for
sale
in
this
state
shall
19
provide
for
all
of
the
following:
20
a.
The
reimbursement
insurance
policy
shall
obligate
the
21
insurer
that
issued
such
policy
to
reimburse
or
pay
on
behalf
22
of
the
service
company
any
covered
sums
that
the
service
23
company
is
legally
obligated
to
pay
according
to
the
terms
of
24
the
contract
or,
in
the
event
of
nonperformance
by
the
service
25
company,
provide
the
service
which
the
service
company
is
26
legally
obligated
to
perform
according
to
the
terms
of
the
27
service
contract,
which
shall
be
conspicuously
stated
in
the
28
reimbursement
insurance
policy.
29
b.
The
reimbursement
insurance
policy
shall
entitle
a
30
service
contract
holder
to
make
a
claim
directly
against
the
31
insurance
policy
if
the
service
company
fails
to
pay
or
provide
32
service
on
a
claim
within
sixty
days
after
proof
of
loss
is
33
filed
with
the
service
company.
34
c.
The
insurer
that
issued
a
reimbursement
insurance
policy
35
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26
S.F.
_____
shall
be
deemed
to
have
received
the
premiums
upon
the
payment
1
of
the
total
purchase
price
of
the
service
contract
by
the
2
service
contract
holder.
3
2.
Termination.
As
applicable,
an
insurer
that
issued
a
4
reimbursement
insurance
policy
shall
not
terminate
the
policy
5
unless
a
written
notice
has
been
received
by
the
commissioner
6
and
by
each
applicable
service
company.
The
notice
shall
7
fix
the
date
of
termination
at
a
date
no
earlier
than
ten
8
days
after
receipt
of
the
notice
by
the
commissioner.
The
9
termination
of
a
reimbursement
insurance
policy
shall
not
10
reduce
the
issuer’s
responsibility
for
a
service
contract
11
issued
by
an
insured
service
company
prior
to
the
date
of
12
termination.
13
3.
Indemnification
or
subrogation.
This
section
does
14
not
prevent
or
limit
the
right
of
an
insurer
that
issued
a
15
reimbursement
insurance
policy
to
seek
indemnification
from
or
16
subrogation
against
a
service
company
if
the
insurer
pays
or
17
is
obligated
to
pay
a
service
contract
holder
sums
that
the
18
service
company
was
obligated
to
pay
pursuant
to
the
provisions
19
of
a
service
contract
or
pursuant
to
a
contractual
agreement.
20
4.
Premium
tax
liability.
Payments
for
the
purchase
price
21
of
a
service
contract
by
a
service
contract
holder
shall
be
22
exempt
from
premium
tax.
However,
premiums
shall
be
subject
23
to
premium
tax.
24
5.
Qualifications
of
insurer.
An
insurer
issuing
a
25
reimbursement
insurance
policy
under
this
chapter
shall
be
26
authorized,
registered,
or
otherwise
permitted
to
transact
27
business
in
this
state
and
shall
meet
one
of
the
following
28
requirements:
29
a.
At
the
time
the
policy
is
filed
with
the
commissioner,
30
and
continuously
thereafter,
the
insurer
maintains
surplus
31
as
to
policyholders
and
paid-in
capital
of
at
least
fifteen
32
million
dollars
and
annually
files
copies
of
the
insurer’s
33
financial
statements,
national
association
of
insurance
34
commissioners
annual
statement,
and
actuarial
certification,
if
35
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26
S.F.
_____
required
and
filed
in
the
insurer’s
state
of
domicile.
1
b.
At
the
time
the
policy
is
filed
with
the
commissioner
and
2
continuously
thereafter,
the
insurer
does
all
of
the
following:
3
(1)
Maintains
surplus
as
to
policyholders
and
paid-in
4
capital
of
less
than
fifteen
million
dollars
but
at
least
ten
5
million
dollars.
6
(2)
Demonstrates
to
the
satisfaction
of
the
commissioner
7
that
the
insurer
maintains
a
ratio
of
net
written
premiums,
8
wherever
written,
to
surplus
as
to
policyholders
and
paid-in
9
capital
of
not
greater
than
three
to
one.
10
(3)
Files
copies
annually
of
the
insurer’s
financial
11
statements,
national
association
of
insurance
commissioners
12
annual
statement,
and
actuarial
certification,
if
required
and
13
filed
in
the
insurer’s
state
of
domicile.
14
Sec.
7.
Section
523C.7,
Code
2019,
is
amended
by
striking
15
the
section
and
inserting
in
lieu
thereof
the
following:
16
523C.7
Disclosure
to
service
contract
holders
——
contract
17
form
——
required
provisions.
18
1.
