The Florida Senate

“Acquisition cost” means all costs specifically associated with acquiring new business, including, but not limited to, underwriting costs, commissions, contingent fees, and cost of sales material.

“Additive product” means any fuel supplement, oil supplement, or any other supplement product added to a motor vehicle for the purpose of increasing or enhancing the performance or improving the longevity of such motor vehicle.

“Affiliate” means any entity which exercises control over or is controlled by the motor vehicle service agreement company or insurer, directly or indirectly, through:

“Gross premium written” means the total amount of premiums paid by the agreement holder, inclusive of commissions, for those agreements which are in force.

“Insurer” means any property or casualty insurer duly authorized to transact such business in this state.

“Motor vehicle” means:

“Motor vehicle manufacturer” means an entity that:

For purposes of this subsection, an entity qualifies as a subsidiary if 25 percent or more of its voting securities are directly or indirectly owned by an entity that manufactures or produces motor vehicles and sells motor vehicles under its own name or label.

“Motor vehicle service agreement” or “service agreement” means any contract or agreement indemnifying the service agreement holder for the motor vehicle listed on the service agreement and arising out of the ownership, operation, and use of the motor vehicle against loss caused by failure of any mechanical or other component part, or any mechanical or other component part that does not function as it was originally intended; however, nothing in this part shall prohibit or affect the giving, free of charge, of the usual performance guarantees by manufacturers or dealers in connection with the sale of motor vehicles. Transactions exempt under s. 624.125 are expressly excluded from this definition and are exempt from the provisions of this part. Service agreements that are sold to persons other than consumers and that cover motor vehicles used for commercial purposes are excluded from this definition and are exempt from regulation under the Florida Insurance Code. The term “motor vehicle service agreement” includes any contract or agreement that provides:

“Motor vehicle service agreement company” or “service agreement company” means any corporation, sole proprietorship, or partnership (other than an authorized insurer) issuing motor vehicle service agreements.

“Net assets” means the amount by which the total statutory assets exceed total liability, except that assets pledged to secure debts not reflected on the books of the service agreement company shall not be included in net assets.

“Person” shall have the same meaning as defined in s. 624.04.

“Premium” means the total amount paid by the agreement holder. No “assessment” or any “membership fee,” “policy fee,” “survey fee,” “inspection fee,” “service fee,” “finance fee,” or similar fee shall be charged by the service agreement company.

“Rate” means the unit charge by which the measure of exposure in a service agreement is multiplied to determine the premium.

“Salesperson” means any dealership, corporation, partnership, or sole proprietorship employed or otherwise retained by an insurer or motor vehicle service agreement company for the purpose of selling or issuing motor vehicle service agreements or for the purpose of soliciting or retaining other salespersons.

“Unearned premium” means that portion of the gross written premium which has not been earned on a straight pro rata basis.

“Unearned premium reserve” means unencumbered assets equal to 50 percent of the unearned premium.

“Unearned gross written premium” means that portion of the gross written premium which has not been amortized or earned on a pro rata basis.

Except as provided in this part, motor vehicle service agreement companies shall be governed by the provisions of this part and shall be exempt from all other provisions of the Florida Insurance Code.

The provisions of chapter 85-321, Laws of Florida, which amended provisions of this part shall be construed as clarifying legislative intent as to the status of persons regulated by the part as insurers.

A person may not transact, administer, or market, attempt to transact, administer, or market, or in any manner hold itself out as transacting, administering, or marketing the service agreement business, on behalf of herself or himself or itself, in this state or from this state unless it is authorized to do so under a subsisting license issued to it by the office. The company shall pay to the office an annual nonrefundable license fee for the license.

No person shall, from offices or by personnel or facilities in this state, solicit applications or otherwise transact service agreement sales in another state or country unless it holds a subsisting license issued to it by the office authorizing it to transact the same kind or kinds of service agreement business in this state.

No person shall transact, administer, or market service agreements unless it holds a subsisting license issued by the office authorizing it to transact the same kind or kinds of service agreement business in this state.

The office may, pursuant to s. 120.569, in its discretion and without advance notice or hearing issue an immediate final order to cease and desist to any person or entity which violates this section. The Legislature finds that a violation of this section constitutes an imminent and immediate threat to the public health, safety, and welfare of the residents of this state.

Any person that is an affiliate of a domestic insurer as defined in chapter 624 is exempt from application of this part if the person does not issue, or market or cause to be marketed, motor vehicle service agreements to residents of this state and does not administer motor vehicle service agreements that were originally issued to residents of this state. The domestic insurer or its wholly owned Florida licensed insurer must be the direct obligor of all motor vehicle service agreements issued by such affiliate or must issue a contractual liability insurance policy to such affiliate that meets the conditions described in s. 634.041(8)(b). If the Office of Insurance Regulation determines, after notice and opportunity for a hearing, that a person’s intentional business practices do not comply with any of the exemption requirements of this subsection, the person shall be subject to this part.

Any person that is an affiliate of a licensed motor vehicle service agreement company which is domiciled in this state and which uses contractual liability insurance to qualify with the requirements of s. 634.041 is exempt from application of this part if the person does not issue, market, or cause to be marketed motor vehicle service agreements to residents of this state and does not administer motor vehicle service agreements that were originally issued to residents of this state. Any affiliated person operating from this state under this subsection must use a licensed motor vehicle service agreement company to administer all service agreements issued by such person in other states. If the office determines, after notice and opportunity for hearing in accordance with s. 120.569, that a person’s intentional business practices do not comply with any part of the exemption requirements of this subsection, the person shall be subject to this part. The motor vehicle service agreement company shall be liable for all acts of and responsible for all violations of this part by an affiliated person operating from this state.

Any person who violates this section commits, in addition to any other violation, a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.

Any service agreement company applying for a license must be a solvent corporation formed under the laws of this state or of another state or district of the United States and must meet minimum requirements under this section.

The service agreement company must furnish the office with evidence satisfactory to the office that the management of the company is competent and trustworthy and can successfully and lawfully manage its affairs.

The service agreement company must make the deposit required under s. 634.052.

A service agreement company may not be licensed to transact service agreement business in this state unless it maintains the required reserves and the required ratio of liquid assets to the required reserves.

A service agreement company may not be licensed to transact service agreement business in this state if, during the 3 years immediately preceding its application for a license, it has violated any requirement of this part or a rule adopted thereunder.

In order to obtain or maintain a license, a service agreement company must have and maintain minimum net assets of $500,000. However, a service agreement company that maintains a gross written premium of less than $750,000 at all times, that has been licensed in Florida for more than 5 years, and that has never had an administrative complaint filed by the office against its operations under this part may reach this net asset requirement in equal increments over a 5-year period beginning on October 1, 1991.

All assets used to maintain the minimum net asset requirement must be maintained in the United States.

In addition to information called for and furnished with its annual statement, a service agreement company must furnish to the office, as soon as reasonably possible, any information as to its transactions or affairs that the office requests in writing. All information furnished pursuant to the request of the office must be verified by the oath of two executive officers of the service agreement company.

A motor vehicle manufacturer complying with the provisions of this part must be an entity formed under the laws of this state or of another state or district of the United States and need comply only with subsections (2) and (10). A motor vehicle manufacturer need not submit fingerprints, background information, or biographical statements for any individual except those serving as officers or directors of the applicant entity. A motor vehicle manufacturer need not comply with s. 634.081(5). Motor vehicle manufacturers are subject to all other applicable provisions of this part.

ASSETS.—In any determination of the financial condition of a service agreement company, there shall be allowed as assets only those assets that are owned by the service agreement company and which assets consist of:

The office, upon determining that a service agreement company’s asset has not been evaluated according to applicable law or that it does not qualify as an asset, shall require the service agreement company to properly reevaluate the asset or replace the asset with an asset suitable to the office within 30 days of written notification by the office of this determination, if the removal of the asset from the organization’s assets would impair the company’s solvency.

ASSETS NOT ALLOWED.—In addition to assets impliedly excluded by the provisions of subsection (1), the following assets expressly shall not be allowed as assets in any determination of the financial condition of a service agreement company:

The office may, however, allow all or a portion of such asset, at values to be determined by the office, if deemed by the office to be available for the payment of losses and claims.

LIABILITIES.—In any determination of the financial condition of a service agreement company, liabilities to be charged against its assets shall include, but not be limited to:

The office, upon determining that the service agreement company has failed to report liabilities that should have been reported, shall require a correct report which reflects the proper liabilities to be submitted by the service agreement company to the office within 10 working days of receipt of written notification.

Has been in continuous operation for 10 years or more and has net assets of the greater of $5 million or 2 times the minimum net asset requirements of the motor vehicle service agreement company. In any determination of the financial condition of the guaranteeing organization, the definitions of assets and liabilities, set forth in this part shall apply, except that investments in or loans to any organizations guaranteed by the guaranteeing organization shall be excluded from net assets. If the guaranteeing organization is sponsoring more than one organization, the net asset requirement shall be increased by a multiple equal to the number of such organizations.

Submits a guarantee that is approved by the office as meeting the requirements of this part, provided that the written guarantee contains a provision which requires that the guarantee be irrevocable unless the guaranteeing organization can demonstrate to the office that the cancellation of the guarantee will not result in the net assets of the motor vehicle service agreement company falling below its minimum net asset requirement and the office approves cancellation of the guarantee.

Initially submits its audited financial statements, certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles, covering its two most current annual accounting periods.

Submits annually, within 3 months after the end of its fiscal year, an audited financial statement certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles. The office may, as it deems necessary, require quarterly financial statements from the guaranteeing organization.

The filings made by a guarantee organization pursuant to this section are confidential and exempt from the provisions of s. 119.07(1).

Nothing in this section shall be construed to prevent the use of such filings in judicial or administrative proceedings when ordered to be produced by appropriate subpoena or by order of the court or an administrative law judge.

To assure the faithful performance of its obligations to its members or subscribers, each motor vehicle service agreement company shall, prior to issuance of its license by the office, deposit with the department securities of the type eligible for deposit by insurers under s. 625.52 and having at all times a market value of not less than $200,000; however, service agreement companies maintaining an unearned gross written premium of less than $750,000 shall have on deposit with the department $100,000. After 1 year from the date of initial licensure, a service agreement company may file a request for the release of a portion of the deposit and thereafter requests may be made quarterly. A request may be granted only after the office has received and approved the company’s current quarterly or annual financial statement. However, at no time shall the deposit be less than $100,000.

In addition to the deposits otherwise required pursuant to this section, the office may, after notice and hearing, require any company for good cause shown to deposit and maintain deposited in trust for the protection of the contract holders and creditors of the company, for such time as the office deems necessary, securities eligible for such deposit under s. 625.52 having a value of not less than the amount which the office determines is necessary, which amount shall be neither less than $100,000, nor more than $500,000, depending on the obligation of the company in this state.

The state shall be responsible for the safekeeping of all securities deposited with the department under this act. Such securities shall not, on account of being in this state, be subject to taxation, but shall be held exclusively and solely to guarantee the faithful performance by the company of its obligations to its members or subscribers.

The depositing company shall, during its solvency, have the right to exchange or substitute other securities of like quality and value for securities so on deposit, to receive the interest and other income accruing on such securities, and to inspect the deposit at all reasonable times.

