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2017 Florida Statutes
Chapter 634
WARRANTY ASSOCIATIONS
WARRANTY ASSOCIATIONS
CHAPTER 634
WARRANTY ASSOCIATIONS
PART I
MOTOR VEHICLE SERVICE AGREEMENT COMPANIES(ss. 634.011-634.288)
PART II
HOME WARRANTY ASSOCIATIONS(ss. 634.301-634.348)
PART III
SERVICE WARRANTY ASSOCIATIONS(ss. 634.401-634.444)
PART I
MOTOR VEHICLE SERVICEAGREEMENT COMPANIES
634.011 Definitions.
634.021 Powers of department, commission, and office; rules.
634.023 Part exclusive; applicability of other laws.
634.031 License required.
634.041 Qualifications for license.
634.042 Prohibited investments and loans.
634.044 Assets and liabilities.
634.045 Guarantee agreements.
634.052 Required deposit.
634.053 Levy upon deposit limited.
634.061 Application for and issuance of license.
634.071 License continuance.
634.081 Suspension or revocation of license; grounds.
634.095 Prohibited acts.
634.101 Order, notice of suspension or revocation of license; effect; publication.
634.111 Duration of suspension; obligations of company during suspension period; reinstatement.
634.121 Forms, required procedures, provisions.
634.1213 Noncompliant forms.
634.131 Tax on premiums and assessments.
634.136 Office records required.
634.137 Financial and statistical reporting requirements.
634.141 Examination of companies.
634.151 Service of process; appointment of commissioner as process agent.
634.161 Service of process; method.
634.171 Salesperson to be licensed and appointed.
634.181 Grounds for compulsory refusal, suspension, or revocation of license or appointment of salespersons.
634.1815 Rebating; when allowed.
634.191 Grounds for discretionary refusal, suspension, or revocation of license or appointment of salespersons.
634.201 Refusal, suspension, or revocation of license or appointment of salespersons.
634.211 Administrative fine in lieu of suspension or revocation of license or appointment.
634.221 Disposition of taxes and fees.
634.231 Insurance business not authorized.
634.241 Prohibition against fronting.
634.242 Injunctive proceedings.
634.251 Penalty for violation.
634.2515 Penalty for selling agreements of a nonlicensed company.
634.252 Acquisition.
634.253 Delinquency proceedings.
634.261 Voluntary compliance in lieu of suspension or revocation.
634.271 Civil remedy.
634.2815 Unfair methods of competition and unfair or deceptive acts or practices prohibited.
634.282 Unfair methods of competition and unfair or deceptive acts or practices defined.
634.2825 Motor vehicle service agreement cost specified in “price package.”
634.283 Power of department and office to examine and investigate.
634.284 Prohibited practices; hearings; procedure; service of process.
634.285 Cease and desist and penalty orders.
634.2855 Unauthorized entities; gifts and grants.
634.286 Appeals from orders of the department or office.
634.287 Penalty for violation of cease and desist order.
634.288 Civil liability.
634.011 Definitions.—As used in this part, the term:
(1) “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.
(2) “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. The term “additive product” does not include a product applied to the exterior or interior surface of a motor vehicle to protect the appearance of the motor vehicle.
(3) “Affiliate” means any entity which exercises control over or is controlled by the motor vehicle service agreement company or insurer, directly or indirectly, through:
(a) Equity ownership of voting securities;
(b) Common managerial control; or
(c) Collusive participation by the management of the motor vehicle service agreement company or insurer and affiliate in the management of the motor vehicle service agreement company or insurer or the affiliate.
(4) “Gross premium written” means the total amount of premiums paid by the agreement holder, inclusive of commissions, for those agreements which are in force.
(5) “Insurer” means any property or casualty insurer duly authorized to transact such business in this state.
(6) “Motor vehicle” means:
(a) A self-propelled device operated solely or primarily upon roadways to transport people or property, or the component part of such a self-propelled device, except such term does not include any self-propelled vehicle, or component part of such vehicle, which:
1. Has a gross vehicle weight rating of 10,000 pounds or more, and is not a recreational vehicle as defined by s. 320.01(1)(b);
2. Is designed to transport more than 10 passengers, including the driver; or
3. Is used in the transportation of materials found to be hazardous for the purposes of the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss. 1801 et seq.; or
(b) A self-propelled device operated solely or primarily upon water for noncommercial, personal use, the engine of such a vehicle, or a trailer or other device used to transport such vehicle or device.
(7) “Motor vehicle manufacturer” means an entity that:
(a) Manufactures or produces motor vehicles and sells motor vehicles under its own name or label;
(b) Is a subsidiary of an entity that manufactures or produces motor vehicles; or
(c) Is a corporation that owns 100 percent of an entity that manufactures or produces motor vehicles.
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.
(8) “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. The term “motor vehicle service agreement” includes any contract or agreement that provides:
(a) For the coverage or protection defined in this subsection and which is issued or provided in conjunction with an additive product applied to the motor vehicle that is the subject of such contract or agreement;
(b) For payment of vehicle protection expenses.
1.a. “Vehicle protection expenses” means a preestablished flat amount payable for the loss of or damage to a vehicle or expenses incurred by the service agreement holder for loss or damage to a covered vehicle, including, but not limited to, applicable deductibles under a motor vehicle insurance policy; temporary vehicle rental expenses; expenses for a replacement vehicle that is at least the same year, make, and model of the stolen motor vehicle; sales taxes or registration fees for a replacement vehicle that is at least the same year, make, and model of the stolen vehicle; or other incidental expenses specified in the agreement.
b. “Vehicle protection product” means a product or system installed or applied to a motor vehicle or designed to prevent the theft of the motor vehicle or assist in the recovery of the stolen motor vehicle.
2. Vehicle protection expenses shall be payable in the event of loss or damage to the vehicle as a result of the failure of the vehicle protection product to prevent the theft of the motor vehicle or to assist in the recovery of the stolen motor vehicle. Vehicle protection expenses covered under the agreement shall be clearly stated in the service agreement form, unless the agreement provides for the payment of a preestablished flat amount, in which case the service agreement form shall clearly identify such amount.
3. Motor vehicle service agreements providing for the payment of vehicle protection expenses shall either:
a. Reimburse a service agreement holder for the following expenses, at a minimum: deductibles applicable to comprehensive coverage under the service agreement holder’s motor vehicle insurance policy; temporary vehicle rental expenses; sales taxes and registration fees on a replacement vehicle that is at least the same year, make, and model of the stolen motor vehicle; and the difference between the benefits paid to the service agreement holder for the stolen vehicle under the service agreement holder’s comprehensive coverage and the actual cost of a replacement vehicle that is at least the same year, make, and model of the stolen motor vehicle; or
b. Pay a preestablished flat amount to the service agreement holder.
Payments shall not duplicate any benefits or expenses paid to the service agreement holder by the insurer providing comprehensive coverage under a motor vehicle insurance policy covering the stolen motor vehicle; however, the payment of vehicle protection expenses at a preestablished flat amount of $5,000 or less does not duplicate any benefits or expenses payable under any comprehensive motor vehicle insurance policy;
(c) For repair or replacement of tires or wheels on a motor vehicle damaged as a result of encountering a road hazard;
(d) For removal of dents, dings, or creases on a motor vehicle that may be repaired using the process of paintless dent removal without affecting the existing paint finish and without using replacement body panels, or sanding, bonding, or painting; or
(e) For replacement of a motor vehicle key or key fob if the key or key fob is inoperable, lost, or stolen.
(9) “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.
(10) “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.
(11) “Person” shall have the same meaning as defined in s. 624.04.
(12) “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.
(13) “Rate” means the unit charge by which the measure of exposure in a service agreement is multiplied to determine the premium.
(14) “Road hazard” means a danger that is encountered while operating a motor vehicle. The term includes, but is not limited to, potholes, rocks, debris, metal parts, glass, plastic, curbs, and composite scraps. The term does not include any damage caused by collision with another vehicle, vandalism, or other causes usually covered under the comprehensive or collision coverages provided by an automobile physical damage policy.
(15) “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.
(16) “Unearned premium” means that portion of the gross written premium which has not been earned on a straight pro rata basis.
(17) “Unearned premium reserve” means unencumbered assets equal to 50 percent of the unearned premium.
(18) “Unearned gross written premium” means that portion of the gross written premium which has not been amortized or earned on a pro rata basis.
History.—s. 1, ch. 59-110; ss. 13, 35, ch. 69-106; s. 268, ch. 71-377; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 1, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 1, 32, 33, ch. 82-234; s. 5, ch. 85-321; s. 1, ch. 88-46; s. 1, ch. 89-125; ss. 9, 68, ch. 91-106; ss. 1, 20, ch. 93-195; s. 1, ch. 94-280; s. 1, ch. 97-74; s. 452, ch. 97-102; s. 1, ch. 2001-281; s. 1, ch. 2002-86; s. 1, ch. 2003-150; s. 1415, ch. 2003-261; s. 1, ch. 2005-258; s. 2, ch. 2008-178; s. 10, ch. 2010-175; s. 1, ch. 2012-77; s. 1, ch. 2016-60.
634.021 Powers of department, commission, and office; rules.—The office shall administer this act and the commission may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of this act related to motor vehicle service agreement companies and motor vehicle service agreements. The department shall administer this act and may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of this act related to sales representatives.
History.—s. 2, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 2, 32, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 209, ch. 98-200; s. 1416, ch. 2003-261; s. 95, ch. 2006-1.
634.023 Part exclusive; applicability of other laws.—
(1) 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.
(2) 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.
History.—ss. 6, 51, ch. 85-321; s. 18, ch. 88-206; s. 68, ch. 91-106; s. 20, ch. 93-195.
634.031 License required.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
History.—s. 3, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 2, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 3, 32, 33, ch. 82-234; ss. 10, 68, ch. 91-106; ss. 2, 20, ch. 93-195; s. 1, ch. 95-245; s. 277, ch. 96-410; s. 1746, ch. 97-102; s. 1, ch. 2003-168; s. 1417, ch. 2003-261; s. 1, ch. 2006-272; s. 11, ch. 2010-175.
634.041 Qualifications for license.—To qualify for and hold a license to issue service agreements in this state, a service agreement company must be in compliance with this part, with applicable rules of the commission, with related sections of the Florida Insurance Code, and with its charter powers and must comply with the following:
(1) 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.
(2) 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.
(3) The service agreement company must make the deposit required under s. 634.052.
(4) 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.
(5) 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.
(6) 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.
(7) All assets used to maintain the minimum net asset requirement must be maintained in the United States.
(8)(a) A service agreement company must establish and maintain an unearned premium reserve in accordance with the following:
1. It must consist of unencumbered assets equal to a minimum of 50 percent of the unearned gross written premium on each service agreement and must amortize this reserve pro rata over the duration of the service agreement. Such assets must be held in the form of cash or invested in securities for investment under ss. 625.301-625.340.
2. In addition to the net asset requirements set forth in subsection (6), a company utilizing the 50-percent reserve must not allow its ratio of gross written premium in force to net assets to exceed 10 to 1. For companies that have utilized both contractual liability insurance and the 50-percent reserve, this ratio must be calculated based only on that portion of gross written premium in force which is covered by the 50-percent reserve.
3. A company that uses an unearned premium reserve must deposit with the department securities of the type eligible for deposit by insurers under s. 625.52 equal to 15 percent of the unearned premium reserve. This reserve deposit may be included as an asset for calculating the requirement of subparagraph 1. A request for release of the reserve deposit may be made quarterly only after the office has approved the company’s current quarterly or annual financial statement and a statement sworn to by two officers of the company, verifying that the release will not reduce the reserve deposit to less than 15 percent of the unearned premium reserve.