A
motor
vehicle
service
contract
or
residential
service
19
contract
shall
not
be
issued,
sold,
or
offered
for
sale
in
this
20
state
unless
the
service
company
does
all
of
the
following:
21
a.
Provides
a
receipt
for
the
purchase
of
the
service
22
contract
to
the
service
contract
holder.
23
b.
Provides
a
copy
of
the
service
contract
to
the
service
24
contract
holder
within
a
reasonable
period
of
time
after
the
25
date
of
purchase
of
the
service
contract.
26
c.
Provides
a
complete
sample
copy
of
the
terms
and
27
conditions
of
the
service
contract
to
the
service
contract
28
holder
prior
to
the
date
of
purchase.
A
service
company
may
29
comply
with
this
paragraph
by
providing
the
service
contract
30
holder
with
a
complete
sample
copy
of
the
terms
or
conditions
31
of
the
service
contract,
or
directing
the
service
contract
32
holder
to
an
internet
site
containing
a
complete
sample
copy
of
33
the
terms
and
conditions
of
the
service
contract.
34
2.
A
motor
vehicle
service
contract
or
residential
service
35
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_____
contract
issued,
sold,
or
offered
for
sale
in
this
state
shall
1
comply
with
all
of
the
following,
as
applicable:
2
a.
A
service
contract
shall
be
written
in
clear,
3
understandable
language
in
at
least
eight
point
font.
4
b.
(1)
A
service
contract
insured
by
a
reimbursement
5
insurance
policy
as
provided
in
section
523C.5,
subsection
1,
6
shall
include
a
statement
in
substantially
the
following
form:
7
Obligations
of
the
service
company
under
this
service
8
contract
are
guaranteed
under
a
reimbursement
insurance
policy.
9
If
the
service
company
fails
to
pay
or
provide
service
on
a
10
claim
within
sixty
days
after
proof
of
loss
has
been
filed
with
11
the
service
company,
the
service
contract
holder
is
entitled
12
to
make
a
claim
directly
against
the
reimbursement
insurance
13
policy.
14
(2)
A
service
contract
insured
by
a
reimbursement
insurance
15
policy
shall
conspicuously
state
the
name
and
address
of
the
16
issuer
of
the
reimbursement
insurance
policy
for
that
service
17
contract.
A
claim
against
a
reimbursement
insurance
policy
18
shall
also
include
a
claim
for
return
of
the
unearned
service
19
company
fee
paid
for
the
service
contract.
20
c.
A
service
contract
not
insured
under
a
reimbursement
21
insurance
policy
shall
contain
a
statement
in
substantially
the
22
following
form:
23
Obligations
of
the
service
company
under
this
service
24
contract
are
backed
by
the
full
faith
and
credit
of
the
service
25
company
and
you
are
not
guaranteed
under
a
reimbursement
26
insurance
policy.
27
d.
A
service
contract
shall
state
the
name
and
address
of
28
the
service
company
obligated
to
perform
services
under
the
29
contract,
and
shall
conspicuously
identify
the
service
company,
30
any
third-party
administrator,
and
the
service
contract
holder
31
to
the
extent
that
the
name
and
address
of
the
service
contract
32
holder
has
been
furnished.
The
identities
of
such
parties
are
33
not
required
to
be
printed
on
the
contract
in
advance
and
may
34
be
added
to
the
contract
at
the
time
of
sale.
35
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_____
e.
A
service
contract
shall
clearly
state
the
total
purchase
1
price
of
the
service
contract
and
the
terms
under
which
the
2
service
contract
is
sold.
The
total
purchase
price
is
not
3
required
to
be
printed
on
the
contract
in
advance
and
may
be
4
added
to
the
contract
at
the
time
of
sale.
5
f.
If
prior
approval
of
repair
work
is
required,
a
service
6
contract
shall
conspicuously
describe
the
procedure
for
7
obtaining
prior
approval
and
for
making
a
claim,
including
a
8
toll-free
telephone
number
for
claim
service,
and
the
procedure
9
for
obtaining
emergency
repairs
performed
outside
of
normal
10
business
hours.
11
g.
A
service
contract
shall
clearly
state
the
existence
of
12
any
deductible
amount.
13
h.
A
service
contract
shall
specify
the
merchandise
14
or
services,
or
both,
to
be
provided
and
any
limitations,
15
exceptions,
or
exclusions.
16
i.
A
service
contract
shall
clearly
state
the
conditions
on
17
which
the
use
of
substitute
parts
or
services
will
be
allowed.
18
Such
conditions
shall
comply
with
applicable
state
and
federal
19
laws.
20
j.
A
service
contract
shall
clearly
state
any
terms,
21
restrictions,
or
conditions
governing
the
transferability
of
22
the
service
contract.