Such deposit shall be maintained unimpaired as long as the company continues in business or from offices in this state. Whenever the company ceases to do business in or from offices in this state and furnishes to the office proof satisfactory to it that it has discharged or otherwise adequately provided for all its obligations to its members or subscribers in this state, the office and department shall release the deposited securities to the parties entitled thereto, on presentation of the receipts of the department for such securities.

A sworn application for a license as a motor vehicle service agreement company shall be made to and filed with the office on forms as prescribed by the commission and furnished by the office.

In addition to information relative to its qualifications as called for under s. 634.041, the application shall show:

The application when filed shall be accompanied by:

Upon completion of the application for license, the office shall examine the same and make such further investigation of the applicant as it deems advisable. If it finds that the applicant is qualified therefor under this part, it shall issue to the applicant a license as a motor vehicle service agreement company. If the office does not so find, it shall refuse to issue the license.

The office may, in its discretion, suspend or revoke the license of any motor vehicle service agreement company if it finds that the company has violated any lawful order of the office or any provision of this part.

The office shall suspend or revoke the license of a motor vehicle service agreement company if it finds that the company:

The office may, in its discretion, suspend the license of any motor vehicle service agreement company as to which a proceeding for receivership, conservatorship, or rehabilitation or other delinquency proceeding has been commenced against it or its affiliate in any state.

A violation of this act by an insurer is grounds for suspension or revocation of the insurer’s certificate of authority in this state.

The office shall suspend or revoke the license of a company if it finds that the ratio of gross written premiums written to net assets exceeds 10 to 1 unless the company has in excess of $750,000 in net assets and is utilizing contractual liability insurance which cedes 100 percent of the service agreement company’s claims liabilities to the contractual liability insurer or is utilizing contractual liability insurance which reimburses the service agreement company for 100 percent of its paid claims. However, if a service agreement company has been licensed by the office in excess of 10 years, is in compliance with all applicable provisions of this part, and has net assets at all times in excess of $3 million that comply with the provisions of part II of chapter 625, such company may not exceed a ratio of gross written premiums written to net assets of 15 to 1.

No salesperson or agent who participates in or influences the processing, administration, or adjustment of claims shall enter into any agreement or understanding in which the effect is to make the amount of any salesperson’s or agent’s commission contingent upon savings effected in the adjustment, settlement, and payment of losses covered by the service agreement company’s or insurer’s service agreement. Any agreement or understanding now existing is declared unlawful and shall be terminated immediately.

Offering or attempting to offer the service agreement holder a return of all or a portion of the premium paid if the service agreement holder does not file any claims or files a limited number of claims or files claims the dollar amount of which does not exceed a set amount or percentage.

Issuing or causing to be issued any advertisement which:

Denying claims for lack of service or maintenance on component parts that do not require servicing or routine maintenance or are unrelated to servicing.

Requiring that the purchaser or insured agree to purchase noninsurance services, commodities, or other insurance including automobile services as specified in s. 624.124 or exempt motor vehicle service agreements specified in s. 624.125.

The practice, known as sliding, by any person whereby the person:

Remitting premiums received on motor vehicle service agreements sold to any person other than the licensed service agreement company that is obligated to perform under such agreement, if the agreement between such company and the salesperson requires that premiums be submitted directly to the service agreement company.

Suspension or revocation of the license of a company shall be by the order of the office mailed to the company by registered or certified mail. The office shall promptly also give notice of such suspension or revocation to the salespersons of the company in this state of record with the department. The company shall not solicit or write any new service agreements in this state during the period of any such suspension or revocation, nor after such revocation renew any business previously written.

In its discretion, the office may cause notice of any such revocation to be published in one or more newspapers of general circulation published in this state.

When the license is surrendered or revoked, the service agreement company shall proceed immediately, following the effective date of the surrender or order of revocation, to conclude its affairs transacted under this part. The service agreement company shall not solicit, negotiate, advertise, or effectuate new or renewal of service agreements. The office retains jurisdiction over the service agreement company as it may find to be in the best interest of the insured until all contracts have been fulfilled, canceled, or expired.

The suspension of the license of a company shall be for such period not to exceed 1 year as is fixed by the office in the order of suspension, unless the office shortens or rescinds such suspension or the order upon which the suspension is based is modified, rescinded, or reversed.

During the period of suspension, the company shall file its annual statement and quarterly reports, pay fees, pay licenses, and pay taxes as required under this chapter as if the license had continued in full force.

Upon expiration of the suspension period, if within such period the license has not otherwise terminated, the license of the company shall be reinstated automatically unless the office finds that the causes of the suspension have not been removed or that the company is otherwise not in compliance with the requirements of this chapter. The office shall give the company notice of any such finding not less than 30 days in advance of the expiration of the suspension period. If not so automatically reinstated, the license shall be deemed to have expired as of the end of the suspension period or upon failure of the company to continue the license during the suspension period, whichever event first occurs.

Upon reinstatement of the license of a company or reinstatement of the certificate of authority of an insurer following suspension, the authority of its salespersons in this state to represent the company or insurer shall likewise be reinstated. The office shall promptly notify the company or insurer and its salespersons of record in this state of such reinstatement.

Before the sale of any service agreement, written notice must be given to the prospective purchaser by the service agreement company or its agent or salesperson that purchase of the service agreement is not required in order to purchase or obtain financing for a motor vehicle.

All motor vehicle service agreements are assignable in a consumer transaction and must contain a statement in conspicuous, boldfaced type, informing the purchaser of the service agreement of her or his right to assign it to a subsequent retail purchaser of the motor vehicle covered by the service agreement and all conditions on such right of transfer. The assignment must occur within a period of time specified in the agreement, which period may not expire earlier than 15 days after the date of the sale or transfer of the motor vehicle. The service agreement company may charge an assignment fee not to exceed $40.

If the service agreement is canceled, pursuant to an order of liquidation, the salesperson or agent is responsible for refunding, and must refund, to the receiver the unearned pro rata commission.

If a service agreement company violates any lawful order of the office or fails to meet its contractual obligations under this part, upon notice from the office, the sales representative or agent must refund to the service agreement holder the unearned pro rata commission, unless the sales representative or agent has made other arrangements, satisfactory to the office, with the service agreement holder.

Each service agreement, which includes a copy of the application form, must be mailed or delivered to the agreement holder within 45 days after the date of purchase.

Each service agreement form must contain in conspicuous, boldfaced type any statement or clause that places restrictions or limitations on the benefits offered or disclose such restrictions or limitations in regular type in a section of the service agreement containing a conspicuous, boldfaced type heading.

If an insurer or service agreement company intends to use or require the use of remanufactured or used replacement parts, each service agreement form as well as all service agreement brochures must contain in conspicuous, boldfaced type a statement to that effect.

Each service agreement form as well as all service agreement company sales brochures must clearly identify the name, address, and Florida license number of the licensed insurer or service agreement company.

If a service agreement contains a rental car provision, it must disclose the terms and conditions of this benefit in conspicuous, boldfaced type or disclose such restrictions or limitations in regular type in a section of the service agreement containing a conspicuous, boldfaced type heading.

By July 1, 2011, each service agreement sold in this state must be accompanied by a written disclosure to the consumer that the rate charged for the service agreement is not subject to regulation by the office. A service agreement company may comply with this requirement by including such disclosure in its service agreement form or in a separate written notice provided to the consumer at the time of sale.

Is in any respect in violation of or does not comply with this part, any applicable provision of the Florida Insurance Code, or any applicable rule of the office.

Contains or incorporates by reference when such incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the service agreement.

Has any title, heading, or other indication of its provisions which is misleading.

Is printed or otherwise reproduced in such manner as to render any material provision of the form substantially illegible.

Contains any provision which is unfair or inequitable or which encourages misrepresentation.

Contains any provision which makes it difficult to determine the actual insurer or service agreement company issuing the form.

Contains any provision for reducing claim payments due to depreciation of parts, except for marine engines.

A complete set of accounting records, including, but not limited to, a general ledger, cash receipts and disbursements journals, accounts receivable registers, and accounts payable registers.

A detailed service agreement register, in numerical order by service agreement number, of agreements in force, which register shall include the following information: service agreement number, date of issue, issuing dealer, name of agreement holder, whether the agreement is covered by contractual liability insurance or the unearned premium reserve account, description of motor vehicle, service agreement period and mileage, gross premium, commission to salespersons, commission to dealer, and net premium.

A detailed claims register, in numerical order by service agreement number, which register shall include the following information: service agreement number, date of issue, date of claim, type of claim, issuing dealer, amount of claim, date claim paid, and, if applicable, disposition other than payment and reason therefor.

By March 1 of each year, each service agreement company shall submit to the office annual financial reports on forms prescribed by the commission and furnished by the office.

Any motor vehicle service agreement company engaged in the business of issuing service agreements in this state must transmit the following information, based on Florida data, to the office each year with the annual report of the company:

Any service agreement company that does not file an annual statement in the form and within the time provided by this section shall forfeit up to $100 for each day during which the default continues, and, upon notice by the office, the authority of the company to do business in this state shall cease while the default continues. The office shall deposit all sums collected under this subsection in the Insurance Regulatory Trust Fund.

The office shall provide a summary of the information provided pursuant to subsection (2) in its annual report.

The commission may by rule require each motor vehicle service agreement company to submit to the office, as the commission may designate, all or part of the information contained in the financial reports required by this section in a computer-readable form compatible with the electronic data processing system specified by the office.

The office shall develop by rule an abbreviated form for motor vehicle manufacturers to use in submitting statistical reporting of sales of service agreements in this state in lieu of the financial reports required in subsections (1) and (2).

Motor vehicle service agreement companies licensed under this part may be subject to periodic examination by the office in the same manner and subject to the same terms and conditions as applies to insurers under part II of chapter 624. The commission may by rule establish provisions whereby a company may be exempted from examination.

The office shall determine whether to conduct an examination of a company by considering:

Each company applying for authority to transact business in this state, whether domestic or foreign, shall file with the office its appointment of the Chief Financial Officer and her or his successors in office, on a form as furnished by the office, as its attorney to receive service of all legal process issued against it in any civil action or proceeding in this state and agreeing that process so served shall be valid and binding upon the company. The appointment shall be irrevocable, shall bind the company and any successor in interest as to the assets or liabilities of the company, and shall remain in effect as long as there is outstanding in this state any obligation or liability of the company resulting from its service agreement transactions therein.

At the time of such appointment of the Chief Financial Officer as its process agent the company shall file with the department a designation of the name and address of the person to whom process against it served upon the Chief Financial Officer is to be forwarded. The company may change the designation at any time by a new filing.

Service of process upon the Chief Financial Officer as process agent of the company shall be made by serving copies in triplicate of the process upon the Chief Financial Officer. Upon receiving such service, the Chief Financial Officer shall file one copy with the department, return one copy with her or his admission of service, and promptly forward one copy of the process by registered or certified mail to the person last designated by the company to receive the same, as provided under s. 634.151.

Process served upon the Chief Financial Officer and copy thereof forwarded as in this section provided shall for all purposes constitute valid and binding service thereof upon the company.