(b) A service agreement company does not have to establish and maintain an unearned premium reserve if it secures and maintains contractual liability insurance in accordance with the following:
1. Coverage of 100 percent of the claim exposure is obtained from an insurer approved by the office, which holds a certificate of authority under s. 624.401 to do business within this state, or secured through a risk retention group, which is authorized to do business within this state under s. 627.943 or s. 627.944. Such insurer or risk retention group must maintain a surplus as regards policyholders of at least $15 million.
2. If the service agreement company does not meet its contractual obligations, the contractual liability insurance policy binds its issuer to pay or cause to be paid to the service agreement holder all legitimate claims and cancellation refunds for all service agreements issued by the service agreement company while the policy was in effect. This requirement also applies to those service agreements for which no premium has been remitted to the insurer.
3. If the issuer of the contractual liability policy is fulfilling the service agreements covered by the contractual liability policy and the service agreement holder cancels the service agreement, the issuer must make a full refund of unearned premium to the consumer, subject to the cancellation fee provisions of s. 634.121(3). The sales representative and agent must refund to the contractual liability policy issuer their unearned pro rata commission.
4. The policy may not be canceled, terminated, or nonrenewed by the insurer or the service agreement company unless a 90-day written notice thereof has been given to the office by the insurer before the date of the cancellation, termination, or nonrenewal.
5. The service agreement company must provide the office with the claims statistics.
All funds or premiums remitted to an insurer by a motor vehicle service agreement company under this part shall remain in the care, custody, and control of the insurer and shall be counted as an asset of the insurer; provided, however, this requirement does not apply when the insurer and the motor vehicle service agreement company are affiliated companies and members of an insurance holding company system. If the motor vehicle service agreement company chooses to comply with this paragraph but also maintains a reserve to pay claims, such reserve shall only be considered an asset of the covered motor vehicle service agreement company and may not be simultaneously counted as an asset of any other entity.
(9)(a) In meeting the requirements of this part, except as provided in paragraph (b), a service agreement company may not utilize both the 50-percent reserve and contractual liability insurance simultaneously. However, a company may have contractual liability coverage on service agreements previously sold and sell new service agreements covered by the 50-percent reserve, and the converse of this is also allowed. A service agreement company must be able to distinguish how each individual service agreement is covered.
(b) A service agreement company that maintains net assets of at least $10 million and that annually files with the office a financial statement audited in accordance with generally accepted accounting principles may use either the 50-percent reserve or the contractual liability coverage for specific blocks of new service agreements. For purposes of this subsection, the term “specific blocks of new service agreements” means the service agreements sold by a single designated licensed salesperson. A service agreement company must be able to distinguish how each individual service agreement is covered. A service agreement company using the 50-percent premium reserve, as permitted under this subsection, must obtain contractual liability insurance coverage for any future deficits in the premium reserve account directly attributable to the specific blocks of new agreements written. Such a contractual liability insurance policy must be filed with the office. Such policies or endorsements to an existing policy must contain language evidencing that the contractual liability insurance policy shall pay claims arising out of such specific blocks of agreements if the service agreement company cannot or will not pay such claims. All contractual liability insurance policies issued to a service agreement company under this part must cover all agreements issued during the term of the policy and, for purposes of this section, the company must obtain and file with the office endorsements to that policy identifying the specific blocks of agreements not covered thereunder.
(10) 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.
(11)(a) A service agreement company offering service agreements providing vehicle protection expenses may meet the requirements for this part only by maintaining contractual liability insurance covering 100 percent of its vehicle protection claim exposure in accordance with paragraph (8)(b). Service agreements providing vehicle protection expenses may be sold only to a service agreement holder that has in-force comprehensive motor vehicle insurance coverage for the vehicle to be covered by the service agreement.
(b) Notwithstanding any other requirement of this part, a service agreement company maintaining an unearned premium reserve on all service agreements in accordance with paragraph (8)(a) may offer service agreements providing vehicle protection expenses if it maintains contractual liability insurance only on all service agreements providing vehicle protection expenses and continues to maintain the 50-percent reserve for all service agreements not providing vehicle protection expenses. A service agreement company maintaining contractual liability insurance for all service agreements providing vehicle protection expenses and the 50-percent reserve for all other service agreements must, in the service agreement register as required under s. 634.136(2), distinguish between insured service agreements providing vehicle protection expenses and service agreements not providing vehicle protection expenses.
(12) 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.
History.—s. 4, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 3, ch. 78-231; ss. 2, 3, ch. 80-149; ss. 2, 3, ch. 81-318; ss. 4, 32, 33, ch. 82-234; s. 131, ch. 83-216; s. 2, ch. 89-125; s. 1, ch. 90-153; ss. 11, 68, ch. 91-106; ss. 3, 20, ch. 93-195; s. 1, ch. 99-293; s. 2, ch. 2002-86; s. 2, ch. 2003-150; s. 1418, ch. 2003-261; s. 2, ch. 2005-258; s. 3, ch. 2008-178; s. 12, ch. 2010-175; s. 1, ch. 2017-99.
634.042 Prohibited investments and loans.—A motor vehicle service agreement company shall not directly or indirectly invest in or lend its funds upon the security of any note or other evidence of indebtedness of any director, officer, or controlling stockholder of the motor vehicle service agreement company. This prohibition applies only to investments and loans initially reported on motor vehicle service agreement financial statements after the third quarterly statement for 2006.
History.—s. 2, ch. 2006-272.
634.044 Assets and liabilities.—
(1) 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:
(a) Cash in the possession of the service agreement company, or in transit under its control, including the true balance of any deposit in a solvent bank, savings and loan association, or trust company which is domiciled in the United States.
(b) Investments, securities, properties, and loans acquired or held in accordance with this part, and in connection therewith the following items:
1. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.
2. Declared and unpaid dividends on stock and shares, unless the amount of the dividends has otherwise been allowed as an asset.
3. Interest due or accrued upon a collateral loan which is not in default in an amount not to exceed 1 year’s interest thereon.
4. Interest due or accrued on deposits or certificates of deposit in solvent banks, savings and loan associations, and trust companies domiciled in the United States, and interest due or accrued on other assets, if such interest is in the judgment of the office a collectible asset.
5. Interest due or accrued on current mortgage loans, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 90 days be allowed as an asset.
6. Rent due or accrued on real property if such rent is not in arrears for more than 3 months. However, in no event shall rent accrued for a period in excess of 90 days be allowed as an asset.
7. The unaccrued portion of taxes paid prior to the due date on real property.
(c) Furniture, fixtures, furnishings, vehicles, and equipment, if the original cost of each item is at least $200, which cost shall be amortized in full over a period not to exceed 5 calendar years, unless otherwise approved by the office.
(d) Part inventories maintained for the purpose of servicing products warranted. Part inventories must be listed at cost. Service agreement companies are required to maintain records to support valuation of part inventories.
(e) The liquidation value of prepaid expenses.
(f) Other assets or receivables, not inconsistent with the provisions of this section, deemed by the office to be available for the payment of losses and claims, at values to be determined by the office.
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.
(2) 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:
(a) Goodwill, agreement holder lists, patents, trade names, agreements not to compete, and other like intangible assets.
(b) Any note or account receivable from or advances to officers, directors, or controlling stockholders, whether secured or not, and advances to employees, agents, or other persons on personal security only.
(c) Stock of the service agreement company owned by it directly or owned by it through any entity in which the organization owns or controls, directly or indirectly, more than 25 percent of the ownership interest.
(d) Leasehold improvements, stationery, and literature, except that leasehold improvements made prior to October 1, 1991, shall be allowed as an asset and shall be amortized over the shortest of the following periods:
1. The life of the lease.
2. The useful life of the improvements.
3. The 3-year period following October 1, 1991.
(e) Furniture, fixtures, furnishings, vehicles, and equipment, other than those items authorized under paragraph (1)(c).
(f) Notes or other evidences of indebtedness which are secured by mortgages or deeds of trust which are in default and beyond the express period specified in the instrument for curing the default.
(g) Bonds in default for more than 60 days.
(h) Deferred costs other than the liquidation value of prepaid expenses except for those companies that reserve 100 percent of gross written premium.
(i) Any note, account receivable, advance, or other evidence of indebtedness, or investment in:
1. The parent of the service agreement company;
2. Any entity directly or indirectly controlled by the service agreement company parent;
3. An affiliate of the parent or the service agreement company; however, receivables from the parent or affiliated companies shall be considered an admitted asset of the company when the office is satisfied that the repayment of receivables, loans, and advances from the parent or the affiliated company are guaranteed by an organization in accordance with s. 634.045; or
4. Officers, directors, shareholders, employees, or salespersons of the service agreement company; however, premium receivables under 45 days old may be considered an admitted asset.
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.
(3) 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:
(a) The amount, in conformity with generally accepted accounting principles, necessary to pay all of its unpaid losses and claims incurred for or on behalf of an agreement holder, on or prior to the end of the reporting period, whether reported or unreported.
(b) Taxes, expenses, and other obligations due or accrued at the date of the statement.
(c) Reserve for unearned premiums.
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.
History.—ss. 12, 68, ch. 91-106; s. 20, ch. 93-195; s. 453, ch. 97-102; s. 2, ch. 2001-281; s. 1419, ch. 2003-261.
634.045 Guarantee agreements.—In order to include receivables from affiliated companies as assets under s. 634.041, the motor vehicle service agreement company shall provide a written guarantee to assure repayment of all receivables, loans, and advances from affiliated companies, provided that the written guarantee is made by a guaranteeing organization which:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) The filings made by a guarantee organization pursuant to this section are confidential and exempt from the provisions of s. 119.07(1).
(6) 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.
History.—s. 2, ch. 90-153; s. 68, ch. 91-106; s. 19, ch. 91-201; s. 115, ch. 92-318; s. 1, ch. 93-117; s. 20, ch. 93-195; s. 393, ch. 96-406; s. 278, ch. 96-410; s. 1420, ch. 2003-261.
634.052 Required deposit.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
History.—s. 5, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 4, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 5, 32, 33, ch. 82-234; s. 132, ch. 83-216; ss. 13, 68, ch. 91-106; s. 184, ch. 91-108; s. 20, ch. 93-195; s. 1421, ch. 2003-261.
634.053 Levy upon deposit limited.—A judgment creditor or other claimant of a motor vehicle service agreement company does not have the right to levy upon any of the assets or securities held in this state as a deposit under s. 634.052. However, to pay any unpaid obligation to this state, the office may levy upon any of the assets of a motor vehicle service agreement company found to be insolvent or found to be bankrupt by any court.
History.—ss. 36, 51, ch. 85-321; s. 68, ch. 91-106; ss. 4, 20, ch. 93-195; s. 1422, ch. 2003-261.
634.061 Application for and issuance of license.—
(1) 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.
(2) In addition to information relative to its qualifications as called for under s. 634.041, the application shall show:
(a) The location of the applicant’s home office.
(b) The name and residence address of each director, officer, and 10-percent or greater stockholder of the applicant.
(c) Other pertinent information as required by the commission or office.
(3) The application when filed shall be accompanied by:
(a) If a corporation or partnership, a copy of the applicant’s articles of incorporation or partnership document, if any, certified by the public official having custody of the original and a copy of its bylaws certified by its secretary.
(b) A copy of the most recent financial statement of the applicant, verified under the oath of at least two of its principal officers.
(c) The license tax as required under s. 634.071.
(4) 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.
History.—s. 6, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 6, 32, 33, ch. 82-234; ss. 14, 68, ch. 91-106; ss. 5, 20, ch. 93-195; s. 1423, ch. 2003-261.
634.071 License continuance.—A license issued under this part shall continue in force as long as the motor vehicle service agreement company is entitled thereto under this part and until suspended, revoked, or terminated. Annually, in conjunction with the March 1 filing of the annual report, each motor vehicle service agreement company shall file a $100 license fee.