23
k.
A
service
contract
shall
clearly
state
the
terms
and
24
conditions
governing
the
cancellation
of
the
contract
prior
25
to
the
termination
or
expiration
date
of
the
contract
by
the
26
service
company
or
the
service
contract
holder.
If
the
service
27
company
cancels
the
contract,
the
service
company
shall
mail
a
28
written
notice
of
termination
to
the
service
contract
holder
29
at
least
fifteen
days
before
the
date
of
the
termination.
30
Prior
notice
of
cancellation
by
the
service
company
is
not
31
required
if
the
reason
for
cancellation
is
nonpayment
of
the
32
purchase
price,
a
material
misrepresentation
by
the
service
33
contract
holder
to
the
service
company
or
its
administrator,
or
34
a
substantial
breach
of
duties
by
the
service
contract
holder
35
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_____
relating
to
the
covered
product
or
its
use.
The
notice
of
1
cancellation
shall
state
the
effective
date
of
the
cancellation
2
and
the
reason
for
the
cancellation.
If
a
service
contract
3
is
canceled
by
the
service
company
for
any
reason
other
than
4
nonpayment
of
the
purchase
price,
the
service
company
shall
5
refund
the
service
contract
holder
in
an
amount
equal
to
one
6
hundred
percent
of
the
unearned
purchase
price
paid,
less
any
7
claims
paid.
The
service
company
may
also
charge
a
reasonable
8
administrative
fee
in
an
amount
no
greater
than
ten
percent
of
9
the
total
purchase
price.
10
l.
(1)
A
service
contract
shall
permit
the
original
11
service
contract
holder
that
purchased
the
contract
to
cancel
12
and
return
the
service
contract
within
at
least
twenty
days
13
of
the
date
of
mailing
the
service
contract
to
the
service
14
contract
holder
or
within
at
least
ten
days
after
delivery
of
15
the
service
contract
if
the
service
contract
is
delivered
at
16
the
time
of
sale
of
the
service
contract,
or
within
a
longer
17
period
of
time
as
permitted
under
the
service
contract.
If
no
18
claim
has
been
made
under
the
service
contract
prior
to
its
19
return,
the
service
contract
is
void
and
the
full
purchase
20
price
of
the
service
contract
shall
be
refunded
to
the
service
21
contract
holder.
A
ten
percent
penalty
shall
be
added
each
22
month
to
a
refund
that
is
not
paid
to
a
service
contract
holder
23
within
thirty
days
of
the
return
of
the
service
contract
to
the
24
service
company.
25
(2)
If
the
service
contract
holder
cancels
the
service
26
contract
outside
of
the
applicable
time
as
provided
in
27
subparagraph
(1)
or
after
a
claim
is
made
under
the
service
28
contract,
the
service
company
shall
refund
the
service
29
contract
holder
in
an
amount
equal
to
one
hundred
percent
of
30
the
unearned
purchase
price
paid,
less
any
claims
paid.
The
31
service
company
may
also
charge
a
reasonable
administrative
fee
32
in
an
amount
no
greater
than
ten
percent
of
the
total
purchase
33
price.
34
m.
A
service
contract
shall
set
forth
all
of
the
obligations
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and
duties
of
the
service
contract
holder,
including
but
not
1
limited
to
the
duty
to
protect
against
any
further
damage,
2
and
the
obligation
to
follow
an
owner’s
manual
or
any
other
3
required
service
or
maintenance.
4
n.
A
service
contract
shall
clearly
state
whether
or
not
5
the
contract
provides
for
or
excludes
consequential
damages
6
or
preexisting
conditions,
if
applicable.
A
service
contract
7
may,
but
is
not
required
to,
cover
damage
resulting
from
rust,
8
corrosion,
or
damage
caused
by
a
part
or
system
which
is
not
9
covered
under
the
service
contract.
10
o.
A
service
contract
shall
clearly
state
the
fee,
if
any,
11
charged
on
the
service
contract
holder
for
making
a
service
12
call.
13
p.
A
service
contract
shall
state
the
name
and
address
of
14
the
commissioner.
15
Sec.
8.
Section
523C.9,
Code
2019,
is
amended
to
read
as
16
follows:
17
523C.9
Suspension
or
revocation
of
license.
18
1.
In
addition
to
the
license
revocation
provisions
of
19
section
523C.5
,
the
The
commissioner
may
suspend
or
revoke
or
20
refuse
to
renew
the
license
of
a
service
company
for
any
of
the
21
following
grounds:
22
a.
1.
The
service
company
violated
a
lawful
order
of
the
23
commissioner
or
any
provision
of
this
chapter
.
24
b.
2.