Material misstatement, misrepresentation, or fraud in obtaining or attempting to obtain the license or appointment.

If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this part, any applicable provision of the Florida Insurance Code, or rule of the department or commission.

Willful misrepresentation of any service agreement or willful deception with regard to any agreement, done either in person or by any form of dissemination of information or advertising.

If in the adjustment of claims arising out of service agreements, she or he has materially misrepresented to a service agreement holder or other interested party the terms and coverage of a service agreement with intent and for the purpose of effecting settlement of the claim on less favorable terms than those provided in and contemplated by the service agreement.

For demonstrated lack of fitness or trustworthiness to engage in the service agreement business.

For demonstrated lack of adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.

Fraudulent or dishonest practices in the conduct of business under the license or appointment.

Misappropriation, conversion, or unlawful withholding of moneys belonging to a service agreement company, insurer, or service agreement holder or to others and received in the conduct of business under the license or appointment.

For unlawfully rebating, or attempt thereat, or for unlawfully dividing or offering to divide her or his commission with another.

Willful failure to comply with, or willful violation of any proper order of the department or office, or willful violation of any provision of this part, or of any applicable provision of the insurance code, or applicable rule of the department or commission.

Having been found guilty of, or having pleaded guilty or nolo contendere to, a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country which involves moral turpitude, without regard to whether a judgment of conviction has been entered by the court having jurisdiction of the cases.

Failure to refund unearned pro rata commission to the agreement holder or the service agreement company, if the service agreement company is making a full unearned pro rata refund to the agreement holder.

No salesperson shall rebate any portion of his or her commission except as follows:

No rebate shall be withheld or limited in amount based on factors which are unfairly discriminatory.

No rebate shall be given which is not reflected on the rebate schedule.

No rebate shall be refused or granted based upon the purchase of or failure to purchase collateral business.

For any cause for which granting of the license or appointment could have been refused had it then existed and been known to the department.

Violation of any provision of this part or of any other law applicable to the business of service agreements in the course of dealings under the license or appointment.

Has violated any lawful order or rule of the department or commission.

Failure or refusal, upon demand, to pay over to any company or insurer the salesperson represents or has represented any money coming into her or his hands belonging to the company or insurer.

If, in the conduct of business under the license or appointment, the salesperson has engaged in unfair methods of competition or in unfair or deceptive acts or practices, as such methods, acts, or practices are or may be defined under this part, or has otherwise shown herself or himself to be a source of injury or loss to the public or detrimental to the public interest.

Having been found guilty of, or having pleaded guilty or nolo contendere to, a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country, without regard to whether a judgment of conviction has been entered by the court having jurisdiction of the cases.

If any salesperson is convicted by a court of a violation of this part or of an applicable provision of the Florida Insurance Code, the license ¹and appointment of the individual shall thereby be deemed to be immediately revoked.

If after an investigation, or upon other evidence, the department has reason to believe that there may exist any one or more grounds therefor, as the grounds are specified in ss. 634.181 and 634.191, the department may suspend, revoke, or refuse to renew or continue the license or appointment of any salesperson.

The department’s papers, documents, reports, or evidence relative to a hearing for revocation or suspension of a license or appointment pursuant to the provisions of this part or the Florida Insurance Code or rule promulgated thereunder and chapter 120 are confidential and exempt from the provisions of s. 119.07(1) until such investigation is completed or ceases to be active. For the purposes of this section, an investigation is considered “active” while the investigation is being conducted by the department with a reasonable, good faith belief that it may lead to the filing of administrative, civil, or criminal proceedings. An investigation does not cease to be active if the department is proceeding with reasonable dispatch, and there is good faith belief that action may be initiated by the department or other administrative or law enforcement agency.

Whenever it appears that any licensed or appointed insurance agent has violated the provisions of this part or of any applicable provision of the Florida Insurance Code or rules, the department may take such action relative thereto as is authorized by the Florida Insurance Code as for a violation of the Florida Insurance Code by the agent.

If the department or office finds that one or more grounds exist for the suspension, revocation, or refusal to renew or continue any license or appointment issued under this part, the department or office may, in its discretion, in lieu of such suspension, revocation, or refusal, on a first offense and except where such suspension, revocation, or refusal is mandatory, impose upon the licensee or appointee an administrative penalty in an amount of up to $500 per violation, or if the department or office has found willful misconduct or willful violation on the part of the licensee or appointee, an administrative fine of up to $1,000 per violation. The administrative penalty may, in the department’s or office’s discretion, be augmented in amount by an amount equal to any commissions received by or accruing to the credit of the licensee or appointee in connection with any transaction as to which the grounds for suspension, revocation, or refusal related.

The department or office may allow the licensee or appointee a reasonable period, not to exceed 30 days, within which to pay to the department or office the amount of the penalty so imposed. If the licensee or appointee fails to pay the penalty in its entirety to the department or office within the period so allowed, the license and appointment of the licensee or appointee shall stand suspended, revoked, or renewal or continuation refused, as the case may be, upon expiration of such period.

If any of the grounds for rehabilitation, liquidation, conservation, reorganization, seizure, or summary proceedings of an insurer as set forth in ss. 631.051, 631.061, and 631.071 exist as to a company, the office may petition for an appropriate court order or may pursue such other relief as is afforded in part I of chapter 631.

In the event an order of rehabilitation, liquidation, conservation, reorganization, seizure, or summary proceedings has been entered against a company, the department and office shall be vested with all of the powers and duties they have under the provisions of part I of chapter 631 in regard to delinquency proceedings of insurance companies.

Any person damaged by a violation of the provisions of this part may bring a civil action against a person who violated such provisions, in the circuit court of the county in which the alleged violator resides or has her or his principal place of business or in the county wherein the alleged violation occurred. Upon an adverse adjudication, the defendant shall be liable for actual damages or $500, whichever is greater, together with court costs and reasonable attorney’s fees incurred by the plaintiff.

No such court costs or attorney’s fee or compensation shall be allowed if such suit was commenced prior to the parties’ complying with any and all arbitration provisions existing in the service agreement or policy.

When so awarded, court costs and compensation or fees of the attorney shall be included in the judgment or decree rendered in the case.

If it appears to the court that the suit brought by the plaintiff is ill-founded or brought for purposes of harassment, the plaintiff shall be liable for court costs and reasonable attorney’s fees incurred by the defendant.

The penalty provisions in ss. 520.12 and 521.006, as well as the statutory penalty in subsection (1), do not apply to any violation of this part or chapters 520 and 521 relating to or in connection with the sale or failure to disclose in a retail installment contract or lease, prior to April 23, 2002, of a vehicle protection product, or contract or agreement that provides for payment of vehicle protection expenses, as defined in s. 634.011(8)(b)1., so long as the sale of such product, contract, or agreement was otherwise disclosed to the consumer in writing at the time of the purchase or lease. However, in the event of a violation for which such statutory penalties do not apply, the court shall award actual damages and costs, including reasonable attorney’s fees. Nothing in this subsection shall be construed to require the application of the referenced statutory penalty provisions where this subsection is not applicable.

MISREPRESENTATION AND FALSE ADVERTISING.—Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:

FALSE INFORMATION AND ADVERTISING GENERALLY.—Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public:

an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of motor vehicle service agreements, which assertion, representation, or statement is untrue, deceptive, or misleading.

DEFAMATION.—Knowingly making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of, any oral or written statement, or any pamphlet, circular, article, or literature, that is false or maliciously critical of, or derogatory to, any person and that is calculated to injure such person.

BOYCOTT, COERCION, AND INTIMIDATION.—Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation resulting in, or tending to result in, unreasonable restraint of, or monopoly in, the business of motor vehicle service agreements.

FALSE STATEMENTS AND ENTRIES.—

UNFAIR DISCRIMINATION.—Knowingly making or permitting any unfair discrimination between individuals of the same actuarially supportable class and essentially the same hazard, in the amount of premium, policy fees, or rates charged for any motor vehicle service agreement, in any of the terms or conditions of such agreement, or in any other manner whatsoever.

UNLAWFUL REBATES.—Except as otherwise expressly provided by law, or in an applicable filing with the office, knowingly:

UNFAIR CLAIM SETTLEMENT PRACTICES.—

FAILURE TO MAINTAIN PROCEDURES FOR HANDLING COMPLAINTS.—Failing to maintain a complete record of all complaints received since the date of the last examination. For purposes of this paragraph, “complaint” means any written communication primarily expressing a grievance.

DISCRIMINATORY REFUSAL TO ISSUE A CONTRACT.—Refusing to issue a contract solely because of an individual’s race, color, creed, marital status, sex, or national origin.

MISREPRESENTATION IN SERVICE AGREEMENT APPLICATIONS.—Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for a motor vehicle service agreement for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, service agreement company, agent, broker, salesperson, or individual.

FREE SERVICE AGREEMENTS.—

ILLEGAL DEALINGS IN PREMIUMS; EXCESS OR REDUCED CHARGES FOR MOTOR VEHICLE SERVICE AGREEMENTS.—

INTERLOCKING OWNERSHIP AND MANAGEMENT.—

FALSE CLAIMS; OBTAINING OR RETAINING MONEY DISHONESTLY.—

in addition to the other penalties provided in this act, commits a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

SLIDING.—Sliding is the act or practice of:

FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO SALE.—Failing to provide a consumer with a complete sample copy of the terms and conditions of the service agreement prior to the time of sale upon a request for the same by the consumer. A service agreement company may comply with this subsection by providing the consumer with a sample copy of the terms and conditions of the service agreement or by directing the consumer to a website that displays a complete sample of the terms and conditions of the service agreement.

When the premium or charge for a motor vehicle service agreement or involving such property or merchandise is included in the overall purchase price or financing of the purchase of merchandise or property, the vendor or lender shall separately state and identify the amount charged and to be paid for the motor vehicle service agreement, and the classifications, if any, upon which based; and the inclusion or exclusion of the cost of a motor vehicle service agreement in such purchase price or financing shall not increase, reduce, or otherwise affect any other factor involved in the cost of merchandise, property, or financing as to the purchaser or borrower.

This section does not apply to transactions that are subject to the provisions of part I of chapter 520, entitled “The Motor Vehicle Retail Sales Finance Act.”

Whenever the department or office has reason to believe that any person has engaged, or is engaging, in this state in any unfair method of competition or any unfair or deceptive act or practice as defined in s. 634.282, or is engaging in the business of motor vehicle service agreements without being properly licensed as required by this part, and that a proceeding by the department or office in respect thereto would be in the interest of the public, the department or office shall conduct or cause to have conducted a hearing in accordance with chapter 120.

The department or office, a duly empowered hearing officer, or an administrative law judge shall, during the conduct of such hearing, have those powers enumerated in s. 120.569; however, the penalty for failure to comply with a subpoena or with an order directing discovery is limited to a fine not to exceed $1,000 per violation.

A statement of charges, notice, or order under this part may be served by anyone duly authorized by the department or office, either in the manner provided by law for service of process in civil actions or by certifying and mailing a copy thereof to the person affected by such statement, notice, order, or other process at her or his residence or principal office or place of business. The verified return by the person so serving such statement, notice, order, or other process, setting forth the manner of the service, is proof of the same; and the return postcard receipt for such statement, notice, order, or other process, certified and mailed as provided in this subsection, is proof of service of the same.