History.—s. 7, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 7, 32, 33, ch. 82-234; ss. 15, 68, ch. 91-106; s. 20, ch. 93-195.
634.081 Suspension or revocation of license; grounds.—
(1) 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.
(2) The office shall suspend or revoke the license of a motor vehicle service agreement company if it finds that the company:
(a) Is impaired or insolvent as defined in s. 631.011 or in unsound condition, or in a condition, or using methods and practices in the conduct of its business, as to render its further transaction of service agreements in this state hazardous or injurious to its service agreement holders or to the public.
(b) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers have refused to give information with respect to its affairs or to perform any other legal obligation as to the examination, when required by the office.
(c) Has failed to pay any fees, taxes, or other assessments within 90 days after their due date.
(d) Has failed to pay any final judgment rendered against it in this state within 90 days after the judgment became final.
(e) With a frequency as to indicate its general business practice in this state, has without just cause refused to pay proper claims arising under its service agreements, or without just cause compels service agreement holders to accept less than the amount due them or to employ attorneys or to bring suit against the service agreement company to secure full payment or settlement of proper claims.
(f) Is affiliated with, or under the same general management or interlocking directorate or ownership of, another motor vehicle service agreement company or person who transacts service agreements in or from this state without a subsisting license.
(g) Fails to affirm or deny coverage of a claim upon written request of the agreement holder within a reasonable time after notification of the claim.
(h) Fails to promptly provide a reasonable explanation in writing if requested by the agreement holder of the basis in the service agreement in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(3) 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.
(4) A violation of this act by an insurer is grounds for suspension or revocation of the insurer’s certificate of authority in this state.
(5) 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.
History.—s. 8, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; s. 7, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 8, 32, 33, ch. 82-234; s. 133, ch. 83-216; s. 3, ch. 89-125; ss. 16, 68, ch. 91-106; ss. 6, 20, ch. 93-195; s. 2, ch. 95-245; s. 1424, ch. 2003-261.
634.095 Prohibited acts.—Any service agreement company or salesperson that engages in one or more of the following acts is, in addition to any applicable denial, suspension, revocation, or refusal to renew or continue any appointment or license, guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083:
(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.
(2) 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.
(3) Issuing or causing to be issued any advertisement which:
(a) Does not fully disclose in boldfaced type the name, address, and license number of the service agreement company.
(b) In any respect is in violation of or does not comply with this part, applicable provisions of the Florida Insurance Code, or applicable rule of the commission.
(c) Is ambiguous, misleading, or deceptive.
(d) Is false, deceptive, or misleading with respect to:
1. The service agreement company’s affiliation with a motor vehicle manufacturer;
2. The service agreement company’s possession of information regarding a motor vehicle owner’s current motor vehicle manufacturer’s original equipment warranty;
3. The expiration of a motor vehicle owner’s current motor vehicle manufacturer’s original equipment warranty; or
4. Any requirement that the motor vehicle owner register for a new motor vehicle service agreement with the company in order to maintain coverage under the current motor vehicle service agreement or manufacturer’s original equipment warranty.
(4) Denying claims for lack of service or maintenance on component parts that do not require servicing or routine maintenance or are unrelated to servicing.
(5) 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.
(6) The practice, known as sliding, by any person whereby the person:
(a) Represents to the applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of a service agreement, when in fact the specific ancillary coverage or product is not required;
(b) Represents to the applicant that a specific ancillary coverage or product is included in the service agreement applied for without an additional charge, when in fact an additional charge is applied; or
(c) Charges an applicant for a specific ancillary coverage or product, over and above the cost of the service coverage applied for, without the informed consent of the applicant.
(7) 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.
History.—ss. 17, 68, ch. 91-106; s. 20, ch. 93-195; s. 454, ch. 97-102; s. 1425, ch. 2003-261; s. 13, ch. 2010-175.
634.101 Order, notice of suspension or revocation of license; effect; publication.—
(1) 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.
(2) 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.
(3) 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.
History.—s. 10, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 9, 32, 33, ch. 82-234; ss. 18, 68, ch. 91-106; s. 20, ch. 93-195; s. 455, ch. 97-102; s. 1426, ch. 2003-261.
634.111 Duration of suspension; obligations of company during suspension period; reinstatement.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
History.—s. 11, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 10, 32, 33, ch. 82-234; s. 134, ch. 83-216; s. 68, ch. 91-106; ss. 7, 20, ch. 93-195; s. 456, ch. 97-102; s. 1427, ch. 2003-261.
634.121 Forms, required procedures, provisions.—
(1) 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.
(2) 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.
(3)(a) Each service agreement must contain a cancellation provision. Any service agreement is cancelable by the purchaser within 60 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 agreement holder.
(b) After the service agreement has been in effect for 60 days, it may not be canceled by the insurer or service agreement company unless:
1. There has been a material misrepresentation or fraud at the time of sale of the service agreement;
2. The agreement holder has failed to maintain the motor vehicle as prescribed by the manufacturer;
3. The odometer has been tampered with or disabled and the agreement holder has failed to repair the odometer; or
4. For nonpayment of premium by the agreement holder, in which case the service agreement company shall provide the agreement holder notice of cancellation by certified mail.
If the service agreement is canceled by the insurer or service agreement company, the return of premium must not be less than 100 percent of the paid unearned pro rata premium, less any claims paid on the agreement. If, after 60 days, the service agreement is canceled by the service agreement holder, lender, finance company, or creditor, the insurer or service agreement company shall return directly to the agreement holder not less than 90 percent of the unearned pro rata premium, less any claims paid on the agreement. Cancellations initiated by lenders, creditors, or finance companies are only valid if authorized by the terms of the service agreement. The service agreement company remains responsible for full refunds to the consumer on canceled service agreements. However, the salesperson and agent are responsible for the refund of the unearned pro rata commission. A service agreement company may effectuate refunds through the issuing salesperson or agent in accordance with paragraphs (c) and (d).
(c) If the service agreement company effectuates refunds through the issuing salesperson or agent, the service agreement company must send the unearned pro rata premium refund due, less any unearned pro rata commission, to the salesperson or agent effectuating the refund. Upon receipt, the salesperson or agent must refund the unearned pro rata premium, including any unearned pro rata commission, and the sales tax refund owed to the service agreement holder.
(d) The salesperson, agent, or service agreement company shall maintain a copy of one of the following documents, as applicable, demonstrating that the refund owed pursuant to paragraph (c) has been refunded:
1. A copy of the front and back of the canceled check for the applicable refund amount owed to the service agreement holder;
2. A copy of the front of the check for the applicable refund amount owed to the service agreement holder and a copy of the statement from the bank account on which the check was drawn showing that the check was cashed;
3. A copy of the front of the check issued by the service agreement company to the salesperson or agent in the amount of the service agreement company’s portion of the refund owed to the service agreement holder and a copy of the statement from the bank account on which the check was drawn showing that the check was cashed;
4. A copy of a completed buyer’s order demonstrating that the applicable refund amount owed to the service agreement holder was credited toward the purchase or lease of another vehicle;
5. Any document received from or sent to a lender, finance company, or creditor demonstrating that a loan or amount financed by the agreement holder was decreased by the amount of the applicable refund amount owed to the service agreement holder; or
6. Any other evidence approved by the office in a written communication to a person licensed pursuant to this part demonstrating that the applicable refund amount due to the service agreement holder was properly made.
A salesperson or agent effectuating a refund shall maintain a copy of the documentation required by this paragraph and shall provide a copy to the service agreement company within 45 days after a request is made by the department or the office to either the service agreement company or the salesperson.
(e) If the office finds that a salesperson or agent exhibits a pattern or practice of failing to properly effectuate refunds owed or to maintain and remit to the service agreement company the documentation required by paragraph (d), the office shall notify the department of its finding.
(4) 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.
(5) 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.
(6) Each service agreement, which includes a copy of the application form, must be mailed, delivered, or electronically transmitted to the agreement holder within 45 days after the date of purchase. Electronic transmission of a service agreement constitutes delivery to the agreement holder. The electronic transmission must notify the agreement holder of his or her right to receive the service agreement via United States mail rather than electronic transmission. If the agreement holder communicates to the service agreement company electronically or in writing that he or she does not agree to receipt by electronic transmission, a paper copy of the service agreement shall be provided to the agreement holder.
(7) 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.
(8) 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.
(9) 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.
(10) 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.
(11) 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.
History.—s. 12, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 8, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 11, 32, 33, ch. 82-234; s. 26, ch. 83-288; ss. 19, 68, ch. 91-106; ss. 8, 20, ch. 93-195; s. 3, ch. 95-245; s. 2, ch. 97-74; s. 457, ch. 97-102; s. 2, ch. 99-293; s. 3, ch. 2002-86; s. 3, ch. 2003-150; s. 1428, ch. 2003-261; s. 14, ch. 2010-175; s. 2, ch. 2012-77; s. 1, ch. 2014-111; s. 2, ch. 2017-99.
634.1213 Noncompliant forms.—The office may order a service agreement company to stop using any service agreement form that:
(1) 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.
(2) 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.
(3) Has any title, heading, or other indication of its provisions which is misleading.
(4) Is printed or otherwise reproduced in such manner as to render any material provision of the form substantially illegible.
(5) Contains any provision which is unfair or inequitable or which encourages misrepresentation.
(6) Contains any provision which makes it difficult to determine the actual insurer or service agreement company issuing the form.
(7) Contains any provision for reducing claim payments due to depreciation of parts, except for marine engines.
History.—ss. 12, 33, ch. 82-234; ss. 20, 68, ch. 91-106; s. 20, ch. 93-195; s. 1429, ch. 2003-261; s. 15, ch. 2010-175.
634.131 Tax on premiums and assessments.—Premiums and assessments received by insurers or service agreement companies and taxed under this section are not subject to any premium tax provided for in the Florida Insurance Code. However, the gross amount of such premiums and assessments is subject to the sales tax imposed by s. 212.0506.
History.—s. 13, ch. 59-110; s. 2, ch. 61-119; s. 30, ch. 65-269; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 9, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 14, 32, 33, ch. 82-234; s. 28, ch. 87-99; s. 10, ch. 88-206; s. 36, ch. 89-356; ss. 22, 68, ch. 91-106; ss. 9, 20, ch. 93-195.
634.136 Office records required.—Each licensed motor vehicle service contract company, as a minimum requirement for permanent office records, shall maintain:
(1) 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.
(2) 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.
(3) 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.
History.—s. 5, ch. 78-231; s. 2, ch. 81-318; ss. 15, 32, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 458, ch. 97-102; s. 3, ch. 2005-258; s. 38, ch. 2010-175.
634.137 Financial and statistical reporting requirements.—
(1) 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.
(2) 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:
(a) Net assets.
(b) Premiums written.
(c) Premiums earned.
(d) Unearned premium reserve.
(e) Percent of claim exposure for which contractual liability insurance has been obtained.
(f) Incurred claims, not including claims incurred but not reported.
(g) Claims incurred but not reported.
(h) Loss reserve for all claims except those incurred but not reported.
(i) Reserves for claims incurred but not reported.
(j) Number and dollar amount of claims paid.
(k) Itemized acquisition costs.
(l) Net gain or loss from operations before income taxes.
(m) Net investment income from all reserves.
(n) Net investment income from surplus.
(o) Ratio of claims paid to premium earned.
(p) Ratio of all claims incurred to premium earned plus investment income from all reserves.
(q) Number of claims resisted.
(r) Any additional information that the commission requires in order to evaluate the financial condition or trade practices of companies issuing service agreements in this state.
(3) 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.
(4) The office shall provide a summary of the information provided pursuant to subsection (2) in its annual report.
(5) 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.
(6) 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).
History.—ss. 16, 33, ch. 82-234; s. 68, ch. 91-106; ss. 10, 20, ch. 93-195; s. 3, ch. 2001-281; s. 1431, ch. 2003-261; s. 4, ch. 2008-178; s. 16, ch. 2010-175.