The
service
company
failed
to
pay
any
final
judgment
25
rendered
against
it
in
this
state
within
sixty
days
after
the
26
judgment
became
final.
27
c.
3.
The
service
company
has
without
just
cause
refused
28
to
perform
or
negligently
or
incompetently
performed
services
29
required
to
be
performed
under
its
residential
service
30
contracts
and
the
refusal,
or
negligent
or
incompetent
31
performance
has
occurred
with
such
frequency,
as
the
32
commissioner
determines,
as
to
indicate
the
general
business
33
practices
of
the
service
company.
34
d.
4.
The
service
company
violated
section
523C.13
.
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e.
5.
The
service
company
failed
to
maintain
the
net
worth
1
required
by
section
523C.6
demonstrate
financial
responsibility
2
pursuant
to
section
523C.5
.
3
f.
The
service
company
failed
to
maintain
the
reserve
4
account
required
by
section
523C.11
.
5
g.
6.
The
service
company
failed
to
maintain
its
corporate
6
certificate
of
good
standing
with
the
secretary
of
state.
7
2.
If
the
license
of
a
service
company
is
terminated
8
under
section
523C.5
because
of
failure
to
maintain
bond,
the
9
commissioner
shall
give
written
notice
of
termination
to
the
10
service
company.
The
notice
shall
include
the
effective
date
11
of
the
termination.
12
Sec.
9.
Section
523C.12,
Code
2019,
is
amended
to
read
as
13
follows:
14
523C.12
Optional
examination.
15
The
commissioner
or
a
designee
of
the
commissioner
may
16
make
an
examination
of
the
books
and
records
of
a
service
17
company,
including
copies
of
contracts
and
records
of
claims
18
and
expenditures,
and
verify
its
assets,
liabilities,
and
19
reserves.
The
actual
costs
of
the
examination
shall
be
borne
20
by
the
service
company.
The
costs
of
an
examination
under
this
21
section
shall
not
exceed
an
amount
equal
to
ten
percent
of
the
22
service
company’s
reported
net
income
in
the
previous
fiscal
23
year.
24
Sec.
10.
Section
523C.13,
Code
2019,
is
amended
to
read
as
25
follows:
26
523C.13
Prohibited
acts
or
practices
——
penalty.
27
1.
A
licensed
service
company
which
offers
motor
28
vehicle
service
contracts
for
sale
in
this
state,
or
its
29
representative,
shall
not,
directly
or
indirectly,
represent
in
30
any
manner,
whether
by
written
solicitation
or
telemarketing,
a
31
false,
deceptive,
or
misleading
statement
with
respect
to
any
32
of
the
following:
33
a.
Statements
regarding
the
service
company’s
affiliation
34
with
a
motor
vehicle
manufacturer
or
importer.
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b.
Statements
regarding
the
validity
or
expiration
of
a
1
warranty.
2
c.
Statements
regarding
a
motor
vehicle
service
contract
3
holder’s
coverage
under
a
motor
vehicle
service
contract,
4
including
statements
suggesting
that
the
service
contract
5
holder
must
purchase
a
new
service
contract
in
order
to
6
maintain
coverage
under
the
existing
service
contract
or
7
warranty.
8
2.
The
commissioner
shall
may
adopt
rules
which
regulate
9
motor
vehicle
service
contracts
and
residential
service
10
contracts
to
prohibit
misrepresentation,
false
advertising,
11
defamation,
boycotts,
coercion,
intimidation,
false
statements
12
and
entries
and
unfair
discrimination
or
practices.
If
the
13
commissioner
finds
that
a
person
has
violated
the
rules
adopted
14
under
this
section
,
the
commissioner
may
order
any
or
all
of
15
the
following:
16
1.
a.
Payment
of
a
civil
penalty
of
not
more
than
one
17
thousand
dollars
for
each
and
every
act
or
violation,
but
not
18
to
exceed
an
aggregate
of
ten
thousand
dollars,
unless
the
19
person
knew
or
reasonably
should
have
known
the
person
was
in
20
violation
of
this
section
,
in
which
case
the
penalty
shall
be
21
not
more
than
five
thousand
dollars
for
each
and
every
act
or
22
violation,
but
not
to
exceed
an
aggregate
penalty
of
fifty
23
thousand
dollars
in
any
one
six-month
period.
The
commissioner
24
shall,
if
it
finds
the
violations
of
this
section
were
25
directed,
encouraged,
condoned,
ignored,
or
ratified
by
the
26
employer
of
such
person,
assess
such
penalty
to
the
employer
27
and
not
such
person.
Any
civil
penalties
collected
under
this
28
subsection
shall
be
deposited
as
provided
in
section
505.7
.
29
2.
b.