The suspension or revocation of such person’s license, or eligibility for any license, if the person knew, or reasonably should have known, that she or he was in violation of this part.

If it is determined that the person charged has provided or offered to provide motor vehicle service agreements without proper licensure, the imposition of an administrative penalty not to exceed $1,000 for each service agreement contract offered or effectuated.

A monetary penalty of not more than $50,000 as to all matters determined in such hearing.

The suspension or revocation of such person’s license or eligibility to hold a license.

“Gross written premiums” means the total amount of premiums, paid for the entire period of the home warranty, inclusive of commissions, for which the association is obligated under home warranties issued.

“Home warranty” or “warranty” means any contract or agreement whereby a person undertakes to indemnify the warranty holder against the cost of repair or replacement, or actually furnishes repair or replacement, of any structural component or appliance of a home, necessitated by wear and tear or an inherent defect of any such structural component or appliance or necessitated by the failure of an inspection to detect the likelihood of any such loss. However, this part does not prohibit the giving of usual performance guarantees by either the builder of a home or the manufacturer or seller of an appliance, as long as no identifiable charge is made for such guarantee. This part does not permit the provision of indemnification against consequential damages arising from the failure of any structural component or appliance of a home, which practice constitutes the transaction of insurance subject to all requirements of the insurance code. This part does not apply to service contracts entered into between consumers and nonprofit organizations or cooperatives the members of which consist of condominium associations and condominium owners and which perform repairs and maintenance for appliances or maintenance of the residential property. This part does not apply to a contract or agreement offered by a warranty association in compliance with part III, provided such contract or agreement only relates to the systems and appliances of the covered residential property and does not cover any structural component of the residential property.

“Home warranty association” means any corporation or any other organization, other than an authorized insurer, issuing home warranties.

“Impaired” means having liabilities in excess of assets.

“Insolvent” means the inability of a corporation to pay its debts as they become due in the usual course of its business.

“Insurance code” means the Florida Insurance Code.

“Insurer” means any property or casualty insurer duly authorized to transact such business in this state.

“Listing period” means the period of time residential property is listed for sale with a licensed real estate broker, beginning on the date the residence is first listed for sale and ending on either the date the sale of the residence is closed, the date the residence is taken off the market, or the date the listing contract with the real estate broker expires.

“Net assets” means the amount by which the total statutory assets of an association exceed the total liabilities of the association.

“Person” includes an individual, company, corporation, association, insurer, agent, and every other legal entity.

“Premium” means the total consideration received, or to be received, by an insurer or home warranty association for or related to the issuance and delivery of any binder or warranty, including any charges designated as assessments or fees for policies, surveys, inspections, or service or any other charges.

“Sales representative” means any person with whom an insurer or home inspection or warranty association has a contract and who is utilized by such insurer or association for the purpose of selling or issuing home warranties. The term includes all employees of an insurer or association engaged directly in the sale or issuance of home warranties.

“Structural component” means the roof, plumbing system, electrical system, foundation, basement, walls, ceilings, or floors of a home.

Except as provided in this part, home warranty associations shall be governed by the provisions of this part and shall be exempt from all other provisions of the Florida Insurance Code.

The provisions of chapter 85-321, Laws of Florida, which amended provisions of this part shall be construed as clarifying legislative intent as to the status of persons regulated by the part as insurers.

No person in this state shall provide or offer to provide home warranties unless authorized therefor under a subsisting license issued by the office. The home warranty association shall pay to the office a license tax of $200 for such license for each license year, or part thereof, the license is in force.

An insurer, while authorized to transact property or casualty insurance in this state, may also transact a home warranty business without additional qualifications or authority, but shall be otherwise subject to the applicable provisions of this part.

Any person that is an affiliate of a domestic insurer as defined in chapter 624 is exempt from application of this part if the person does not issue, or market or cause to be marketed, home warranties to residents of this state and does not administer home warranties that were originally issued to residents of this state. The domestic insurer or its wholly owned Florida licensed insurer must be the direct obligor of all home warranties issued by such affiliate or must issue a contractual liability insurance policy to such affiliate that meets the conditions described in s. 634.3077(3). If the Office of Insurance Regulation determines, after notice and opportunity for a hearing, that a person’s intentional business practices do not comply with any of the exemption requirements of this subsection, the person shall be subject to this part.

Any person who provides, offers to provide, or holds oneself out as providing or offering to provide home warranties in this state or from this state without holding a subsisting license commits, in addition to any other violation, a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.

Is a solvent corporation formed under the laws of this state or of another state, district, territory, or possession of the United States.

Furnishes the office with evidence satisfactory to it that the management of the association is competent and trustworthy and can successfully manage the affairs of the association in compliance with law.

Proposes to use and uses in its business a name, together with a trademark or emblem, if any, which is distinctive and not so similar to the name or trademark of any other association, corporation, or organization already doing business in this state as will tend to mislead or confuse the public.

Meets the deposit requirements under s. 634.305.

Is otherwise in compliance with this part.

To assure the faithful performance of its obligations to its members or subscribers in the event of insolvency, every home warranty association shall, before the issuance of its license by the office, deposit with the department securities of the type eligible for deposit by insurers under s. 625.52, which securities shall have at all times a market value of not less than $100,000.

In lieu of any deposit of securities required under subsection (1), the association may:

Securities or bonds posted by an association pursuant to this section are for the benefit of, and subject to action thereon in the event of insolvency of any association or insurer by, any person or persons sustaining an actionable injury due to the failure of the association faithfully to perform its obligations to its warranty holders. Whenever the market value of the securities deposited with the department is less than 95 percent of the amount required, the association shall deposit additional securities or otherwise increase the deposit to the amount required.

The state is responsible for the safekeeping of all securities deposited with the department under this part. Such securities are not, on account of being in this state, subject to taxation, but shall be held exclusively and solely to guarantee the faithful performance by the association of its obligations to its members or subscribers.

The depositing association shall, during its solvency, have the right to exchange or substitute other securities of like quality and value for securities so on deposit, to receive the interest and other income accruing to such securities, and to inspect the deposit at all reasonable times.

Such deposit or bond shall be maintained unimpaired as long as the association continues in business in this state. Whenever the association ceases to do business in this state and furnishes the office proof satisfactory to the office that it has discharged or otherwise adequately provided for all its obligations to its members or subscribers in this state, the office and department shall release the deposited securities to the parties entitled thereto, on presentation of the receipts of the department for such securities, or shall release any bond filed with it pursuant to this section.

An application for license as a home warranty association must be made to and must be filed with the office on printed forms prescribed by the commission and furnished by the office.

In addition to information relative to its qualifications as required under s. 634.304, the application must show:

The application must be accompanied by:

Upon completion of the application for license, the office shall examine the application and make any further investigation of the applicant as it deems advisable. If it finds that the applicant is qualified therefor, the office shall issue to the applicant a license as a home warranty association. If the office does not so find, it shall refuse to issue the license and shall give the applicant written notice of such refusal, setting forth the grounds therefor.

An association licensed under this part shall maintain a funded, unearned premium reserve account, consisting of unencumbered assets, equal to a minimum of 25 percent of the gross written premiums received by it from all warranty contracts in force. Such assets shall be held in the form of cash or invested in securities for investments as provided in part II of chapter 625.

An association shall maintain, at a minimum, net assets equal to one-sixth of the written premiums it receives for the issuance and delivery of any binder or warranty in force. Net assets may be less than one-sixth of the premiums written provided the association has net assets of not less than $500,000 and maintains a funded, unearned premium reserve account consisting of unencumbered assets equal to a minimum of 40 percent of the gross written premiums received by it from all warranty contracts in force which shall be held in the form of cash or invested in securities for investments as provided in part II of chapter 625.

An association shall not be required to set up an unearned premium reserve if it has purchased contractual liability insurance which demonstrates to the satisfaction of the office that 100 percent of its claim exposure is covered by such insurance. Such contractual liability insurance shall be obtained from an insurer that holds a certificate of authority to do business within the state or from an insurer approved by the office as financially capable of meeting the obligations incurred pursuant to the policy. For purposes of this subsection, the contractual liability policy shall contain the following provisions:

An association that purchases contractual liability insurance on the warranties that it issues shall provide the office with claim statistics required to be filed by associations not purchasing such insurance.

ASSETS.—In any determination of the financial condition of a home warranty association, there shall be allowed as assets only those assets that are owned by the home warranty association company and which assets consist of:

The office, upon determining that a home warranty association’s asset has not been evaluated according to applicable law or that it does not qualify as an asset, shall require the home warranty association to properly reevaluate the asset or replace the asset with an asset suitable to the office within 30 days after written notification by the office of this determination, if the removal of the asset from the organization’s assets would impair the company’s solvency.

ASSETS NOT ALLOWED.—In addition to assets impliedly excluded by the provisions of subsection (1), the following assets expressly shall not be allowed as assets in any determination of the financial condition of a home warranty association:

The office may, however, allow all or a portion of such asset, at values to be determined by the office, if deemed by the office to be available for the payment of losses and claims.

LIABILITIES.—In any determination of the financial condition of a home warranty association, liabilities to be charged against its assets shall include, but not be limited to:

The office, upon determining that the home warranty association has failed to report liabilities that should have been reported, shall require a correct report which reflects the proper liabilities to be submitted by the home warranty association to the office within 10 working days after receipt of written notification.

The license of any home warranty association may be revoked or suspended, or the office may refuse to renew any such license, if it is determined that:

The license of any home warranty association shall be suspended, revoked, or not renewed if it is determined that such association:

The office may, pursuant to s. 120.60, in its discretion and without advance notice or hearing thereon, immediately suspend the license of any home warranty association if it finds that one or more of the following circumstances exist:

A violation of this part by an insurer is grounds for suspension or revocation of the insurer’s certificate of authority in this state.

A suspension or revocation of the license of a home warranty association shall be effected by order mailed to the association by registered or certified mail. The office also shall promptly give notice of such suspension or revocation to the sales representatives of the association in this state who are of record with the department. The association may not solicit or write any new warranties in this state during the period of any such suspension or revocation.

In its discretion, the office may cause notice of any such revocation or suspension to be published in one or more newspapers of general circulation published in this state.

A suspension of the license of a home warranty association shall be for such period, not to exceed 1 year, as is fixed in the order of suspension, unless such suspension, or the order upon which the suspension is based, is modified, rescinded, or reversed.

During the period of suspension, the association shall file its annual statement and pay fees, licenses, and taxes as required under this part as if the license had continued in full force.

Upon expiration of the suspension period, if within such period the license has not otherwise terminated, the license of the association shall automatically be reinstated, unless it is determined, upon notice and hearing, that the causes of the suspension have not been removed or that the association is otherwise not in compliance with the requirements of this part.

Upon reinstatement of the license of an association, or reinstatement of the certificate of authority of an insurer, following suspension, the authority of the sales representatives of the association in this state to represent the association or insurer shall likewise be reinstated. The office shall promptly notify the association.

If it is found that one or more grounds exist for the suspension, revocation, or refusal to renew the license of any association issued under this part, the office may, in lieu of such revocation or suspension, impose a fine upon the association.