634.141 Examination of companies.—
(1) 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 apply to insurers under part II of chapter 624. The office is not required to conduct periodic examinations pursuant to this section, but may examine a service agreement company at its discretion. An examination conducted pursuant to this section may cover a period of only the most recent 5 years. The costs of examinations conducted pursuant to ss. 624.316(2)(e) and 624.3161(3) may not exceed 10 percent of the companies’ reported net income for the prior year. The commission may by rule establish provisions whereby a company may be exempted from examination.
(2) The office shall determine whether to conduct an examination of a company by considering:
(a) The amount of time that the company has been continuously licensed and operating under the same management and control.
(b) The company’s history of compliance with applicable law.
(c) The number of consumer complaints against the company.
(d) The financial condition of the company, demonstrated by the financial reports submitted pursuant to s. 634.137.
History.—s. 14, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 17, 32, 33, ch. 82-234; ss. 23, 68, ch. 91-106; s. 20, ch. 93-195; s. 1432, ch. 2003-261; s. 17, ch. 2010-175; s. 3, ch. 2012-77.
634.151 Service of process; appointment of commissioner as process agent.—
(1) 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.
(2) 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.
History.—s. 15, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 18, 32, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 459, ch. 97-102; s. 1433, ch. 2003-261.
634.161 Service of process; method.—
(1) 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.
(2) 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.
History.—s. 16, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 19, 32, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 460, ch. 97-102; s. 1434, ch. 2003-261.
634.171 Salesperson to be licensed and appointed.—Salespersons for motor vehicle service agreement companies and insurers shall be licensed, appointed, renewed, continued, reinstated, or terminated as prescribed in chapter 626 for insurance representatives in general. However, they shall be exempt from all other provisions of chapter 626 including fingerprinting, photo identification, education, and examination provisions. License, appointment, and other fees shall be those prescribed in s. 624.501. A licensed and appointed salesperson shall be directly responsible and accountable for all acts of her or his employees and other representatives. Each service agreement company or insurer shall, on forms prescribed by the department, within 30 days after termination of the appointment, notify the department of such termination. No employee or salesperson of a motor vehicle service agreement company or insurer may directly or indirectly solicit or negotiate insurance contracts, or hold herself or himself out in any manner to be an insurance agent, unless so qualified, licensed, and appointed therefor under the Florida Insurance Code. A motor vehicle service agreement company is not required to be licensed as a salesperson to solicit, sell, issue, or otherwise transact the motor vehicle service agreements issued by the motor vehicle service agreement company.
History.—s. 17, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 10, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 20, 32, 33, ch. 82-234; s. 18, ch. 85-208; ss. 24, 68, ch. 91-106; s. 137, ch. 91-108; s. 20, ch. 93-195; s. 461, ch. 97-102; s. 4, ch. 2001-281; s. 94, ch. 2003-1; s. 70, ch. 2003-267; s. 61, ch. 2003-281.
634.181 Grounds for compulsory refusal, suspension, or revocation of license or appointment of salespersons.—The department shall deny, suspend, revoke, or refuse to renew or continue the license or appointment of any such salesperson if it finds that as to the salesperson any one or more of the following applicable grounds exist:
(1) Material misstatement, misrepresentation, or fraud in obtaining or attempting to obtain the license or appointment.
(2) 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.
(3) 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.
(4) 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.
(5) For demonstrated lack of fitness or trustworthiness to engage in the service agreement business.
(6) For demonstrated lack of adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.
(7) Fraudulent or dishonest practices in the conduct of business under the license or appointment.
(8) 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.
(9) For unlawfully rebating, or attempt thereat, or for unlawfully dividing or offering to divide her or his commission with another.
(10) 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.
(11) 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.
(12) 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.
History.—s. 18, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 21, 32, 33, ch. 82-234; s. 48, ch. 88-166; ss. 25, 68, ch. 91-106; s. 138, ch. 91-108; ss. 11, 20, ch. 93-195; s. 462, ch. 97-102; s. 1435, ch. 2003-261.
634.1815 Rebating; when allowed.—
(1) No salesperson shall rebate any portion of his or her commission except as follows:
(a) The rebate shall be available to all consumers in the same actuarial class.
(b) The rebate shall be in accordance with a rebating schedule filed with and approved by the service agreement company issuing the service agreement to which the rebate applies. The service agreement company shall maintain a copy of all rebating schedules for a period of 3 years.
(c) The rebating schedule shall be uniformly applied so all consumers who purchase the same service agreement through the salesperson for the same coverage shall receive the same percentage rebate.
(d) The rebate schedule shall be prominently displayed in public view in the salesperson’s place of business, and a copy shall be made available to consumers on request at no charge.
(e) The age, sex, place of residence, race, nationality, ethnic origin, marital status, or occupation of the consumer shall not be used in determining the percentage of the rebate or whether a rebate is available.
(2) No rebate shall be withheld or limited in amount based on factors which are unfairly discriminatory.
(3) No rebate shall be given which is not reflected on the rebate schedule.
(4) No rebate shall be refused or granted based upon the purchase of or failure to purchase collateral business.
History.—s. 39, ch. 2004-374; s. 18, ch. 2010-175.
634.191 Grounds for discretionary refusal, suspension, or revocation of license or appointment of salespersons.—The department may, in its discretion, deny, suspend, revoke, or refuse to renew or continue the license or appointment of any salesperson if it finds that as to the salesperson any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 634.181:
(1) 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.
(2) 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.
(3) Has violated any lawful order or rule of the department or commission.
(4) 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.
(5) 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.
(6) 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.
History.—s. 19, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 22, 32, 33, ch. 82-234; s. 39, ch. 87-226; s. 49, ch. 88-166; ss. 26, 68, ch. 91-106; s. 139, ch. 91-108; s. 20, ch. 93-195; s. 463, ch. 97-102; s. 4, ch. 2001-64; s. 4, ch. 2002-86; s. 1436, ch. 2003-261.
634.201 Refusal, suspension, or revocation of license or appointment of salespersons.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
History.—s. 20, ch. 59-110; s. 27, ch. 63-512; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 32, 33, ch. 82-234; ss. 27, 68, ch. 91-106; s. 140, ch. 91-108; s. 2, ch. 93-117; s. 20, ch. 93-195; s. 394, ch. 96-406; s. 1747, ch. 97-102.
634.211 Administrative fine in lieu of suspension or revocation of license or appointment.—
(1) 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.
(2) 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.
History.—s. 21, ch. 59-110; s. 30, ch. 65-269; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 32, 33, ch. 82-234; ss. 28, 68, ch. 91-106; s. 141, ch. 91-108; s. 20, ch. 93-195; s. 1437, ch. 2003-261.
634.221 Disposition of taxes and fees.—All license taxes, taxes on premiums and assessments, registration fees, and administrative fines and penalties collected under this act from motor vehicle service agreement companies shall be deposited to the credit of the Insurance Regulatory Trust Fund.
History.—s. 22, ch. 59-110; s. 2, ch. 61-119; s. 20, ch. 65-269; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 23, 32, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 1438, ch. 2003-261.
634.231 Insurance business not authorized.—Nothing in the Florida Insurance Code or in this part shall be deemed to authorize any motor vehicle service agreement company to transact any insurance business other than that of motor vehicle service agreement as herein defined or otherwise to engage in any other type of insurance unless the company is authorized under a certificate of authority issued by the office under the provisions of the Florida Insurance Code.
History.—s. 23, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 24, 32, 33, ch. 82-234; s. 7, ch. 85-321; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 1439, ch. 2003-261.
634.241 Prohibition against fronting.—An authorized insurer or licensed motor vehicle service agreement company may not act as a fronting company for any unauthorized insurer or unlicensed motor vehicle service agreement company. A “fronting company” is an authorized insurer or licensed motor vehicle service agreement company that by reinsurance or otherwise generally transfers to one or more unauthorized insurers or unlicensed motor vehicle service agreement companies substantially all of the risk of loss under service agreements written by it in this state.
History.—s. 24, ch. 59-110; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 25, 32, 33, ch. 82-234; s. 68, ch. 91-106; ss. 12, 20, ch. 93-195.
634.242 Injunctive proceedings.—In addition to the penalties and other enforcement provisions of this part, if any person violates s. 634.031 or s. 634.171 or any rule adopted pursuant thereto, the department or office may resort to a proceeding for injunction in the circuit court of the county where such person resides or has her or his or its principal place of business, and therein apply for such temporary and permanent orders as the department or office may deem necessary to restrain such person from engaging in any such activity, until such person has complied with such provision or rule.
History.—ss. 31, 68, ch. 91-106; s. 20, ch. 93-195; s. 464, ch. 97-102; s. 1440, ch. 2003-261.
634.251 Penalty for violation.—Any individual who knowingly makes a false or otherwise fraudulent application for license or appointment under this act, or who knowingly violates any provision thereof, shall in addition to any applicable denial, suspension, revocation, or refusal to renew or continue any license or appointment, be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. Each instance of violation shall be considered a separate offense.
History.—s. 25, ch. 59-110; s. 660, ch. 71-136; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 32, 33, ch. 82-234; ss. 29, 68, ch. 91-106; s. 20, ch. 93-195.
634.2515 Penalty for selling agreements of a nonlicensed company.—Any individual or entity who knowingly offers for sale or sells a motor vehicle service agreement of a company which has failed to comply with the provisions of this act is, in addition to any applicable denial, suspension, revocation, or refusal to renew or continue any license or appointment, guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. Each instance of violation shall be considered a separate offense.
History.—s. 6, ch. 78-231; s. 2, ch. 81-318; ss. 26, 32, 33, ch. 82-234; ss. 30, 68, ch. 91-106; s. 160, ch. 91-224; s. 20, ch. 93-195.
634.252 Acquisition.—Every motor vehicle service agreement company shall be subject to the provisions of s. 628.4615.
History.—s. 11, ch. 78-231; s. 2, ch. 81-318; ss. 27, 32, 33, ch. 82-234; ss. 4, 17, ch. 86-250; s. 4, ch. 87-50; s. 10, ch. 90-248; ss. 32, 68, ch. 91-106; s. 184, ch. 91-108; s. 20, ch. 93-195.
634.253 Delinquency proceedings.—
(1) 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.
(2) 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.
History.—s. 12, ch. 78-231; s. 2, ch. 81-318; ss. 28, 32, 33, ch. 82-234; s. 68, ch. 91-106; s. 184, ch. 91-108; s. 20, ch. 93-195; s. 1441, ch. 2003-261.
634.261 Voluntary compliance in lieu of suspension or revocation.—The department or office may terminate an investigation or an action upon acceptance of the written assurance of a company or salesperson of voluntary compliance with this part. An acceptance of assurance may be conditioned on a commitment to reimburse agreement purchasers or to take other appropriate corrective action. An assurance is not evidence of a prior violation of this part. However, unless an assurance has been rescinded by agreement of the parties or voided by a court for good cause, the subsequent failure to comply with the terms of an assurance is prima facie evidence of a violation of this part. No such assurance shall act as a limitation upon any action or remedy available to a person aggrieved by a violation of this part.
History.—ss. 29, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 465, ch. 97-102; s. 1442, ch. 2003-261.
634.271 Civil remedy.—
(1) 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.
(2) 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.
(3) When so awarded, court costs and compensation or fees of the attorney shall be included in the judgment or decree rendered in the case.
(4) 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.
(5) 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.
History.—ss. 30, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 466, ch. 97-102; s. 1, ch. 2005-151; s. 5, ch. 2008-178.
634.2815 Unfair methods of competition and unfair or deceptive acts or practices prohibited.—No person may engage in this state in any trade practice which is defined in this part as, or determined pursuant to s. 634.282 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of motor vehicle service agreements.