Suspension
or
revocation
of
the
license
of
a
person,
30
if
the
person
knew
or
reasonably
should
have
known
the
person
31
was
in
violation
of
this
section
.
32
Sec.
11.
Section
523C.15,
Code
2019,
is
amended
to
read
as
33
follows:
34
523C.15
Annual
report.
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A
licensed
service
company
that
does
not
demonstrate
1
financial
responsibility
by
insuring
service
contracts
under
a
2
reimbursement
insurance
policy
as
provided
in
section
523C.5,
3
subsection
1,
shall
file
with
the
commissioner
an
annual
4
report
within
ninety
days
of
the
close
of
its
fiscal
no
later
5
than
August
31
of
each
year.
The
annual
report
shall
be
in
6
a
form
prescribed
by
the
commissioner
and
contain
all
of
the
7
following:
8
1.
A
current
financial
statement
including
a
balance
9
sheet
and
statement
of
operations
prepared
in
accordance
with
10
generally
accepted
accounting
principles
and
certified
by
an
11
independent
certified
public
accountant.
12
2.
The
number
of
motor
vehicle
service
contracts
or
13
residential
service
contracts
issued
during
the
preceding
14
fiscal
year,
the
number
canceled
or
expired
during
the
year,
15
the
number
in
effect
at
year
end
and
the
amount
of
residential
16
service
contract
fees
received.
17
3.
Any
other
information
relating
to
the
performance
and
18
solvency
of
the
residential
service
company
required
by
the
19
commissioner.
20
Sec.
12.
Section
523C.16,
Code
2019,
is
amended
to
read
as
21
follows:
22
523C.16
Exclusions.
23
This
chapter
does
not
apply
to
any
of
the
following:
24
1.
A
performance
guarantee
given
by
a
builder
of
a
residence
25
or
the
manufacturer
or
seller
or
lessor
of
residential
property
26
if
no
identifiable
charge
is
made
for
the
guarantee.
27
2.
A
residential
service
contract,
guarantee
or
warranty
28
between
a
residential
customer
and
a
service
company
which
will
29
perform
the
work
itself
and
not
through
subcontractors
for
30
the
service,
repair
or
replacement
of
residential
property,
31
appliances
,
or
electrical,
plumbing,
heating,
cooling
or
32
air-conditioning
systems.
33
3.
A
contract
between
a
service
company
issuing
residential
34
service
contracts
and
a
person
who
actually
performs
the
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maintenance,
repairs,
or
replacements
of
structural
components,
1
or
appliances,
or
electrical,
plumbing,
heating,
cooling,
or
2
air-conditioning
systems,
if
someone
other
than
the
service
3
company
actually
performs
these
functions.
4
4.
A
residential
service
contract,
guarantee
or
warranty
5
issued
by
a
retail
merchant
to
a
retail
customer,
guaranteeing
6
or
warranting
the
repair,
service
or
replacement
of
appliances
7
or
electrical,
plumbing,
heating,
cooling
or
air-conditioning
8
systems
sold
by
said
retail
merchant.
9
5.
A
residential
service
contract,
guarantee,
or
warranty
10
issued
by
a
manufacturer,
third
party,
or
retail
company,
11
covering
the
repair,
maintenance,
or
replacement
of
residential
12
property,
individual
appliances
,
and
other
individual
items
13
of
merchandise
marketed
and
sold
by
a
retail
company,
in
the
14
ordinary
course
of
business.
15
6.
A
motor
vehicle
service
contract
issued
by
the
16
manufacturer
or
importer
of
the
motor
vehicle
covered
by
17
the
service
contract
or
to
any
third
party
acting
in
an
18
administrative
capacity
on
the
manufacturer’s
behalf
in
19
connection
with
that
service
contract.
20
7.
A
residential
service
contract
involving
residential
21
property
containing
more
than
four
dwelling
units.
22
8.
A
warranty.
23
9.
A
motor
vehicle
service
contract
issued,
offered
for
24
sale,
or
sold
to
any
person
other
than
a
consumer.
25
10.
A
maintenance
agreement.
26
Sec.
13.
Section
523C.17,
Code
2019,
is
amended
to
read
as
27
follows:
28
523C.17
Lending
institutions
,
service
companies,
and
29
insurance
companies
.
30
A
bank,
savings
association,
insurance
company,
or
other
31
lending
institution
shall
not
require
the
purchase
of
a
motor
32
vehicle
service
contract
or
residential
service
contract
as
a
33
condition
of
a
loan
or
the
sale
of
any
property
.