With respect to any nonwillful violation, such fine may not exceed $500 per violation. In no event may such fine exceed an aggregate amount of $5,000 for all nonwillful violations arising out of the same action. When an association discovers a nonwillful violation, the association shall correct the violation and, if restitution is due, make restitution to all affected persons. Such restitution shall include interest at 12 percent per year from either the date of the violation or the date of inception of the affected person’s policy, at the option of the association.

With respect to any knowing and willful violation of a lawful order or rule of the office or commission or a provision of this part, the office may impose a fine upon the association in an amount not to exceed $2,500 for each such violation. In no event may such fine exceed an aggregate amount of $25,000 for all knowing and willful violations arising out of the same action. In addition to such fines, an association shall make restitution when due in accordance with the provisions of subsection (2).

The failure of an association to make restitution when due, as required under this section, constitutes a willful violation of this code. However, if an insurer in good faith is uncertain as to whether any restitution is due or as to the amount of such restitution, it shall promptly notify the office of the circumstances, and the failure to make restitution pending a determination thereof will not constitute a violation of this part.

All home warranty contracts are assignable in a consumer transaction and must contain a statement informing the purchaser of the home warranty of her or his right to assign it, at least within 15 days from the date the home is sold or transferred, to a subsequent retail purchaser of the home covered by the home warranty and all conditions on such right of transfer. The home warranty company may charge an assignment fee not to exceed $40. Home warranty assignments include, but are not limited to, the assignment from a home builder who purchased the home warranty to a subsequent home purchaser.

Subject to the insurer’s or home warranty association’s requirement as to payment of premium, every home warranty shall be mailed or delivered to the warranty holder not later than 45 days after the effectuation of coverage, and the application is part of the warranty contract document.

All home warranty contracts must state in conspicuous, boldfaced type that the home warranty may not provide listing period coverage free of charge.

All home warranty contracts must disclose any exclusions, restrictions, or limitations on the benefits offered or the coverage provided by the home warranty contract in boldfaced type, and must contain, in boldfaced type, a statement on the front page of the contract substantially similar to the following: “Certain items and events are not covered by this contract. Please refer to the exclusions listed on page   of this document.”

Each home warranty contract shall contain a cancellation provision. Any home warranty agreement may be canceled by the purchaser within 10 days after purchase. The refund must be 100 percent of the gross premium paid, less any claims paid on the agreement. A reasonable administrative fee may be charged, not to exceed 5 percent of the gross premium paid by the warranty agreement holder. After the home warranty agreement has been in effect for 10 days, if the contract is canceled by the warranty holder, a return of premium shall be based upon 90 percent of unearned pro rata premium less any claims that have been paid. If the contract is canceled by the association for any reason other than for fraud or misrepresentation, a return of premium shall be based upon 100 percent of unearned pro rata premium, less any claims paid on the agreement.

By July 1, 2011, each home warranty contract sold in this state must be accompanied by a written disclosure to the consumer that the rate charged for the contract is not subject to regulation by the office. A home warranty association may comply with this requirement by including such disclosure in its home warranty contract form or in a separate written notice provided to the consumer at the time of sale.

Is in violation of or does not comply with this part.

Contains or incorporates by reference, when such incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses or exceptions or conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract.

Has any title, heading, or other indication of its provisions which is misleading.

Is printed or otherwise reproduced in such a manner as to render any material provision of the form illegible.

Provides that the cost of renewal exceeds the then-current cost for new warranty contracts, unless the increase is supported by the claims history or claims cost data, or impose a fee for inspection of the premises.

In addition to paying the license taxes provided for in this part for home warranty associations and license taxes provided in the insurance code as to insurers, each such association and each such insurer must, annually on or before March 1, file with the office its annual statement, in the form prescribed by the commission, showing all premiums received by it in connection with the issuance of warranties in this state during the preceding calendar year and using accounting principles that will enable the office to ascertain whether the reserve required by s. 634.3077 has been maintained. Each annual statement must contain a balance sheet listing all assets and liabilities; a statement of operations and retained earnings; and a schedule used to report all claims statistics. The annual statement must be completed using generally accepted accounting principles except as otherwise provided in this part. Further, each association and each insurer must pay to the Chief Financial Officer a tax in an amount equal to 2 percent of the amount of such premiums so received.

Premiums received by insurers and taxed under this section are not subject to any premium tax provided for in the insurance code.

Any association or insurer neglecting to file the annual statement in the form and within the time provided by this section shall forfeit up to $100 for each day during which such neglect continues; and, upon notice by the office to that effect, its authority to do business in this state shall cease while such default continues. The office shall deposit all sums collected by it under this section to the credit of the Insurance Regulatory Trust Fund.

The commission may by rule require each home warranty association to submit to the office, as the commission may designate, all or part of the information contained in the financial reports required by this section in a computer-readable form compatible with the electronic data processing system specified by the office.

A complete set of accounting records, including a general ledger, cash receipts and disbursements journals, accounts receivable registers, and accounts payable registers.

A detailed warranty register, in numerical order by warranty number, of warranties in force. The register shall include the warranty number, date of issue, issuing sales representative, name of warranty holder, location of the property, warranty period, gross premium, commission to sales representative, and net premium.

A detailed claims register which includes the warranty number, date of issue, date of claim, issuing sales representative, amount of claim, date claim paid, and, if applicable, disposition other than payment and reason therefor.

Nothing in this section shall prohibit an association from maintaining office records by computer.

Home warranty associations licensed under this part may be subject to periodic examinations by the office, in the same manner and subject to the same terms and conditions as apply to insurers under part II of chapter 624 of the insurance code.

The office shall determine whether to conduct an examination of a home warranty association by considering:

All funds belonging to insurers, home warranty associations, or others received by a sales representative in transactions under her or his license ¹and appointment are trust funds so received by the sales representative in a fiduciary capacity; and the sales representative, in the applicable regular course of business, shall account for and pay such funds to the insurer, association, warranty holder, or other person entitled thereto.

Any sales representative who, not being entitled thereto, diverts or appropriates such funds or any portion thereof to her or his own use is, upon conviction, guilty of theft, punishable as provided in s. 812.014.

Material misstatement, misrepresentation, or fraud in obtaining or attempting to obtain a license or appointment.

The license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this part.

Willful misrepresentation of any warranty contract or willful deception with regard to any such contract, done either in person or by any form of dissemination of information or advertising.

In the adjustment of claims arising out of warranties, material misrepresentation to a warranty holder or other interested party of the terms and coverage of a contract, with the intent and for the purpose of effecting settlement of such claim on less favorable terms than those provided in and contemplated by the contract.

Demonstrated lack of fitness or trustworthiness to engage in the business of home warranty.

Demonstrated lack of adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.

Fraudulent or dishonest practices in the conduct of business under the license or appointment.

Misappropriation, conversion, or unlawful withholding of moneys belonging to an association, insurer, or warranty holder, or to others, and received in the conduct of business under the license or appointment.

Unlawfully rebating, or attempting to unlawfully rebate, or unlawfully dividing, or offering to divide, her or his commission with another.

Willful failure to comply with, or willful violation of, any proper order or rule of the department or commission or willful violation of any provision of this part.

Being found guilty of or pleading guilty or nolo contendere to a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country involving moral turpitude, without regard to whether judgment of conviction has been entered by the court.

No sales representative shall rebate any portion of his or her commission except as follows:

No rebate shall be withheld or limited in amount based on factors which are unfairly discriminatory.

No rebate shall be given which is not reflected on the rebate schedule.

No rebate shall be refused or granted based upon the purchase of or failure to purchase collateral business.

Any cause for which granting of the license or appointment could have been refused had it then existed and been known to the department.

Violation of any provision of this part, or of any other law applicable to the business of warranties, in the course of dealings under the license or appointment.

Violation of any lawful order or rule of the department or commission.

Failure or refusal to pay over, upon demand, to any home warranty association or insurer the sales representative represents or has represented any money coming into her or his hands which belongs to the association or insurer.

In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as such methods, acts, or practices are or may be defined under this part, or otherwise showing herself or himself to be a source of injury or loss to the public or detriment to the public interest.

Being found guilty of or pleading guilty or nolo contendere to a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country, without regard to whether a judgment of conviction has been entered by the court.

If any sales representative is convicted by a court of a violation of any provision of this part or applicable provisions of the Florida Insurance Code, the license or appointment of such individual shall thereby be deemed to be immediately revoked without any further procedure relative thereto by the department.

Whenever it appears that any licensed ¹or appointed insurance agent has violated the provisions of this part, the department may take such action relative thereto as is authorized by the insurance code as for a violation of the insurance code by such agent.

The department shall, in its order suspending a license or appointment, specify the time period during which the suspension is to be effective. Such period may not exceed 1 year. The license or appointment shall remain suspended during the period specified, subject to any rescission or modification by the department. A license or appointment which has been suspended may be reinstated, but the department may not grant such reinstatement if it determines that the circumstances for which the license or appointment was suspended still exist or are likely to recur.

No person whose license or appointment has been revoked by the department has the right to apply for another license or appointment within 2 years from the effective date of revocation or, if judicial review of the revocation is sought, within 2 years from the date of the final court order or decree affirming the revocation. The department may not grant a new license or appointment if it determines that the circumstances for which the previous license or appointment was revoked still exist or are likely to recur.

The department may not grant or issue any license or appointment to any individual whose license or appointment has been revoked twice.

During any period of suspension or revocation of the license or appointment, the former licensee or appointee may not engage in or attempt to engage in any transaction or business for which a license or appointment is required under this part.

If, pursuant to procedures provided for in this part, it is found that one or more grounds exist for the suspension or revocation of, or refusal to renew or continue, any sales representative’s license or appointment issued under this part, on a first offense, an order may be entered imposing upon the licensee or appointee, in lieu of such suspension, revocation, or refusal, an administrative penalty for each violation in an amount of up to $500 or, in the event of willful misconduct or willful violation on the part of the licensee or appointee, an administrative fine of up to $1,000. The administrative penalty may be augmented in amount by an amount equal to any commissions received by or accruing to the credit of the licensee or appointee in connection with any transaction to which the grounds for suspension, revocation, or refusal related.

The order may allow the licensee or appointee a reasonable period, not to exceed 30 days, within which to pay to the department the amount of the penalty so imposed. If the licensee or appointee fails to pay the penalty in its entirety to the department at its office in Tallahassee within the period so allowed, the license or appointment of the licensee or appointee shall stand suspended or revoked, or renewal or continuation may be refused, as the case may be, upon expiration of such period and without any further proceedings.

Any person damaged by a violation of the provisions of this part may bring a civil action against a person violating such provisions in the circuit court of the county in which the alleged violator resides or has her or his principal place of business or in the county in which the alleged violation occurred. Upon adverse adjudication, the defendant will be liable for actual damages or $500, whichever is greater, together with court costs and reasonable attorney’s fees incurred by the plaintiff.

No punitive damages may be awarded under this section unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are:

Any person who pursues a claim under this subsection shall post in advance the costs of discovery. Such costs shall be awarded to the insurer if no punitive damages are awarded to the plaintiff.