History.—s. 6, ch. 2001-281.
634.282 Unfair methods of competition and unfair or deceptive acts or practices defined.—The following methods, acts, or practices are defined as unfair methods of competition and unfair or deceptive acts or practices:
(1) 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:
(a) Misrepresents the benefits, advantages, conditions, or terms of any motor vehicle service agreement.
(b) Is misleading or is a misrepresentation as to the financial condition of any person.
(c) Uses any name or title of any contract misrepresenting the true nature thereof.
(d) Is a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any motor vehicle service agreement.
(e) Uses any advertisement that would mislead or otherwise cause a reasonable person to believe mistakenly that the state or federal government is responsible for the motor vehicle service agreement sales activity of any person or stands behind any person’s credit or that any person, the state, or the federal government guarantees any returns on motor vehicle service agreements or is a source of payment of any motor vehicle service agreement obligation of or sold by any person.
(2) 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:
(a) In a newspaper, magazine, or other publication;
(b) In the form of a notice, circular, pamphlet, letter, or poster;
(c) Over any radio or television station; or
(d) Over the Internet, electronically, or in any other way,
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.
(3) 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.
(4) 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.
(5) FALSE STATEMENTS AND ENTRIES.—
(a) Knowingly:
1. Filing with any supervisory or other public official;
2. Making, publishing, disseminating, or circulating;
3. Delivering to any person;
4. Placing before the public; or
5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,
any false statement.
(b) Knowingly making any false entry of a material fact in any book, report, or statement of any person, or knowingly failing to make a true entry of any material fact pertaining to the business of such person in any book, report, or statement of such person.
(6) 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.
(7) UNLAWFUL REBATES.—Except as otherwise expressly provided by law, or in an applicable filing with the office, knowingly:
(a) Permitting, or offering to make, or making, any contract or agreement as to such contract other than as plainly expressed in the motor vehicle service agreement issued thereon;
(b) Paying, allowing, or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to such motor vehicle service agreement, any unlawful rebate of premiums payable on the agreement, any special favor or advantage in the benefits thereon, or any valuable consideration or inducement not specified in the agreement;
(c) Giving, selling, or purchasing, or offering to give, sell, or purchase, as an inducement to such motor vehicle service agreement or in connection therewith, any stocks, bonds, or other securities of any insurance company, service agreement company, or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value not specified in the motor vehicle service agreement.
(8) UNFAIR CLAIM SETTLEMENT PRACTICES.—
(a) Attempting to settle claims on the basis of an application or any other material document that was altered without notice to, or knowledge or consent of, the service agreement holder;
(b) Making a material misrepresentation to the service agreement holder for the purpose and with the intent of effecting settlement of such claims, loss, or damage under such contract on less favorable terms than those provided in, and contemplated by, such contract; or
(c) Committing or performing with such frequency as to indicate a general business practice any of the following practices:
1. Failure to adopt and implement internal standards for the investigation of claims;
2. Misrepresentation of pertinent facts or contract provisions relating to coverages at issue;
3. Failure to acknowledge and act promptly upon communications with respect to claims;
4. Denial of claims without conducting reasonable investigations based upon available information;
5. Failure to affirm or deny full or partial coverage of claims and, as to partial coverage, the dollar amount or extent of coverage, or failure to provide a written statement that the claim is being investigated, upon written request of the service agreement holder within 30 days after proof-of-loss statements have been completed;
6. Failure to promptly provide a reasonable explanation to the service agreement holder of the basis in the contract in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement;
7. Failure to promptly notify the service agreement holder of any additional information necessary for the processing of a claim; or
8. Failure to clearly explain the nature of the requested information and the reasons such information is necessary.
(9) 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.
(10) 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.
(11) 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.
(12) FREE SERVICE AGREEMENTS.—
(a) Advertising, offering, or providing a free motor vehicle service agreement as an inducement to the purchase or sale of real or personal property or of services directly or indirectly connected with such real or personal property.
(b) For the purposes of this subsection, a “free” motor vehicle service agreement is:
1. A motor vehicle service agreement for which no identifiable and additional charge is made to the purchaser of such real property, personal property, or services.
2. A motor vehicle service agreement for which an identifiable or additional charge is made in an amount less than the cost of such motor vehicle service agreement as to the seller or other person, other than the service agreement company, providing the same.
3. Using the word “free” or words that imply the provision of a motor vehicle service agreement without a cost in connection with the advertising or offering for sale of any kind of goods, merchandise, or services.
(13) ILLEGAL DEALINGS IN PREMIUMS; EXCESS OR REDUCED CHARGES FOR MOTOR VEHICLE SERVICE AGREEMENTS.—
(a) Knowingly collecting any sum as a premium or charge for a motor vehicle service agreement, which is not then provided, or is not in due course to be provided, subject to acceptance of the risk by a service agreement company or an insurer, by a motor vehicle service agreement issued by a service agreement company or an insurer as permitted by this part.
(b) Knowingly collecting as a premium or charge for a motor vehicle service agreement any sum in excess of or less than the premium or charge applicable to such motor vehicle service agreement, as specified in the motor vehicle service agreement. However, there is no violation of this subsection if excess premiums or charges are refunded to the service agreement holder within 45 days after receipt of the agreement by the service agreement company or if the licensed sales representative’s commission is reduced by the amount of any premium undercharge.
(14) INTERLOCKING OWNERSHIP AND MANAGEMENT.—
(a) Any motor vehicle service agreement company may retain, invest in, or acquire the whole or any part of the capital of any other motor vehicle service agreement company, or have a common management with any other motor vehicle service agreement company, unless such retention, investment, acquisition, or common management is inconsistent with any other provision of this part, or unless by reason thereof the business of such insurers with the public is conducted in a manner that substantially lessens competition generally in the insurance business.
(b) Any person otherwise qualified may be a director of two or more motor vehicle service agreement companies that are competitors, unless the effect thereof is substantially to lessen competition between motor vehicle service agreement companies generally or materially tend to create a monopoly.
(15) FALSE CLAIMS; OBTAINING OR RETAINING MONEY DISHONESTLY.—
(a) Any salesperson who causes to be presented to any motor vehicle service agreement company a false claim for payment, knowing the same to be false; or
(b) Any salesperson who represents any motor vehicle service agreement company or collects or does business without the authority of the motor vehicle service agreement company, secures cash advances by false statements, or fails to turn over when required, or satisfactorily account for, all collections of such motor vehicle service agreement company,
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.
(16) SLIDING.—Sliding is the act or practice of:
(a) Representing to the applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of a motor vehicle service agreement when such coverage or product is not required;
(b) Representing to the applicant that a specific ancillary coverage or product is included in the motor vehicle service agreement contract applied for without an additional charge when such charge is required; or
(c) Charging an applicant for a specific ancillary coverage or product, in addition to the cost of the motor vehicle service agreement coverage applied for, without the informed consent of the applicant.
(17) 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.
No provision of this section shall be deemed to prohibit a service agreement company or a licensed insurer from giving to service agreement holders, prospective service agreement holders, and others for the purpose of advertising, any article of merchandise having a value of not more than $25.
History.—s. 7, ch. 2001-281; s. 1443, ch. 2003-261; s. 19, ch. 2010-175.
634.2825 Motor vehicle service agreement cost specified in “price package.”—
(1) 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.
(2) 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.”
History.—s. 8, ch. 2001-281.
634.283 Power of department and office to examine and investigate.—The department and office may, within their respective regulatory jurisdictions, examine and investigate the affairs of every person involved in the business of motor vehicle service agreements in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by s. 634.2815, and each shall have the powers and duties specified in ss. 634.284-634.288 in connection therewith.
History.—s. 9, ch. 2001-281; s. 1444, ch. 2003-261; s. 160, ch. 2014-17.
634.284 Prohibited practices; hearings; procedure; service of process.—
(1) 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.
(2) 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.
(3) 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.
History.—s. 10, ch. 2001-281; s. 1445, ch. 2003-261.
634.285 Cease and desist and penalty orders.—After the hearing provided for in s. 634.284, the department or office shall enter a final order in accordance with s. 120.569. If it is determined that the person charged has engaged in an unfair or deceptive act or practice or the unlawful transaction of a service agreement business, the department or office also shall issue an order requiring the violator to cease and desist from engaging in such method of competition, act, or practice or the unlawful transaction of service agreement business. Further, the department or office may, at its discretion, order any one or more of the following penalties:
(1) 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.
(2) 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.
History.—s. 11, ch. 2001-281; s. 1446, ch. 2003-261.
634.2855 Unauthorized entities; gifts and grants.—A governmental unit, public agency, institution, person, firm, or legal entity may provide money to the department to enable the department to pursue unauthorized entities operating in violation of this part. The department may transfer funds to the office to investigate, discipline, sanction, and take all action consistent with this part relative to unauthorized entities. All donations or grants of moneys to the department shall be deposited into the Insurance Regulatory Trust Fund and shall be separately accounted for in accordance with this section. Moneys deposited into the Insurance Regulatory Trust Fund pursuant to this section may be appropriated by the Legislature, pursuant to chapter 216, for the purpose of enabling the department or the office to carry out the provisions of this section. Notwithstanding s. 216.301 and pursuant to s. 216.351, any balance of moneys deposited into the Insurance Regulatory Trust Fund pursuant to this section remaining at the end of any fiscal year shall be available for carrying out the duties and responsibilities of the department or the office.
History.—s. 4, ch. 2012-77.
634.286 Appeals from orders of the department or office.—Any person subject to an order of the department or office under s. 634.285 may obtain a review of such order by filing an appeal therefrom in accordance with the provisions and procedures for appeal from the orders of the department or office in general under s. 120.68.
History.—s. 12, ch. 2001-281; s. 1447, ch. 2003-261.
634.287 Penalty for violation of cease and desist order.—Any person who violates a cease and desist order of the department or office under s. 634.285 while such order is in effect, after notice and hearing as provided in s. 634.284, is subject, at the discretion of the department or office, to any one or more of the following penalties:
(1) A monetary penalty of not more than $50,000 as to all matters determined in such hearing.
(2) The suspension or revocation of such person’s license or eligibility to hold a license.
History.—s. 13, ch. 2001-281; s. 1448, ch. 2003-261.
634.288 Civil liability.—The provisions of this part are cumulative to rights under the general civil and common law, and no action of the department or office will abrogate such rights to damages or other relief in any court.
History.—s. 14, ch. 2001-281; s. 1449, ch. 2003-261.
PART II
HOME WARRANTY ASSOCIATIONS634.301 Definitions.
634.302 Powers of department, commission, and office; rules.
634.3025 Part exclusive; applicability of other laws.
634.303 License required.
634.304 Qualifications for license.
634.305 Required deposit or bond.
634.3051 Levy upon deposit limited.
634.306 Application for and issuance of license.
634.307 License expiration; renewal.
634.3073 Acquisition.
634.3076 Prohibited investments and loans.
634.3077 Financial requirements.
634.3078 Assets and liabilities.
634.308 Grounds for suspension or revocation of license.
634.309 Procedure to suspend or revoke license.
634.310 Order, notice of suspension or revocation of license; effect; publication.
634.311 Duration of suspension; obligations of association during suspension period; reinstatement.
634.3112 Administrative fine in lieu of suspension or revocation of license of association.
634.312 Forms; required provisions and procedures.
634.3123 Noncompliant forms.
634.313 Tax on premiums; annual statement; reports.
634.3135 Office records required.
634.314 Examination of associations.
634.315 Service of process.
634.317 License and appointment required.
634.318 License and appointment of sales representatives.
634.319 Reporting and accounting for funds.
634.320 Grounds for compulsory refusal, suspension, or revocation of license or appointment of sales representatives.
634.3205 Rebating; when allowed.
634.321 Grounds for discretionary refusal, suspension, or revocation of license or appointment of sales representatives.
634.322 Procedure for refusal, suspension, or revocation of license or appointment of sales representatives.
634.3225 Duration of suspension or revocation of license or appointment.
634.323 Administrative fine in lieu of suspension or revocation of sales representative’s license or appointment.
634.324 Disposition of taxes and fees.
634.325 Insurance business not authorized.
634.326 Fronting not permitted.
634.327 Applicability to warranty on new home.
634.328 Penalty for violation.
634.3284 Civil remedy.
634.329 Dissolution or liquidation.
634.331 Coverage of property for sale.
634.335 Unfair methods of competition and unfair or deceptive acts or practices prohibited.
634.336 Unfair methods of competition and unfair or deceptive acts or practices defined.
634.337 Power of department and office to examine and investigate.
634.338 Prohibited practices; hearings; procedure; service of process.
634.3385 Unauthorized entities; gifts and grants.
634.339 Cease and desist and penalty orders.
634.34 Appeals from orders of the department or office.
634.341 Penalty for violation of cease and desist order.
634.342 Injunctive proceedings.
634.343 Civil liability.
634.344 Coercion of debtor prohibited.
634.348 Investigatory records.
634.301 Definitions.—As used in this part, the term:
(1) “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.