A
service
34
company
or
an
insurer,
either
directly
or
indirectly,
as
a
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part
of
any
real
property
transaction
in
which
a
residential
1
service
contract
will
be
issued,
purchased,
or
acquired,
shall
2
not
require
that
a
residential
service
contract
be
issued,
3
purchased,
or
acquired
in
conjunction
with
or
as
a
condition
4
precedent
to
the
issuance,
purchase,
or
acquisition,
by
any
5
person,
of
a
policy
of
insurance.
A
lending
institution
shall
6
not
sell
a
residential
service
contract
to
a
borrower
unless
7
the
borrower
signs
an
affidavit
acknowledging
that
the
purchase
8
is
not
required.
Violation
of
this
section
is
punishable
as
9
provided
in
section
523C.13
.
10
Sec.
14.
Section
523C.22,
Code
2019,
is
amended
to
read
as
11
follows:
12
523C.22
Claim
procedures.
13
A
licensed
service
company
shall
promptly
provide
a
written
14
explanation
to
the
residential
customer
service
contract
15
holder
,
describing
the
reasons
for
denying
a
claim
or
for
the
16
offer
of
a
compromise
settlement,
based
on
all
relevant
facts
17
or
legal
requirements
and
referring
to
applicable
provisions
of
18
the
residential
service
contract.
19
Sec.
15.
NEW
SECTION
.
523C.24
Service
company
oversight
20
fund.
21
1.
A
service
company
oversight
fund
is
created
in
the
22
state
treasury
as
a
separate
fund
under
the
control
of
the
23
commissioner.
The
fund
shall
consist
of
all
moneys
deposited
24
in
the
fund
pursuant
to
subsection
2.
25
2.
The
commissioner
shall
deposit
in
the
service
company
26
oversight
fund
an
amount
equal
to
one-third
of
all
licensing,
27
examination,
renewal,
and
inspection
fees
collected
under
this
28
chapter,
provided
that
the
maximum
amount
of
fees
deposited
29
in
the
fund
each
fiscal
year
shall
not
exceed
five
hundred
30
thousand
dollars.
Any
remaining
fees
collected
under
this
31
chapter
and
not
deposited
in
the
service
company
oversight
fund
32
shall
be
deposited
as
provided
in
section
505.7.
33
3.
Moneys
in
the
service
company
oversight
fund
are
34
appropriated
to
the
commissioner
for
the
administration
and
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enforcement
of
this
chapter,
and
for
establishing
service
1
contract
consumer
complaint,
education,
and
outreach
programs.
2
4.
Notwithstanding
section
12C.7,
subsection
2,
interest
or
3
earnings
on
moneys
deposited
in
the
service
company
oversight
4
fund
shall
be
credited
to
the
fund.
Notwithstanding
section
5
8.33,
moneys
credited
to
the
fund
shall
not
revert
at
the
close
6
of
a
fiscal
year.
7
Sec.
16.
REPEAL.
Chapter
516E,
Code
2019,
is
repealed.
8
Sec.
17.
REPEAL.
Sections
523C.8,
523C.8A,
523C.11,
9
523C.14,
and
523C.18,
Code
2019,
are
repealed.
10
Sec.
18.
EMERGENCY
RULES.
The
commissioner
of
insurance
11
may
adopt
emergency
rules
under
section
17A.4,
subsection
3,
12
and
section
17A.5,
subsection
2,
paragraph
“b”,
to
implement
13
the
provisions
of
this
Act
and
the
rules
shall
be
effective
14
immediately
upon
filing
unless
a
later
date
is
specified
in
the
15
rules.
Any
rules
adopted
in
accordance
with
this
section
shall
16
also
be
published
as
a
notice
of
intended
action
as
provided
17
in
section
17A.4.
18
Sec.
19.
EFFECTIVE
DATE.
This
Act,
being
deemed
of
19
immediate
importance,
takes
effect
upon
enactment.
20
EXPLANATION
21
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
22
the
explanation’s
substance
by
the
members
of
the
general
assembly.
23
This
bill
modifies
provisions
applicable
to
certain
service
24
contract
providers
regulated
by
the
commissioner
of
insurance.
25
Current
Code
chapter
516E
requires
service
contract
26
providers,
or
service
companies,
that
offer
motor
vehicle
27
service
contracts
for
sale
in
Iowa
to
register
annually
28
with
the
commissioner,
whereas
service
companies
that
offer
29
residential
service
contracts
must
become
licensed
annually
by
30
the
commissioner
under
Code
chapter
523C.
31
The
bill
repeals
Code
chapter
516E,
incorporates
certain
32
provisions
regarding
service
companies
offering
motor
vehicle
33
service
contracts
in
Code
chapter
523C,
thereby
requiring
any
34
service
company
that
sells
motor
vehicle
service
contracts
35
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or
residential
service
contracts
in
Iowa
to
obtain
an
annual
1
license
from
the
commissioner
under
Code
chapter
523C,
and
2
makes
other
changes
to
provisions
in
Code
chapter
523C.