As a condition precedent to bringing an action under this section, the department and the insurer shall be given written notice of the violation. The notice shall state with specificity the facts which allegedly constitute the violation and the law upon which the plaintiff is relying and shall state that such notice is given in order to perfect the right to pursue the civil remedy authorized by this section. No action will lie if, within 30 days thereafter, the damages are paid or the circumstances giving rise to the violation are corrected.

This section shall not be construed to authorize a class action suit against a home warranty association or a civil action against the department or office or their employees or the Chief Financial Officer.

MISREPRESENTATION AND FALSE ADVERTISING.—Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:

FALSE INFORMATION AND ADVERTISING GENERALLY.—Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public:

an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of home warranty, which assertion, representation, or statement is untrue, deceptive, or misleading.

DEFAMATION.—Knowingly making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of, any oral or written statement, or any pamphlet, circular, article, or literature, which is false or maliciously critical of, or derogatory to, any person and which is calculated to injure such person.

FALSE STATEMENTS AND ENTRIES.—

UNFAIR CLAIM SETTLEMENT PRACTICES.—

FAILURE TO MAINTAIN PROCEDURES FOR HANDLING COMPLAINTS.—Failing to maintain a complete record of each written complaint received for a 3-year period after the date of the receipt of the written complaint.

DISCRIMINATORY REFUSAL TO ISSUE A CONTRACT.—Refusing to issue a contract solely because of an individual’s race, color, creed, marital status, sex, or national origin.

COERCION OF DEBTORS.—When a home warranty is sold:

FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO SALE.—Failing to provide a consumer with a complete sample copy of the terms and conditions of the home warranty contract prior to the time of sale upon a request for the same by the consumer. A home warranty association may comply with this subsection by providing the consumer with a sample copy of the terms and conditions of the home warranty contract or by directing the consumer to a website that displays a complete sample of the terms and conditions of the contract.

Whenever the department or office has reason to believe that any person has engaged, or is engaging, in this state in any unfair method of competition or any unfair or deceptive act or practice as defined in s. 634.336, or is engaging in the business of home warranty without being properly licensed as required by this part, and that a proceeding by the department or office in respect thereto would be in the interest of the public, the department or office shall conduct or cause to have conducted a hearing in accordance with chapter 120.

The department or office, a duly empowered hearing officer, or an administrative law judge shall, during the conduct of such hearing, have those powers enumerated in s. 120.569; however, the penalty for failure to comply with a subpoena or with an order directing discovery is limited to a fine not to exceed $1,000 per violation.

A statement of charges, notice, or order under this part may be served by anyone duly authorized by the department or office, either in the manner provided by law for service of process in civil actions or by certifying and mailing a copy thereof to the person affected by such statement, notice, order, or other process at her or his or its residence or principal office or place of business. The verified return by the person so serving such statement, notice, order, or other process, setting forth the manner of the service is proof of the same; and the return postcard receipt for such statement, notice, order, or other process, certified and mailed as provided in this subsection, is proof of service of the same.

The suspension or revocation of such person’s license, or eligibility for any license, if the person knew, or reasonably should have known, that she or he was in violation of this part.

If it is determined that the person charged has provided or offered to provide home warranties without proper licensure, the imposition of an administrative penalty not to exceed $1,000 for each home warranty contract offered or effectuated.

A monetary penalty of not more than $25,000 as to all matters determined in such hearing.

The suspension or revocation of such person’s license or eligibility to hold a license.

When a home warranty is sold in connection with the lending of money, a person may not require, as a condition precedent or condition subsequent to the lending of the money or the extension of the credit or any renewal thereof, that the person to whom such money or credit is extended purchase a home warranty.

When a home warranty is purchased in connection with the lending of money, the insurer or home warranty association or the sales representative of the insurer or home warranty association shall advise the borrower or purchaser in writing that Florida law prohibits the lender from requiring the purchase of a home warranty as a condition precedent or condition subsequent to the making of the loan.

“Consumer product” means tangible property primarily used for personal, family, or household purposes.

“Gross income” means the total amount of revenue received in connection with business-related activity.

“Gross written premiums” means the total amount of premiums, paid or to be paid by the consumer for the entire period of the service warranty inclusive of commissions, for which the association is obligated under service warranties issued.

“Impaired” means having liabilities in excess of assets.

“Indemnify” means to undertake repair or replacement of a consumer product, or pay compensation for such repair or replacement by cash, check, store credit, gift card, or other similar means, in return for the payment of a segregated premium, when such consumer product suffers operational failure.

“Insolvent” means unable to pay debts as they become due in the usual course of business.

“Insurance code” means the Florida Insurance Code as defined in s. 624.01.

“Insurer” means any property or casualty insurer duly authorized to transact such business in this state.

“Net assets” means total statutory assets in excess of liabilities, except that assets pledged to secure debts not reflected on the books of the service warranty association shall not be included in net assets.

“Person” includes an individual, company, corporation, association, insurer, agent, and any other legal entity.

“Premium” means the total amount paid by the consumer, including any charges designated as assessments or fees for membership, policy, survey, inspection, finance, service, or other charges by the association.

“Sales representative” means any person, retail store, corporation, partnership, or sole proprietorship utilized by an insurer or service warranty association for the purpose of selling or issuing service warranties. However, in the case of service warranty associations selling service warranties from one or more business locations, the person in charge of each location may be considered the sales representative.

“Service warranty” means any warranty, guaranty, extended warranty or extended guaranty, maintenance service contract equal to or greater than 1 year in length or which does not meet the exemption in paragraph (a), ¹contract agreement, or other written promise for a specific duration to perform the repair, replacement, or maintenance of a consumer product, or for indemnification for repair, replacement, or maintenance, for operational or structural failure due to a defect in materials or workmanship, normal wear and tear, power surge, or accidental damage from handling in return for the payment of a segregated charge by the consumer; however:

“Service warranty association” or “association” means any person, other than an authorized insurer, issuing service warranties.

“Warrantor” means any person engaged in the sale of service warranties and deriving not more than 50 percent of its gross income from the sale of service warranties.

“Warranty seller” means any person engaged in the sale of service warranties and deriving more than 50 percent of its gross income from the sale of service warranties.

“Manufacturer” means any entity or its affiliate which:

“Affiliate” means any entity which exercises control over or is controlled by, the service warranty association or insurer, directly or indirectly, through:

Except as provided in this part, service warranty associations shall be governed by this part and shall be exempt from all other provisions of the Florida Insurance Code.

The provisions of chapter 85-321, Laws of Florida, which amended provisions of this part shall be construed as clarifying legislative intent as to the status of persons regulated by the part as insurers.

No person in this state shall provide or offer to provide service warranties unless authorized therefor under a subsisting license issued by the office. The service warranty association shall pay to the office a license fee of $200 for such license for each license year, or part thereof, the license is in force.

An insurer, while authorized to transact property or casualty insurance in this state, may also transact a service warranty business without additional qualifications or authority, but shall be otherwise subject to the applicable provisions of this part.

The office may, pursuant to s. 120.569, in its discretion and without advance notice and hearing, issue an immediate final order to cease and desist to any person or entity which violates this section. The Legislature finds that a violation of this section constitutes an imminent and immediate threat to the public health, safety, and welfare of the residents of this state.

Any person that is an affiliate of a domestic insurer as defined in chapter 624 is exempt from application of this part if the person does not issue, or market or cause to be marketed, service warranties to residents of this state and does not administer service warranties that were originally issued to residents of this state. The domestic insurer or its wholly owned Florida licensed insurer must be the direct obligor of all service warranties issued by such affiliate or must issue a contractual liability insurance policy to such affiliate that meets the conditions described in s. 634.406(3). If the Office of Insurance Regulation determines, after notice and opportunity for a hearing, that a person’s intentional business practices do not comply with any of the exemption requirements of this subsection, the person shall be subject to this part.

Any person who provides, offers to provide, or holds oneself out as providing or offering to provide a service warranty in this state or from this state without holding a subsisting license commits, in addition to any other violation, a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.

Is a warrantor with minimum net assets of $25,000 or a warranty seller with minimum net assets of $300,000.

Furnishes the office with evidence satisfactory to it that the management of the association is competent and trustworthy and can successfully manage the affairs of the association in compliance with law.

Proposes to use and uses in its business a name, together with a trademark or emblem, if any, which is distinctive and not so similar to the name or trademark of any other person already doing business in this state as will tend to mislead or confuse the public.

Makes the deposit or files the bond required under s. 634.405.

Is formed under the laws of this state or another state, district, territory, or possession of the United States, if the association is other than a natural person.

In lieu of the provisions of subsections (1)-(5) of this section and s. 634.407, a manufacturer or affiliate as defined in this part is eligible for licensure as a service warranty association under the provisions of this part and shall complete an application evidencing its qualifications as set forth in this section. The application for license as a service warranty association from a manufacturer or affiliate shall be made to, and filed with, the office on printed forms as promulgated by the commission to be specifically and exclusively applicable to qualifying manufacturers.

To assure the faithful performance of its obligations to its members or subscribers in the event of insolvency, each service warranty association shall, before the issuance of its license by the office and during such time as the association may have premiums in force in this state, deposit and maintain with the department securities of the type eligible for deposit by insurers under s. 625.52. Whenever the market value of the securities deposited with the department is less than 95 percent of the amount required, the association shall deposit additional securities or otherwise increase the deposit to the amount required. Such securities shall have at all times a market value as follows:

In lieu of any deposit of securities required under subsection (1) and subject to the approval of the office, the service warranty association may file with the office a surety bond issued by an authorized surety insurer. The bond shall be for the same purpose as the deposit in lieu of which it is filed. The office may not approve any bond under the terms of which the protection afforded against insolvency is not equivalent to the protection afforded by those securities provided for in subsection (1). When a bond is deposited in lieu of the required securities, no warranties may be written which provide coverage for a time period beyond the duration of such bond. The bond shall guarantee that the service warranty association will faithfully and truly perform all the conditions of any service warranty contract. No such bond may be canceled or subject to cancellation unless at least 60 days’ advance notice thereof, in writing, is filed with the office. In the event that notice of termination of the bond is filed with the office, the service warranty association insured thereunder shall, within 30 days of the filing of notice of termination, provide the office with a replacement bond meeting the requirements of this part or deposit additional securities as required under subsection (1). The cancellation of a bond will not relieve the obligation of the issuer of the bond for claims arising out of contracts issued before cancellation of the bond unless a replacement bond or securities are filed. In no event may the liability of the issuer under the bond exceed the face amount of the bond. If within 30 days of filing the notice of termination no replacement bond or additional security is provided, the office shall suspend the license of the association until the deposit requirements are satisfied.

Securities and bonds posted by an association pursuant to this section are for the benefit of, and subject to action thereon in the event of insolvency or impairment of any association or insurer by, any person or persons sustaining an actionable injury due to the failure of the association to faithfully perform its obligations to its warranty holders.

The state is responsible for the safekeeping of all securities deposited with the department under this part. Such securities are not, on account of being in this state, subject to taxation, but shall be held exclusively and solely to guarantee the faithful performance by the association of its obligations to its members or subscribers.

