AB 1883: Insurance: home protection contracts.

Existing law regulates home protection companies, which issue contracts for the repair or replacement of a component, system, or appliance of a home. Existing law prohibits a person from issuing or offering a home protection contract unless the person holds a home protection company license issued by the Department of Insurance, as specified.

This bill would, notwithstanding the above-described provisions, prohibit a person or entity from selling or offering any form of a home protection contract unless the person is licensed as an insurance agent or broker, falls under a specified exemption, or has been issued a license under the provisions described below.

The bill would provide for the licensure of an applicant and require specified information be submitted to the Insurance Commissioner along with a written application, including an application fee, as specified, and a certificate by a home protection company or insurer stating that it is satisfied that the named applicant is trustworthy and competent to act as an agent on its behalf.

The bill would authorize an endorsee, as defined, to act on behalf of, or under the supervision of, a licensee, as defined, in matters relating to selling or offering home protection contracts, if specified conditions are met. The bill would require the licensee to provide specified training to an endorsee prior to allowing the endorsee to sell or offer home protection contracts. The bill would also require a licensee to provide the training materials with the initial application for a license, and whenever the materials are changed, for review and approval by the department.

The bill would prohibit the licensee or endorsee from selling or offering a home protection contract under specified circumstances, including through telephone solicitation, as defined. The bill would prohibit the licensee from specified actions, including selling a contract without providing the prospective customer with specified information. The bill would also authorize the commissioner to take specified disciplinary actions for a violation of these provisions after notice and hearing, including suspending or revoking the license of the licensee.

The bill would authorize the commissioner to send an application for renewal to the licensee, through mail or an electronic delivery method, not less than 60 days before a license period, as defined, expires. The bill would place the responsibility for renewal on the licensee, whether or not they receive an application from the commissioner, and would require the licensee to pay a renewal fee. The bill would require the commissioner to impose a penalty fee equal to ¹/₂ of the renewal fee for a renewal filed after the license period expires, unless specified circumstances occur.