3
The
bill
makes
several
changes
to
the
definitions
in
Code
4
section
523C.1.
The
bill
removes
definitions
for
“custodial
5
account”,
“custodial
agreement”,
“custodian”,
“depository”,
6
and
“reserve
account
agreement”.
The
bill
adds
definitions
7
for
“maintenance
agreement”,
“motor
vehicle”,
“motor
vehicle
8
manufacturer”,
“motor
vehicle
service
contract”,
“premium”,
9
“reimbursement
insurance
policy”,
“service
contract”,
and
10
“warranty”,
and
modifies
existing
definitions
for
“residential
11
service
contract”
and
“service
contract”,
as
described
in
the
12
bill.
13
The
bill
provides
that
a
person
shall
not
issue,
offer
for
14
sale,
or
sell
a
motor
vehicle
service
contract
or
residential
15
service
contract
in
Iowa
unless
the
person
is
licensed
as
16
a
service
company
under
Code
chapter
523C.
The
licensure
17
requirements
do
not
apply
to
any
person
who
provides
support
18
services
or
works
under
the
direction
of
a
licensed
service
19
company,
including
but
not
limited
to
a
person
who
provides
20
marketing,
administrative,
or
technical
support.
21
The
bill
specifies
the
information
required
in
an
22
application
for
a
license
under
Code
chapter
523C.
In
addition
23
to
such
information,
an
application
shall
be
accompanied
24
by
a
license
fee
of
$500
and
a
fee
of
$50
for
each
motor
25
vehicle
service
contract
form
submitted
in
an
application,
26
if
applicable.
The
commissioner
shall
issue
a
license
if
27
an
application
contains
the
required
information
and
is
28
accompanied
by
the
required
fees.
29
The
bill
provides
that
each
license
issued
under
Code
30
chapter
523C
shall
be
valid
for
a
period
of
one
year
and
shall
31
be
renewed
by
August
31
of
each
year
following
the
date
of
32
issuance.
An
application
for
renewal
shall
require
the
same
33
information
required
in
an
initial
application,
a
$500
license
34
renewal
fee,
and
other
fees
described
in
the
bill
that
apply
to
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certain
service
companies.
In
addition
to
such
requirements,
a
1
service
company
must
report
to
the
commissioner
any
material
2
change
in
information
provided
in
the
initial
application
which
3
has
not
been
reported
to
the
commissioner.
4
The
bill
replaces
Code
section
523C.5,
which
provides
a
5
surety
bond
requirement,
with
a
new
Code
section
which
requires
6
a
service
company
to
demonstrate
financial
responsibility
to
7
the
commissioner.
The
service
company
shall
satisfy
this
8
requirement
by
either
insuring
all
of
its
service
contracts
9
offered
for
sale
in
Iowa
under
a
reimbursement
insurance
10
policy
that
complies
with
the
bill,
maintaining
a
funded
11
reserve
account
and
placing
in
trust
with
the
commissioner
a
12
financial
security
deposit,
or
maintaining
a
minimum
net
worth
13
or
stockholders’
equity
and
providing
certain
information
to
14
the
commissioner
upon
request,
as
described
in
the
bill.
15
The
bill
replaces
Code
section
523C.6,
which
provides
a
net
16
worth
requirement,
with
a
new
Code
section
which
establishes
17
certain
requirements
for
reimbursement
insurance
policies
18
that
insure
service
contracts
offered
for
sale
in
Iowa.
The
19
requirements
include
provisions
regarding
insurer
obligations,
20
service
contract
holder
rights,
termination,
indemnification
21
or
subrogation,
insurance
premium
tax
liability,
and
insurer
22
qualifications,
as
described
in
the
bill.
23
The
bill
replaces
Code
section
523C.7,
which
provides
24
service
contract
filing
and
form
requirements,
with
a
new
25
Code
section
which
establishes
certain
requirements
regarding
26
disclosure
to
service
contract
holders,
service
contract
forms,
27
and
provisions
included
in
service
contracts,
as
described
in
28
the
bill.
29
The
bill
provides
that
the
commissioner
may
suspend
or
30
revoke
or
refuse
to
renew
the
license
of
a
service
company
if
31
the
service
company
violates
a
lawful
order
of
the
commissioner
32
or
any
provision
of
Code
chapter
523C,
fails
to
pay
a
final
33
judgment
in
Iowa
within
60
days,
indicates
negligence,
34
incompetence,
or
a
refusal
to
perform
services,
performs
any
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prohibited
acts
or
practices
described
in
the
bill,
fails
to
1
demonstrate
financial
responsibility
as
provided
in
the
bill,
2
or
fails
to
maintain
its
corporate
certificate
of
good
standing
3
with
the
secretary
of
state.