The depositing association shall, during its solvency, have the right to exchange or substitute other securities of like quality and value for securities on deposit, to receive the interest and other income accruing to such securities, and to inspect the deposit at all reasonable times.

Such deposit or bond shall be maintained unimpaired as long as the association continues in business in this state. Whenever the association ceases to do business in this state and furnishes the office proof satisfactory to the office that it has discharged or otherwise adequately provided for all its obligations to its members or subscribers in this state, the office and department shall release the deposited securities to the parties entitled thereto, on presentation of the receipts of the department for such securities, or shall release any bond filed with it in lieu of such deposit.

Any business, or its affiliate, whose primary source of income is the sale of goods to the final consumer and derives more than 50 percent of its revenue through such sales and maintains a net worth of $100 million, as evidenced by either filing a form 10-K or other similar statement with the Securities and Exchange Commission or which has an annual financial statement that is audited and certified by an independent public accounting firm, shall be presumed to have complied with this subsection if such forms or statement are filed with the office.

An association licensed under this part shall maintain a funded, unearned premium reserve account, consisting of unencumbered assets, equal to a minimum of 25 percent of the gross written premiums received on all warranty contracts in force, wherever written. Such assets shall be held as prescribed under ss. 625.301-625.340. For contracts in excess of 2 years which are offered by associations having net assets of less than $500,000 and for which premiums are collected in advance for coverage in a subsequent year, 100 percent of the premiums for such subsequent years shall be placed in the funded, unearned premium reserve account.

An association utilizing an unearned premium reserve shall deposit with the department a reserve deposit equal to 10 percent of the gross written premium received on all warranty contracts in force. Such reserve deposit shall be of a type eligible for deposit by insurers under s. 625.52. Request for release of all or part of the reserve deposit may be made quarterly and only after the office has received and approved the association’s current financial statements, as well as a statement sworn to by two officers of the association verifying such release will not reduce the reserve deposit to less than 10 percent of the gross written premium. The reserve deposit required under this part shall be included in calculating the reserve required by subsection (1). The deposit required in s. 634.405(1)(b) shall be included in calculating the reserve requirements of this section.

An association will not be required to establish an unearned premium reserve if it has purchased contractual liability insurance which demonstrates to the satisfaction of the office that 100 percent of its claim exposure is covered by such policy. The contractual liability insurance shall be obtained from an insurer that holds a certificate of authority to do business within the state. For the purposes of this subsection, the contractual liability policy shall contain the following provisions:

No warrantor may allow its gross written premiums in force to exceed a 7-to-1 ratio to net assets; however, a company may exceed this requirement if the company:

No warranty seller may allow its gross written premiums in force to exceed a 7-to-1 ratio to net assets.

An association which holds a license under this part and which does not hold any other license under this chapter may allow its premiums to exceed the ratio to net assets limitations of this section if the association meets all of the following:

A contractual liability policy must insure 100 percent of an association’s claims exposure under all of the association’s service warranty contracts, wherever written, unless all of the following are satisfied:

If all the preceding conditions are satisfied, then the scope of coverage under a contractual liability policy shall not be required to exceed an association’s claims exposure under service warranty contracts delivered in this state.

An association licensed under this part and holding no other license under part I or part II of this chapter is not required to establish an unearned premium reserve or maintain contractual liability insurance and may allow its premiums to exceed the ratio to net assets limitation of this section if the association complies with the following:

ASSETS.—In any determination of the financial condition of a service warranty association, there shall be allowed as assets only those assets that are owned by the service warranty association and which assets consist of:

The office, upon determining that a service warranty association’s asset has not been evaluated according to applicable law or that it does not qualify as an asset, shall require the service warranty association to properly reevaluate the asset or replace the asset with an asset suitable to the office within 30 days of written notification by the office of this determination, if the removal of the asset from the organization’s assets would impair the company’s solvency.

ASSETS NOT ALLOWED.—In addition to assets impliedly excluded by the provisions of subsection (1), the following assets expressly shall not be allowed as assets in any determination of the financial condition of a service warranty association:

The office may, however, allow all or a portion of such asset, at values to be determined by the office, if deemed by the office to be available for the payment losses and claims.

LIABILITIES.—In any determination of the financial condition of a service warranty association, liabilities to be charged against its assets shall include, but not be limited to:

The office, upon determining that the service warranty association has failed to report liabilities that should have been reported, shall require a correct report which reflects the proper liabilities to be submitted by the service warranty association to the office within 10 working days of receipt of written notification.

Has been in continuous operation for 5 years or more and has net assets of the greater of $3 million or 2 times the minimum net asset requirements of the service warranty association. In any determination of the financial condition of the guaranteeing organization, the definitions of assets and liabilities as set forth in this part shall apply except that investments in or loans to any organizations guaranteed by the guaranteeing organization shall be excluded from net assets. If the guaranteeing organization is sponsoring more than one organization, the net assets requirement shall be increased by a multiple equal to the number of such organizations.

Submits a guarantee that is approved by the office as meeting the requirements of this part, provided that the written guarantee contains a provision which requires that the guarantee be irrevocable unless the guaranteeing organization can demonstrate to the office that the cancellation of the guarantee will not result in the net assets of the service warranty association falling below its minimum net assets requirement and the office approves cancellation of the guarantee.

Initially submits its audited financial statements certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles, covering its two most current annual accounting periods.

Submits annually, within 3 months after the end of its fiscal year, an audited financial statement certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles. The office may, as it deems necessary, require quarterly financial statements from the guaranteeing organization.

The filings made by a guarantee organization pursuant to this section are confidential and exempt from the provisions of s. 119.07(1).

Nothing in this section shall be construed to prevent the use of such filings in judicial or administrative proceedings when ordered to be produced by appropriate subpoena or by order of the court, an administrative law judge, or a hearing officer.

An application for license as a service warranty association shall be made to, and filed with, the office on printed forms as prescribed by the commission and furnished by the office.

In addition to information relative to its qualifications as required under s. 634.404, the commission may require that the application show:

The commission may require that the application, when filed, be accompanied by:

Upon completion of the application for license, the office shall examine the application and make such further investigation of the applicant as it deems advisable. If it finds that the applicant is qualified therefor, the office shall issue to the applicant a license as a service warranty association. If the office does not find the applicant to be qualified, it shall refuse to issue the license and shall give the applicant written notice of such refusal, setting forth the grounds therefor.

The license of any service warranty association may be revoked or suspended, or the office may refuse to renew any such license, if it is determined that the association has violated any lawful rule or order of the commission or office or any provision of this part.

The license of any service warranty association shall be suspended or revoked if it is determined that such association:

The office may, pursuant to s. 120.60, in its discretion and without advance notice or hearing thereon, immediately suspend the license of any service warranty association if it finds that one or more of the following circumstances exist:

A violation of this part by an insurer is grounds for suspension or revocation of the insurer’s certificate of authority in this state.

Suspension or revocation of a service warranty association’s license shall be by order of the office mailed to the association by registered or certified mail. The office shall also promptly give notice of such suspension or revocation to the association’s sales representatives in this state which are of record with the department. The association shall not solicit or write any new service warranties in this state during the period of any such suspension or revocation.

In its discretion, the office may cause notice of any such revocation or suspension to be published in one or more newspapers of general circulation published in this state.

When the license is surrendered, nonrenewed, or revoked, the association shall proceed, immediately following the effective date of the surrender, nonrenewal, or order of revocation, to conclude the affairs transacted under this part. The association shall not solicit, negotiate, advertise, or effectuate new or renewal service warranty contracts. The office retains jurisdiction over the association as it may find to be in the best interest of the contract holders until all contracts have been fulfilled, canceled, or expired.

A suspension of the license of a service warranty association shall be for such period, not to exceed 1 year, as is fixed in the order of suspension, unless such suspension or the order upon which the suspension is based is modified, rescinded, or reversed.

During the period of suspension, the association shall file its annual statement and pay fees, licenses, and taxes as required under this part as if the license had continued in full force.

Upon expiration of the suspension period, if within such period the license has not otherwise terminated, the license of the association shall automatically be reinstated, unless the causes of the suspension have not been removed or the association is otherwise not in compliance with the requirements of this part.

Upon reinstatement of the license of an association, or upon reinstatement of the certificate of authority of an insurer, following suspension, the authority of the sales representatives of the association in this state to represent the association or insurer shall likewise be reinstated.

Each service warranty contract shall contain a cancellation provision. If the contract is canceled by the warranty holder, return of premium shall be based upon no less than 90 percent of unearned pro rata premium less any claims that have been paid or less the cost of repairs made on behalf of the warranty holder. If the contract is canceled by the association, return of premium shall be based upon 100 percent of unearned pro rata premium, less any claims paid or the cost of repairs made on behalf of the warranty holder.

By July 1, 2011, each service warranty contract sold in this state must be accompanied by a written disclosure to the consumer that the rate charged for the contract is not subject to regulation by the office. A service warranty association may comply with this requirement by including such disclosure in its service warranty contract form or in a separate written notice provided to the consumer at the time of sale.

Violates this part;

Is misleading in any respect;

Is reproduced so that any material provision is substantially illegible; or

Contains provisions which are unfair or inequitable or which encourage misrepresentation.

In addition to the license fees provided in this part for service warranty associations and license taxes as provided in the insurance code as to insurers, each such association and insurer shall, annually on or before March 1, file with the office its annual statement, in the form prescribed by the commission, showing all premiums or assessments received by it in connection with the issuance of service warranties in this state during the preceding calendar year and using accounting principles which will enable the office to ascertain whether the financial requirements set forth in s. 634.406 have been satisfied.

The gross amount of premiums and assessments is subject to the sales tax imposed by s. 212.0506.

The office may levy a fine of up to $100 a day for each day an association neglects to file the annual statement in the form and within the time provided by this part. The amount of the fine shall be established by rules adopted by the commission. The office shall deposit all sums collected by it under this section to the credit of the Insurance Regulatory Trust Fund.

The office may suspend or revoke the license of a service warranty association failing to file its annual statement when due.

The commission may by rule require each service warranty association to submit to the office, as the commission may designate, all or part of the information contained in the financial statements and reports required by this section in a computer-readable form compatible with the electronic data processing system specified by the office.

The rate charged a service warranty association by the office for examination may be adjusted to reflect the amount collected for the Form 10-K filing fee as provided in this section.

On or before May 1 of each year, an association may submit to the office the Form 10-K, as filed with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. Upon receipt and review of the most current Form 10-K, the office may waive the examination requirement; if the office determines not to waive the examination, such examination will be limited to that examination necessary to ensure compliance with this part. The Form 10-K shall be accompanied by a filing fee of $2,000 to be deposited into the Insurance Regulatory Trust Fund.

The office is not required to examine an association that has less than $20,000 in gross written premiums as reflected in its most recent annual statement. The office may examine such an association if it has reason to believe that the association may be in violation of this part or is otherwise in an unsound financial condition. If the office examines an association that has less than $20,000 in gross written premiums, the examination fee may not exceed 5 percent of the gross written premiums of the association.

A complete set of accounting records, including, but not limited to, a general ledger, cash receipts and disbursements journals, accounts receivable registers, and accounts payable registers.