(2) “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.
(3) “Home warranty association” means any corporation or any other organization, other than an authorized insurer, issuing home warranties.
(4) “Impaired” means having liabilities in excess of assets.
(5) “Insolvent” means the inability of a corporation to pay its debts as they become due in the usual course of its business.
(6) “Insurance code” means the Florida Insurance Code.
(7) “Insurer” means any property or casualty insurer duly authorized to transact such business in this state.
(8) “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.
(9) “Net assets” means the amount by which the total statutory assets of an association exceed the total liabilities of the association.
(10) “Person” includes an individual, company, corporation, association, insurer, agent, and every other legal entity.
(11) “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.
(12) “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.
(13) “Structural component” means the roof, plumbing system, electrical system, foundation, basement, walls, ceilings, or floors of a home.
History.—s. 1, ch. 77-339; s. 1, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 1, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 4, ch. 89-125; ss. 13, 20, ch. 93-195; s. 3, ch. 97-74; s. 1451, ch. 2003-261; s. 3, ch. 2006-272; s. 1, ch. 2007-235; s. 20, ch. 2010-175.
634.302 Powers of department, commission, and office; rules.—The office shall administer this part, and the commission may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of this part related to home warranty associations and home warranties. The department shall administer this part and may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of this part related to sales representatives. Such rules by the commission or department may identify specific methods of competition or acts or practices that are prohibited by s. 634.336 but shall not enlarge upon or extend the provisions of that section.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 210, ch. 98-200; s. 27, ch. 2001-281; s. 1452, ch. 2003-261.
634.3025 Part exclusive; applicability of other laws.—
(1) 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.
(2) 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.
History.—ss. 8, 52, ch. 85-321; s. 19, ch. 88-206; s. 20, ch. 93-195.
634.303 License required.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 2, ch. 2003-168; s. 1453, ch. 2003-261; s. 21, ch. 2010-175.
634.304 Qualifications for license.—The office may not issue or renew a license to any home warranty association unless the association:
(1) Is a solvent corporation formed under the laws of this state or of another state, district, territory, or possession of the United States.
(2) 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.
(3) 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.
(4) Meets the deposit requirements under s. 634.305.
(5) Is otherwise in compliance with this part.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 2, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1454, ch. 2003-261.
634.305 Required deposit or bond.—
(1) 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.
(2) In lieu of any deposit of securities required under subsection (1), the association may:
(a) 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 $25,000; and
(b) File with the office a surety bond in the amount of $75,000. The bond shall be one issued by an authorized surety insurer, shall be for the same purpose as the deposit in lieu of which it is filed, and shall be subject to the approval of the office. The bond shall guarantee that the home warranty association will faithfully and truly perform all the conditions of any home 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 home 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 pursuant to this section. 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 4, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 184, ch. 91-108; s. 20, ch. 93-195; s. 1455, ch. 2003-261.
634.3051 Levy upon deposit limited.—No judgment creditor or other claimant of a home warranty association shall have the right to levy upon any of the assets or securities held in this state as a deposit under s. 634.305.
History.—ss. 37, 52, ch. 85-321; s. 20, ch. 93-195.
634.306 Application for and issuance of license.—
(1) 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.
(2) In addition to information relative to its qualifications as required under s. 634.304, the application must show:
(a) The location of the applicant’s home office.
(b) The name and residence address of each director or officer of the applicant and the name and residence address of each shareholder who owns or controls 10 percent or more shares of the applicant.
(c) Such other pertinent information as is required by the office or commission.
(3) The application must be accompanied by:
(a) A copy of the applicant’s articles of incorporation, certified by the public official having custody of the original, and a copy of the applicant’s bylaws, certified by the applicant’s secretary.
(b) A copy of the most recent financial statement of the applicant, verified under oath of at least two of its principal officers.
(c) A license fee in the amount of $200, as required under s. 634.303.
(4) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 5, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; ss. 14, 20, ch. 93-195; s. 1456, ch. 2003-261.
634.307 License expiration; renewal.—Each license as a home warranty association issued under this part shall expire on June 1 next following the date of issuance. If the association is then qualified therefor under the provisions of this part, its license may be renewed annually, upon its request and upon payment to the office of the license tax in the amount of $200, in advance, for each such license year.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 6, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1457, ch. 2003-261.
634.3073 Acquisition.—Every home warranty association shall be subject to the provisions of s. 628.4615.
History.—ss. 28, 33, ch. 83-323; s. 1, ch. 84-94; ss. 5, 17, ch. 86-250; s. 4, ch. 87-50; s. 10, ch. 90-248; s. 184, ch. 91-108; s. 115, ch. 92-318; s. 20, ch. 93-195.
634.3076 Prohibited investments and loans.—A home warranty association shall not directly or indirectly invest in or lend its funds upon the security of any note or other evidence of indebtedness of any director, officer, or controlling stockholder of the home warranty association. This prohibition applies only to investments and loans initially reported on a home warranty association’s financial statements after the third quarterly statement for 2006.
History.—s. 4, ch. 2006-272.
634.3077 Financial requirements.—
(1) 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.
(2) 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.
(3) 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:
(a) In the event that the home warranty association is unable to fulfill its obligation under its contracts issued in this state for any reason, including insolvency, bankruptcy, or dissolution, the contractual liability insurer will pay losses and unearned premiums under such plans directly to persons making claims under such contracts.
(b) The insurer issuing the policy shall assume full responsibility for the administration of claims in the event of the inability of the association to do so.
(c) The policy may not be canceled or not renewed by either the insurer or the association unless 60 days’ written notice thereof has been given to the office by the insurer before the date of such cancellation or nonrenewal.
(d) The contractual liability insurance policy shall insure all home warranty contracts that were issued while the policy was in effect whether or not the premium has been remitted to the insurer.
(4) 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.
History.—ss. 3, 33, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 468, ch. 97-102; s. 15, ch. 2001-281; s. 1458, ch. 2003-261; s. 5, ch. 2006-272.
634.3078 Assets and liabilities.—
(1) 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:
(a) Cash in the possession of the home warranty association, or in transit under its control, including the true balance of any deposit in a solvent bank, savings and loan association, or trust company that is domiciled in the United States.
(b) Investments, securities, properties, and loans acquired or held in accordance with this part and, in connection therewith, the following items:
1. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.
2. Declared and unpaid dividends on stock and shares, unless the amount of the dividends has otherwise been allowed as an asset.
3. Interest due or accrued upon a collateral loan that is not in default in an amount not to exceed 1 year’s interest thereon.
4. Interest due or accrued on deposits or certificates of deposit in solvent banks, savings and loan associations, and trust companies domiciled in the United States, and interest due or accrued on other assets, if such interest is in the judgment of the office a collectible asset.
5. Interest due or accrued on current mortgage loans, in an amount not exceeding the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but interest accrued for a period in excess of 90 days may not be allowed as an asset.
6. Rent due or accrued on real property if such rent is not in arrears for more than 3 months. However, rent accrued for a period in excess of 90 days may not be allowed as an asset.
7. The unaccrued portion of taxes paid prior to the due date on real property.
(c) Furniture, fixtures, furnishings, vehicles, and equipment, if the original cost of each item is at least $200, which cost shall be amortized in full over a period not to exceed 5 calendar years, unless otherwise approved by the office.
(d) Part inventories maintained for the purpose of servicing products warranted. Part inventories must be listed at cost. Home warranty associations companies are required to maintain records to support valuation of part inventories.
(e) The liquidation value of prepaid expenses.
(f) Other assets or receivables, not inconsistent with the provisions of this section, deemed by the office to be available for the payment of losses and claims, at values to be determined by the office.
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.
(2) 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:
(a) Goodwill, agreement holder lists, patents, trade names, agreements not to compete, and other like intangible assets.
(b) Any note or account receivable from or advances to officers, directors, or controlling stockholders, whether secured or not, and advances to employees, agents, or other persons on personal security only.
(c) Stock of the home warranty association owned by it directly or owned by it through any entity in which the organization owns or controls, directly or indirectly, more than 25 percent of the ownership interest.
(d) Leasehold improvements, stationery, and literature, except that leasehold improvements made prior to October 1, 2001, shall be allowed as an asset and shall be amortized over the shortest of the following periods:
1. The life of the lease.
2. The useful life of the improvements.
3. The 3-year period following October 1, 2001.
(e) Furniture, fixtures, furnishings, vehicles, and equipment, other than those items authorized under paragraph (1)(c).
(f) Notes or other evidences of indebtedness which are secured by mortgages or deeds of trust which are in default and beyond the express period specified in the instrument for curing the default.
(g) Bonds in default for more than 60 days.
(h) Deferred costs other than the liquidation value of prepaid expenses except for those companies that reserve 100 percent of gross written premium.
(i) Any note, account receivable, advance, or other evidence of indebtedness, or investment in:
1. The parent of the home warranty association;
2. Any entity directly or indirectly controlled by the home warranty association’s parent;
3. An affiliate of the parent or the home warranty association; or
4. Officers, directors, shareholders, employees, or salespersons of the home warranty association; however, premium receivables under 45 days old may be considered an admitted asset.
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.
(3) 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:
(a) The amount, in conformity with generally accepted accounting principles, necessary to pay all of its unpaid losses and claims incurred for or on behalf of an agreement holder, on or prior to the end of the reporting period, whether reported or unreported.
(b) Taxes, expenses, and other obligations due or accrued at the date of the statement.
(c) Reserve for unearned premiums.
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.
History.—s. 16, ch. 2001-281; s. 1459, ch. 2003-261.
634.308 Grounds for suspension or revocation of license.—
(1) 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:
(a) The association has violated any lawful rule or order of the commission or office or any provision of this part.
(b) The association has not maintained a funded, unearned premium reserve account as required by s. 634.3077(1).
(c) The association has not maintained, at a minimum, net assets as required by s. 634.3077(2).
(2) The license of any home warranty association shall be suspended, revoked, or not renewed if it is determined that such association:
(a) Is in unsound financial condition or is in such condition or is using such methods and practices in the conduct of its business as to render its further transaction of warranties in this state hazardous or injurious to its warranty holders or to the public.
(b) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers have refused to give information with respect to its affairs or have refused to perform any other legal obligation as to such examination, when required by the office.
(c) Has failed to pay any final judgment rendered against it in this state within 60 days after the judgment became final.
(d) Has, without just cause, refused to pay proper claims arising under its warranties or, without just cause, has compelled warranty holders to accept less than the amount due them or to employ attorneys, or to bring suit against the association, to secure full payment or settlement of such claims.
(e) Is affiliated with, and under the same general management, interlocking directorate, or ownership as, another home warranty association which transacts direct warranties in this state without having a license therefor.