4
The
bill
provides
that
the
costs
of
a
service
company
5
examination
conducted
at
the
discretion
of
the
commissioner,
6
which
is
paid
by
the
service
company,
shall
not
exceed
an
7
amount
equal
to
10
percent
of
the
service
company’s
reported
8
net
income
in
the
previous
fiscal
year.
9
The
bill
prohibits
a
licensed
service
company
offering
10
for
sale
in
Iowa
motor
vehicle
service
contracts,
or
its
11
representatives,
from
directly
or
indirectly
representing
a
12
false,
deceptive,
or
misleading
statement
with
respect
to
13
certain
statements
regarding
its
affiliation
with
a
motor
14
vehicle
manufacturer
or
importer,
the
validity
or
expiration
15
of
a
warranty,
or
a
service
contract
holder’s
coverage
16
under
a
service
contract,
as
described
in
the
bill.
The
17
bill
also
allows
the
commissioner
to
adopt
rules
regulating
18
service
contract
practices,
any
violation
of
which
allows
the
19
commissioner
to
assess
certain
civil
penalties
or
suspend
or
20
revoke
a
license,
as
described
in
the
bill.
21
The
bill
provides
that
annual
reporting
requirements
22
shall
apply
only
to
licensed
service
companies
which
do
not
23
demonstrate
financial
responsibility
by
insuring
their
service
24
contracts
under
a
reimbursement
insurance
policy.
The
annual
25
report
shall
be
filed
with
the
commissioner
no
later
than
26
August
31
of
each
year
and
shall
contain
certain
information
27
described
in
the
bill.
28
The
bill
excludes
from
regulation
under
Code
chapter
523C,
29
in
addition
to
residential
service
contracts
currently
excluded
30
under
Code
section
523C.16,
certain
motor
vehicle
service
31
contracts
currently
excluded
from
regulation
under
Code
chapter
32
516E,
residential
service
contracts
involving
residential
33
property
containing
more
than
four
dwelling
units,
warranties,
34
motor
vehicle
service
contracts
issued
or
sold
to
any
person
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other
than
a
consumer,
and
maintenance
agreements.
1
The
bill
prohibits
a
lending
institution
from
requiring
the
2
purchase
of
a
motor
vehicle
service
contract
or
residential
3
service
contract
as
a
condition
of
a
loan
or
the
sale
of
4
any
property.
A
violation
of
this
provision
allows
the
5
commissioner
to
assess
certain
civil
penalties
or
suspend
or
6
revoke
a
license,
as
described
in
the
bill.
7
The
bill
establishes
new
Code
section
523C.24,
which
8
creates
a
service
company
oversight
fund
under
the
control
9
of
the
commissioner.
The
fund
shall
consist
of
all
moneys
10
deposited
in
the
fund
pursuant
to
the
bill.
The
bill
directs
11
the
commissioner
to
deposit
in
the
fund
an
amount
equal
12
to
one-third
of
all
licensing,
examination,
renewal,
and
13
inspection
fees
collected
under
Code
chapter
523C,
provided
14
that
the
maximum
amount
deposited
each
fiscal
year
shall
15
not
exceed
$500,000.
Any
remaining
fees
collected
and
not
16
deposited
in
the
fund
shall
be
deposited
in
the
department
17
of
commerce
revolving
fund,
pursuant
to
Code
section
18
505.7.
Moneys
in
the
oversight
fund
are
appropriated
to
the
19
commissioner
for
the
administration
and
enforcement
of
Code
20
chapter
523C,
and
for
establishing
service
contract
consumer
21
complaint,
education,
and
outreach
programs.
Interest
or
22
earnings
on
moneys
deposited
in
the
fund
shall
be
credited
to
23
the
fund.
Moneys
deposited
in
the
fund
shall
not
revert
at
the
24
close
of
a
fiscal
year.
25
In
addition
to
repealing
Code
chapter
516E,
the
bill
26
repeals
the
following
Code
sections:
523C.8
(provisions
27
regarding
rebates
and
commissions),
523C.8A
(prohibition
28
against
the
issuance
of
residential
service
contracts
without
29
consideration),
523C.11
(reserve
account
requirements),
523C.14
30
(provisions
regarding
rate
review),
and
523C.18
(criminal
31
penalty
no
longer
applicable).
The
bill
makes
conforming
32
changes
throughout
Code
chapter
523C.
33
The
bill
allows
the
commissioner
to
adopt
emergency
rules
34
to
implement
the
provisions
of
the
bill.
Any
such
rules
shall
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