A detailed warranty register of warranties in force, by unique identifier. The register shall include the unique identifier, date of issue, issuing sales representative, name of warranty holder and the location of the property to the extent the name and address have been furnished by the warranty holder, warranty period, gross premium, commission to sales representative, and net premium. Associations not collecting the name and address of the warranty holder at the time of sale must provide another method for warranty holders to provide such information, such as Internet registration, return postcard, or other means acceptable to the office.

A detailed centralized claims or service records register which includes the unique identifier, date of issue, date of claim, issuing service representative, amount of claim or service, date claim paid, and, if applicable, disposition other than payment and reason therefor.

All funds belonging to insurers, service warranty associations, or others received by a sales representative in transactions under her or his license or appointment are trust funds so received by the sales representative or agent in a fiduciary capacity; and the sales representative or agent, in the applicable regular course of business, shall account for and pay such funds to the insurer, association, warranty holder, or other person entitled thereto.

Any sales representative who, not being entitled thereto, diverts or appropriates funds or any portion thereof to her or his own use commits theft as provided in s. 812.014.

Material misstatement, misrepresentation, or fraud in obtaining or attempting to obtain a license or appointment.

The license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this part.

Willful misrepresentation of any service warranty contract or willful deception with regard to any such contract, done either in person or by any form of dissemination of information or advertising.

In the adjustment of claims arising out of warranties, material misrepresentation to a service warranty holder or other interested party of the terms and coverage of a contract with the intent and for the purpose of effecting settlement of the claim on less favorable terms than those provided in and contemplated by the contract.

Demonstrated lack of fitness or trustworthiness to engage in the business of service warranty.

Demonstrated lack of adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.

Fraudulent or dishonest practices in the conduct of business under the license or appointment.

Misappropriation, conversion, or unlawful withholding of moneys belonging to an association, insurer, or warranty holder, or to others, and received in the conduct of business under the license or appointment.

Unlawfully rebating, or attempting to unlawfully rebate, or unlawfully dividing, or offering to divide, her or his commission with another.

Willful failure to comply with, or willful violation of, any proper order or rule of the department or commission, or willful violation of any provision of this part.

Being found guilty of or pleading nolo contendere to a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country involving moral turpitude, without regard to whether judgment of conviction has been entered by the court having jurisdiction of the case.

No sales representative shall rebate any portion of his or her commission except as follows:

No rebate shall be withheld or limited in amount based on factors which are unfairly discriminatory.

No rebate shall be given which is not reflected on the rebate schedule.

No rebate shall be refused or granted based upon the purchase of or failure to purchase collateral business.

Any cause for which granting of the license or appointment could have been refused had it then existed and been known to the department.

Violation of any provision of this part, or of any other law applicable to the business of service warranties, in the course of dealings under the license or appointment.

Violation of any lawful order or rule of the department or commission.

Failure or refusal to pay over, upon demand, to any service warranty association or insurer the sales representative represents or has represented any money coming into her or his hands which belongs to the association or insurer.

In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as such methods, acts, or practices are or may be defined under this part, or otherwise showing herself or himself to be a source of injury or loss to the public or detriment to the public interest.

Being found guilty of or pleading guilty or nolo contendere to a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country, without regard to whether judgment of conviction has been entered by the court having jurisdiction of such case.

If any sales representative is convicted by a court of a violation of any provision of this part or an applicable provision of the Florida Insurance Code, the license and appointment of the individual shall thereby be deemed to be immediately revoked without any further procedure relative thereto by the department.

If, after an investigation or upon other evidence, the department has reason to believe that there may exist any one or more grounds for the suspension, revocation, or refusal to renew or continue the license or appointment of any sales representative, as such grounds are specified in ss. 634.422 and 634.423, the department may proceed to suspend, revoke, or refuse to renew or continue the license or appointment, as the case may be.

If the licensed and appointed sales representative also holds a license to perform professional services of the type covered by the service warranty issued, the department shall file with the regulatory authority that issued the license a recommendation that the license be suspended or revoked. Such regulatory authority shall promptly review the recommendation and take appropriate action in accordance with its laws and rules to suspend or revoke the license.

Whenever it appears that any licensed or appointed insurance agent has violated the provisions of this part, the department may take action relative thereto as is authorized by the insurance code for a violation of the insurance code by the agent.

The department shall, in its order suspending a license or appointment, specify the time period during which the suspension is to be in effect. Such period may not exceed 1 year. The license or appointment shall remain suspended during the period so specified, subject to any rescission or modification of the order by the department before the expiration of the suspension period. A license or appointment which has been suspended may not be reinstated except upon request, but the department may not grant reinstatement if it finds that the circumstances for which the license or appointment was suspended still exist or are likely to recur.

No person whose license or appointment has been revoked by the department has the right to apply for another license or appointment within 2 years from the effective date of the revocation or, if judicial review of such revocation is sought, within 2 years from the date of the final court order or decree affirming the revocation. The department, however, may not grant a new license or appointment if it finds that the circumstance or circumstances for which the previous license or appointment was revoked still exist or are likely to recur.

The department may not grant or issue any license or appointment to any individual whose license or appointment has been revoked twice.

During the period of suspension, or after revocation of the license or appointment, the former licensee or appointee may not engage in or attempt to engage in any transaction or business for which a license or appointment is required under this part.

If, pursuant to procedures provided for in this part, it is found that one or more grounds exist for the suspension, revocation, or refusal to renew or continue any license or appointment issued under this part, on a first offense and except when such suspension, revocation, or refusal is mandatory, an order may be entered imposing upon the licensee or appointee, in lieu of such suspension, revocation, or refusal, an administrative penalty for each violation in an amount of up to $500, or in the event of willful misconduct or willful violation on the part of the licensee or appointee, an administrative fine not to exceed $1,000 for each violation. The administrative penalty may be augmented by an amount equal to any commissions received by or accruing to the credit of the licensee or appointee in connection with any transaction to which the grounds for suspension, revocation, or refusal are related.

The order may allow the licensee or appointee a reasonable period, not to exceed 30 days, within which to pay to the department or office the amount of the penalty so imposed. If the licensee or appointee fails to pay the penalty in its entirety to the department or office within the period so allowed, the license and appointment of the licensee or appointee shall stand suspended or revoked or renewal or continuation may be refused, as the case may be, upon expiration of such period and without any further proceedings.

Except as provided in subsection (2), the dissolution or liquidation of an association subject to the provisions of this part shall be under the supervision of the department, which shall have all powers with respect thereto granted to it under the laws of the state with respect to the dissolution and liquidation of property and casualty companies pursuant to chapter 631. An involuntary dissolution or liquidation of a manufacturer licensed under this part shall subject the warranty operations of the manufacturer in this state to the provisions of chapter 631.

The department and office shall be notified of the commencement of voluntary dissolution proceedings of a manufacturer licensed under this part. As to the warranty operations of a manufacturer in this state, the department shall supervise the voluntary dissolution and shall require protection of the interests of the department, office, and consumers who have been issued service warranties by the manufacturer by the continuation of deposits or bonds as required by this part until that time as all warranties issued by the manufacturer are no longer in effect or all outstanding warranties have been assigned to another association approved by the department and office. The notification as provided herein shall be made by the manufacturer within 30 days of the commencement of any legal action for dissolution.

Any person damaged by a violation of the provisions of this part may bring a civil action against a person violating such provisions in the circuit court of the county in which the alleged violator resides or has her or his principal place of business or in the county in which the alleged violation occurred. Upon adverse adjudication, the defendant will be liable for actual damages or $500, whichever is greater, together with court costs and reasonable attorney’s fees incurred by the plaintiff.

No punitive damages may be awarded under this section unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are:

Any person who pursues a claim under this subsection shall post in advance the costs of discovery. Such costs shall be awarded to the insurer if no punitive damages are awarded to the plaintiff.

As a condition precedent to bringing an action under this section, the department and the insurer shall be given written notice of the violation. The notice shall state with specificity the facts which allegedly constitute the violation and the law upon which the plaintiff is relying and shall state that such notice is given in order to perfect the right to pursue the civil remedy authorized by this section. No action will lie if, within 30 days thereafter, the damages are paid or the circumstances giving rise to the violation are corrected.

This section shall not be construed to authorize a class action suit against a service warranty association or a civil action against the department, the office, their employees, or the Chief Financial Officer.

MISREPRESENTATION AND FALSE ADVERTISING OF INSURANCE POLICIES.—Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:

FALSE INFORMATION AND ADVERTISING GENERALLY.—Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public:

an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of service warranty, which assertion, representation, or statement is untrue, deceptive, or misleading.

DEFAMATION.—Knowingly making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of, any oral or written statement, or any pamphlet, circular, article, or literature, which is false or maliciously critical of, or derogatory to, any person and which is calculated to injure such person.

FALSE STATEMENTS AND ENTRIES.—

UNFAIR CLAIM SETTLEMENT PRACTICES.—

FAILURE TO MAINTAIN PROCEDURES FOR HANDLING COMPLAINTS.—Failing to maintain a record of each complaint received for a 3-year period after the date of the receipt of the written complaint.

DISCRIMINATORY REFUSAL TO ISSUE A CONTRACT.—Refusing to issue a contract solely because of an individual’s race, color, creed, marital status, sex, or national origin.

FREE SERVICE WARRANTIES.—

FAILURE TO PROVIDE TERMS AND CONDITIONS PRIOR TO SALE.—Failing to provide a consumer with a complete sample copy of the terms and conditions of the service warranty prior to before the time of sale upon a request for the same by the consumer. A service warranty association may comply with this subsection by providing the consumer with a sample copy of the terms and conditions of the warranty contract or by directing the consumer to a website that displays a complete sample of the terms and conditions of the contract.

Whenever the department or office has reason to believe that any person has engaged, or is engaging, in this state in any unfair method of competition or any unfair or deceptive act or practice as defined in s. 634.436, or is engaging in the business of service warranty without being properly licensed as required by this part, and that a proceeding by the department or office in respect thereto would be in the interest of the public, the department or office shall conduct or cause to have conducted a hearing in accordance with chapter 120.

The department or office, a duly empowered hearing officer, or an administrative law judge shall, during the conduct of such hearing, have those powers enumerated in s. 120.569; however, the penalty for failure to comply with a subpoena or with an order directing discovery is limited to a fine not to exceed $1,000 per violation.

A statement of charges, notice, or order under this part may be served by anyone duly authorized by the department or office, either in the manner provided by law for service of process in civil actions or by certifying and mailing a copy thereof to the person affected by such statement, notice, order, or other process at her or his or its residence or principal office or place of business. The verified return by the person so serving such statement, notice, order, or other process, setting forth the manner of the service, is proof of the same; and the return postcard receipt for such statement, notice, order, or other process, certified and mailed as provided in this subsection, is proof of service of the same.

The suspension or revocation of such person’s license, or eligibility for any license, if the person knew, or reasonably should have known, she or he was in violation of this part.

If it is determined that the person charged has provided or offered to provide service warranties without proper licensure, the imposition of an administrative penalty not to exceed $1,000 for each service warranty contract offered or effectuated.

A monetary penalty of not more than $50,000 as to all matters determined in such hearing.

The suspension or revocation of such person’s license or eligibility to hold a license.