(f) Has issued warranty contracts which renewal contracts provide 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.
(3) 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) The association is insolvent or impaired.
(b) The reserve account or net asset ratio requirement of s. 634.3077 is not being maintained.
(c) A proceeding for receivership, conservatorship or rehabilitation or any other delinquency proceeding regarding the association has been commenced in any state.
(d) The financial condition or business practices of the association otherwise pose an imminent threat to the public health, safety, or welfare of the residents of this state.
(4) A violation of this part by an insurer is grounds for suspension or revocation of the insurer’s certificate of authority in this state.
History.—s. 1, ch. 77-339; s. 2, ch. 78-255; ss. 1, 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 7, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 1, ch. 86-75; s. 45, ch. 88-166; s. 34, ch. 91-106; s. 20, ch. 93-195; s. 1460, ch. 2003-261; s. 22, ch. 2010-175.
634.309 Procedure to suspend or revoke license.—Except when a hearing is expressly not required under s. 120.60 or s. 634.308, no order suspending or revoking a home warranty association’s license shall be effective unless made after notice and hearing pursuant to chapter 120.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195.
634.310 Order, notice of suspension or revocation of license; effect; publication.—
(1) 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.
(2) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 8, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 18, ch. 85-62; s. 20, ch. 93-195; s. 1461, ch. 2003-261.
634.311 Duration of suspension; obligations of association during suspension period; reinstatement.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 9, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1462, ch. 2003-261.
634.3112 Administrative fine in lieu of suspension or revocation of license of association.—
(1) 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.
(2) 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.
(3) 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).
(4) 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.
History.—ss. 10, 33, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1463, ch. 2003-261.
634.312 Forms; required provisions and procedures.—
(1) 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.
(2) Subject to the insurer’s or home warranty association’s requirement as to payment of premium, every home warranty must be mailed, delivered, or electronically transmitted to the warranty holder within 45 days after the effectuation of coverage, and the application is part of the warranty contract document. Electronic transmission of a home warranty constitutes delivery to the warranty holder. The electronic transmission must notify the warranty holder of his or her right to receive the home warranty via United States mail rather than electronic transmission. If the warranty holder communicates to the home warranty association electronically or in writing that he or she does not agree to receipt by electronic transmission, a paper copy of the home warranty shall be provided to the warranty holder.
(3) All home warranty contracts must state in conspicuous, boldfaced type that the home warranty may not provide listing period coverage free of charge.
(4) 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.”
(5) 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. A home warranty association may effectuate a refund through the issuing sales representative.
(6) 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.
History.—s. 1, ch. 77-339; ss. 2, 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 2, ch. 86-75; s. 46, ch. 88-166; s. 19, ch. 90-119; s. 20, ch. 93-195; s. 4, ch. 95-245; s. 4, ch. 97-74; s. 46, ch. 99-7; s. 3, ch. 99-293; s. 17, ch. 2001-281; s. 1464, ch. 2003-261; s. 6, ch. 2006-272; s. 23, ch. 2010-175; s. 5, ch. 2012-77; s. 2, ch. 2014-111.
634.3123 Noncompliant forms.—The office may order a home warranty association to stop using any contract form that:
(1) Is in violation of or does not comply with this part.
(2) 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.
(3) Has any title, heading, or other indication of its provisions which is misleading.
(4) Is printed or otherwise reproduced in such a manner as to render any material provision of the form illegible.
(5) 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.
History.—ss. 11, 33, ch. 83-323; s. 1, ch. 84-94; s. 3, ch. 86-75; s. 47, ch. 88-166; s. 35, ch. 91-106; s. 20, ch. 93-195; s. 1465, ch. 2003-261; s. 24, ch. 2010-175.
634.313 Tax on premiums; annual statement; reports.—
(1) 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.
(2) Premiums received by insurers and taxed under this section are not subject to any premium tax provided for in the insurance code.
(3) 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.
(4) 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.
History.—s. 1, ch. 77-339; s. 243, ch. 79-400; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 13, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 29, ch. 87-99; ss. 15, 20, ch. 93-195; s. 18, ch. 2001-281; s. 1467, ch. 2003-261; s. 39, ch. 2010-175.
634.3135 Office records required.—Each licensed home warranty association, as a minimum requirement for permanent office records, shall maintain:
(1) A complete set of accounting records, including a general ledger, cash receipts and disbursements journals, accounts receivable registers, and accounts payable registers.
(2) 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.
(3) 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.
(4) Nothing in this section shall prohibit an association from maintaining office records by computer.
History.—ss. 14, 33, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195.
634.314 Examination of associations.—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 is not required to conduct periodic examinations pursuant to this section, but may examine a home warranty company at its discretion. An examination conducted pursuant to this section may cover a period of only the most recent 5 years. The costs of examinations conducted pursuant to ss. 624.316(2)(e) and 624.3161(3) may not exceed 10 percent of the companies’ reported net income for the prior year.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1468, ch. 2003-261; s. 25, ch. 2010-175; s. 6, ch. 2012-77.
634.315 Service of process.—Home warranty associations are subject to service of process in the same manner and subject to the same terms, conditions, and fees as apply to insurers under chapter 624.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 15, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195.
634.317 License and appointment required.—No person may solicit, negotiate, or effectuate home warranty contracts for remuneration in this state unless such person is licensed and appointed as a sales representative. A licensed and appointed sales representative shall be directly responsible and accountable for all acts of the licensee’s employees.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 16, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 36, ch. 91-106; s. 142, ch. 91-108; s. 20, ch. 93-195; s. 5, ch. 95-245; s. 77, ch. 98-199.
634.318 License and appointment of sales representatives.—Sales representatives for home warranty associations and insurers shall be licensed, appointed, renewed, continued, reinstated, or terminated in the same manner as prescribed in chapter 626 for insurance representatives in general, except they shall be exempt from the fingerprinting, photo identification card, education, and examination provisions. License, appointment, and other fees shall be those as prescribed in s. 624.501. No employee or sales representative of a home warranty association or insurer may directly or indirectly solicit or negotiate insurance contracts, or hold herself or himself out in any manner to be an insurance agent, unless so qualified, licensed, and appointed therefor under the insurance code. A home warranty association is not required to be licensed as a sales representative to solicit, sell, issue, or otherwise transact the home warranty agreements issued by the home warranty association.
History.—s. 1, ch. 77-339; s. 3, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 17, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 19, ch. 85-208; s. 37, ch. 91-106; s. 143, ch. 91-108; s. 20, ch. 93-195; s. 469, ch. 97-102; s. 19, ch. 2001-281; s. 69, ch. 2002-206.
634.319 Reporting and accounting for funds.—
(1) 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.
(2) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 18, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 38, ch. 91-106; s. 144, ch. 91-108; s. 4, ch. 92-79; s. 20, ch. 93-195; s. 470, ch. 97-102.
634.320 Grounds for compulsory refusal, suspension, or revocation of license or appointment of sales representatives.—The department shall deny, suspend, revoke, or refuse to renew or continue the license or appointment of any sales representative if it is found that any one or more of the following grounds applicable to the sales representative exist:
(1) Material misstatement, misrepresentation, or fraud in obtaining or attempting to obtain a license or appointment.
(2) The license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this part.
(3) 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.
(4) 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.
(5) Demonstrated lack of fitness or trustworthiness to engage in the business of home warranty.
(6) Demonstrated lack of adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.
(7) Fraudulent or dishonest practices in the conduct of business under the license or appointment.
(8) 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.
(9) Unlawfully rebating, or attempting to unlawfully rebate, or unlawfully dividing, or offering to divide, her or his commission with another.
(10) 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.
(11) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 19, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 50, ch. 88-166; s. 39, ch. 91-106; s. 145, ch. 91-108; s. 20, ch. 93-195; s. 471, ch. 97-102; s. 1469, ch. 2003-261.
634.3205 Rebating; when allowed.—
(1) No sales representative shall rebate any portion of his or her commission except as follows:
(a) The rebate shall be available to all consumers in the same actuarial class.
(b) The rebate shall be in accordance with a rebating schedule filed with and approved by the home warranty association issuing the home warranty to which the rebate applies. The home warranty association shall maintain a copy of all rebating schedules for a period of 3 years.
(c) The rebating schedule shall be uniformly applied so all consumers who purchase the same home warranty through the sales representative for the same coverage shall receive the same percentage rebate.
(d) The rebate schedule shall be prominently displayed in public view in the sales representative’s place of business, and a copy shall be made available to consumers on request at no charge.
(e) The age, sex, place of residence, race, nationality, ethnic origin, marital status, or occupation of the consumer shall not be used in determining the percentage of the rebate or whether a rebate is available.
(2) No rebate shall be withheld or limited in amount based on factors which are unfairly discriminatory.
(3) No rebate shall be given which is not reflected on the rebate schedule.
(4) No rebate shall be refused or granted based upon the purchase of or failure to purchase collateral business.
History.—s. 40, ch. 2004-374; s. 26, ch. 2010-175.
634.321 Grounds for discretionary refusal, suspension, or revocation of license or appointment of sales representatives.—The department may, in its discretion, deny, suspend, revoke, or refuse to renew or continue the license or appointment of any sales representative if it is found that any one or more of the following grounds applicable to the sales representative exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 634.320:
(1) Any cause for which granting of the license or appointment could have been refused had it then existed and been known to the department.
(2) 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.
(3) Violation of any lawful order or rule of the department or commission.
(4) 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.
(5) 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.
(6) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 20, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 51, ch. 88-166; s. 40, ch. 91-106; s. 146, ch. 91-108; s. 20, ch. 93-195; s. 472, ch. 97-102; s. 1470, ch. 2003-261.
634.322 Procedure for refusal, suspension, or revocation of license or appointment of sales representatives.—
(1) 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.
(2) 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.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 21, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 41, ch. 91-106; s. 147, ch. 91-108; s. 20, ch. 93-195.
634.3225 Duration of suspension or revocation of license or appointment.—
(1) 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.
(2) 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.
(3) The department may not grant or issue any license or appointment to any individual whose license or appointment has been revoked twice.
(4) 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.
History.—ss. 22, 33, ch. 83-323; s. 1, ch. 84-94; s. 42, ch. 91-106; s. 148, ch. 91-108; s. 20, ch. 93-195.
634.323 Administrative fine in lieu of suspension or revocation of sales representative’s license or appointment.—
(1) 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.
(2) 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.
History.—s. 1, ch. 77-339; s. 244, ch. 79-400; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 23, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 43, ch. 91-106; s. 149, ch. 91-108; s. 20, ch. 93-195.
634.324 Disposition of taxes and fees.—All license taxes, taxes on premiums, license and appointment fees, and administrative fines and penalties collected under this part from home warranty associations and sales representatives shall be deposited to the credit of the Insurance Regulatory Trust Fund.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 24, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 44, ch. 91-106; s. 20, ch. 93-195; s. 1471, ch. 2003-261.
634.325 Insurance business not authorized.—Nothing in the Florida Insurance Code or in this part shall be deemed to authorize any home warranty association to transact any insurance business other than that of home warranty as herein defined or otherwise to engage in any other type of insurance unless the association is authorized under a certificate of authority issued by the office under the provisions of the Florida Insurance Code.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 9, ch. 85-321; s. 20, ch. 93-195; s. 1472, ch. 2003-261.
634.326 Fronting not permitted.—No authorized insurer or licensed home warranty association may act as a fronting company for any unauthorized insurer or unlicensed home warranty association. A “fronting company” is an authorized insurer or licensed home warranty association which, by reinsurance or otherwise, generally transfers to one or more unauthorized insurers or unlicensed home warranty associations the risk of loss under warranties written by it in this state.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 25, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195.
634.327 Applicability to warranty on new home.—This part shall not apply to any program offering a warranty on a new home which is underwritten by an insurer licensed to do business in the state when the insurance policy underwriting such program has been filed with and approved by the office as required by law.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1473, ch. 2003-261.
634.328 Penalty for violation.—Any individual who knowingly makes a false or otherwise fraudulent application for a license or appointment under this part, or who knowingly violates any provision hereof, shall, in addition to any applicable denial, suspension, or revocation of, or refusal to renew or continue, any license or appointment, be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. Each instance of violation shall be considered a separate offense.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 45, ch. 91-106; s. 161, ch. 91-224; s. 20, ch. 93-195.
634.3284 Civil remedy.—
(1) 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.
(2) 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:
(a) Willful, wanton, and malicious; or
(b) In reckless disregard for the rights of any insured.
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.
(3) 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.
(4) 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.
History.—ss. 27, 33, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 473, ch. 97-102; s. 1474, ch. 2003-261.
634.329 Dissolution or liquidation.—Any dissolution or liquidation of a corporation 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 this state with respect to the dissolution and liquidation of property and casualty insurance companies pursuant to chapter 631.
History.—s. 4, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195.
634.331 Coverage of property for sale.—A home warranty may provide coverage of residential property during the listing period of such property for a period not to exceed 12 months, provided that the home warranty company charges the warranty purchaser a separately identifiable charge for the listing period coverage in an amount equal to at least 15 percent of the annual premium charged for the home warranty and the charge for such coverage is due at the earlier of the end of the listing period or the date the sale of the residential property is closed.
History.—s. 5, ch. 97-74; s. 20, ch. 2001-281.
634.335 Unfair methods of competition and unfair or deceptive acts or practices prohibited.—No person may engage in this state in any trade practice which is defined in this part as, or determined pursuant to s. 634.337 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of home warranty.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195.
634.336 Unfair methods of competition and unfair or deceptive acts or practices defined.—The following methods, acts, or practices are defined as unfair methods of competition and unfair or deceptive acts or practices:
(1) 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:
(a) Misrepresents the benefits, advantages, conditions, or terms of any home warranty contract.
(b) Is misleading or is a misrepresentation as to the financial condition of any person.
(c) Uses any name or title of any contract misrepresenting the true nature thereof.
(d) Is a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any home warranty contract.
(2) 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:
(a) In a newspaper, magazine, or other publication;
(b) In the form of a notice, circular, pamphlet, letter, or poster;
(c) Over any radio or television station; or
(d) In any other way,
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.
(3) 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.
(4) FALSE STATEMENTS AND ENTRIES.—
(a) Knowingly:
1. Filing with any supervisory or other public official;
2. Making, publishing, disseminating, or circulating;
3. Delivering to any person;
4. Placing before the public; or
5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,
any false statement.
(b) Knowingly making any false entry of a material fact in any book, report, or statement of any person.
(5) UNFAIR CLAIM SETTLEMENT PRACTICES.—
(a) Attempting to settle claims on the basis of an application or any other material document which was altered without notice to, or knowledge or consent of, the warranty holder;
(b) Making a material misrepresentation to the warranty holder for the purpose and with the intent of effecting settlement of such claims, loss, or damage under such contract on less favorable terms than those provided in, and contemplated by, such contract; or
(c) Committing or performing with such frequency as to indicate a general business practice any of the following practices:
1. Failure properly to investigate claims;
2. Misrepresentation of pertinent facts or contract provisions relating to coverages at issue;
3. Failure to acknowledge and act promptly upon communications with respect to claims;
4. Denial of claims without conducting reasonable investigations based upon available information;
5. Failure to affirm or deny coverage of claims upon written request of the warranty holder within a reasonable time after proof-of-loss statements have been completed; or
6. Failure to promptly provide a reasonable explanation to the warranty holder of the basis in the contract in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(6) 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.
(7) 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.
(8) COERCION OF DEBTORS.—When a home warranty is sold:
(a) Requiring, 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 credit is extended purchase a home warranty; or
(b) Failing to provide the advice required by s. 634.344.
(9) 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.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1475, ch. 2003-261; s. 7, ch. 2006-272; s. 27, ch. 2010-175.
634.337 Power of department and office to examine and investigate.—The department and office have the power, within their respective regulatory jurisdictions, to examine and investigate the affairs of every person involved in the business of home warranty in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by s. 634.335, and each shall have the powers and duties specified in ss. 634.338-634.342 in connection therewith.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1476, ch. 2003-261.
634.338 Prohibited practices; hearings; procedure; service of process.—
(1) 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.
(2) 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.
(3) 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.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 279, ch. 96-410; s. 1748, ch. 97-102; s. 1477, ch. 2003-261.
634.3385 Unauthorized entities; gifts and grants.—A governmental unit, public agency, institution, person, firm, or legal entity may provide money to the department to enable the department to pursue unauthorized entities operating in violation of this part. The department may transfer funds to the office to investigate, discipline, sanction, and take all action consistent with this part relative to unauthorized entities. All donations or grants of moneys to the department shall be deposited into the Insurance Regulatory Trust Fund and shall be separately accounted for in accordance with this section. Moneys deposited into the Insurance Regulatory Trust Fund pursuant to this section may be appropriated by the Legislature, pursuant to chapter 216, for the purpose of enabling the department or the office to carry out the provisions of this section. Notwithstanding s. 216.301 and pursuant to s. 216.351, any balance of moneys deposited into the Insurance Regulatory Trust Fund pursuant to this section remaining at the end of any fiscal year shall be available for carrying out the duties and responsibilities of the department or the office.
History.—s. 7, ch. 2012-77.
634.339 Cease and desist and penalty orders.—After the hearing provided for in s. 634.338, the department or office shall enter a final order in accordance with s. 120.569. If it is determined that the person charged has engaged in an unfair or deceptive act or practice or the unlawful transaction of home warranty business, the department or office also shall issue an order requiring the violator to cease and desist from engaging in such method of competition, act, or practice or the unlawful transaction of home warranty business. Further, the department or office may, at its discretion, order any one or more of the following penalties:
(1) 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.
(2) 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.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 19, ch. 85-62; s. 20, ch. 93-195; s. 280, ch. 96-410; s. 1749, ch. 97-102; s. 1478, ch. 2003-261.
634.34 Appeals from orders of the department or office.—Any person subject to an order of the department or office under s. 634.339 may obtain a review of such order by filing an appeal therefrom in accordance with the provisions and procedures for appeal from the orders of the department or office in general under s. 120.68.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1479, ch. 2003-261.
634.341 Penalty for violation of cease and desist order.—Any person who violates a cease and desist order of the department or office under s. 634.339 while such order is in effect, after notice and hearing as provided in s. 634.338, is subject, at the discretion of the department or office, to any one or more of the following penalties:
(1) A monetary penalty of not more than $25,000 as to all matters determined in such hearing.
(2) The suspension or revocation of such person’s license or eligibility to hold a license.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1480, ch. 2003-261.
634.342 Injunctive proceedings.—In addition to the penalties and other enforcement provisions of this part, in the event any person violates s. 634.303 or s. 634.318 or any rule adopted or promulgated pursuant thereto, the department or office is authorized to resort to a proceeding for injunction in the circuit court of the county where such person resides or has her or his principal place of business, and therein apply for such temporary and permanent orders as the department or office may deem necessary to restrain such person from engaging in any such activities, until such person has complied with such provision or rule.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 474, ch. 97-102; s. 1481, ch. 2003-261.
634.343 Civil liability.—The provisions of this part are cumulative to rights under the general civil and common law, and no action of the department or office will abrogate such rights to damages or other relief in any court.
History.—s. 29, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1482, ch. 2003-261.
634.344 Coercion of debtor prohibited.—
(1) 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.
(2) 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.
History.—s. 30, ch. 83-323; s. 1, ch. 84-94; s. 20, ch. 93-195; s. 1483, ch. 2003-261; s. 28, ch. 2010-175.
634.348 Investigatory records.—All active examination or investigatory records of the department or office made or received pursuant to this part 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 or office 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 or office is proceeding with reasonable dispatch, and there is good faith belief that action may be initiated by the department or office or other administrative or law enforcement agency.
History.—ss. 26, 33, ch. 83-323; s. 1, ch. 84-94; s. 3, ch. 93-117; s. 20, ch. 93-195; s. 395, ch. 96-406; s. 1485, ch. 2003-261.
PART III
SERVICE WARRANTY ASSOCIATIONS634.401 Definitions.
634.402 Powers of department, commission, and office; rules.
634.4025 Part exclusive; applicability of other laws.
634.403 License required; exemptions.
634.404 Qualifications for license.
634.405 Required deposit or bond.
634.4051 Levy upon deposit limited.
634.406 Financial requirements.
634.4061 Assets and liabilities.
634.4062 Prohibited investments and loans.
634.4065 Guarantee agreements.
634.407 Application for and issuance of license.
634.408 License continuance.
634.4085 Acquisition.
634.409 Grounds for suspension or revocation of license.
634.411 Order; notice of suspension or revocation of license; effect; publication.
634.412 Duration of suspension; obligations of association during suspension; reinstatement.
634.413 Administrative fine in lieu of suspension or revocation.
634.414 Forms; required provisions.
634.4145 Noncompliant forms.
634.415 Tax on premiums; annual statement; reports.
634.416 Examination of associations.
634.4165 Office records required.
634.417 Service of process.
634.419 License and appointment required.
634.420 License and appointment of sales representatives.
634.421 Reporting and accounting for funds.
634.422 Grounds for compulsory refusal, suspension, or revocation of license or appointment of sales representatives.
634.4225 Rebating; when allowed.
634.423 Grounds for discretionary refusal, suspension, or revocation of license or appointment of sales representatives.
634.424 Procedure for refusal, suspension, or revocation of license or appointment of sales representatives.
634.425 Duration of suspension or revocation.
634.426 Administrative fine in lieu of suspension or revocation of license or appointment.
634.427 Disposition of taxes and fees.
634.428 Insurance business not authorized.
634.429 Fronting not permitted.
634.430 Dissolution or liquidation.
634.431 Penalty for violation.
634.433 Civil remedy.
634.435 Unfair methods of competition and unfair or deceptive acts or practices prohibited.
634.436 Unfair methods of competition and unfair or deceptive acts or practices defined.
634.437 Power of department and office to examine and investigate.
634.438 Prohibited practices; hearings; procedure; service of process.
634.4385 Unauthorized entities; gifts and grants.
634.439 Cease and desist and penalty orders.
634.44 Appeals from orders of the department or office.
634.441 Penalty for violation of cease and desist order.
634.442 Injunctive proceedings.
634.443 Civil liability.
634.444 Investigatory records.
634.401 Definitions.—As used in this part, the term:
(1) “Consumer product” means tangible property primarily used for personal, family, or household purposes.
(2) “Gross income” means the total amount of revenue received in connection with business-related activity.
(3) “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.
(4) “Impaired” means having liabilities in excess of assets.
(5) “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.
(6) “Insolvent” means unable to pay debts as they become due in the usual course of business.
(7) “Insurance code” means the Florida Insurance Code as defined in s. 624.01.
(8) “Insurer” means any property or casualty insurer duly authorized to transact such business in this state.
(9) “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.
(10) “Person” includes an individual, company, corporation, association, insurer, agent, and any other legal entity.
(11) “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.
(12) “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.
(13) “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:
(a) Maintenance service contracts written for less than 1 year which do not contain provisions for indemnification and which do not provide a discount to the consumer for any combination of parts and labor in excess of 20 percent during the effective period of such contract, motor vehicle service agreements, transactions exempt under s. 624.125, and home warranties subject to regulation under part II of this chapter are excluded from this definition;
(b) The term “service warranty” does not include service contracts between consumers and condominium associations; and
(c) All contracts that include coverage for accidental damage from handling must be covered by the contractual liability policy referred to in s. 634.406(3).
(14) “Service warranty association” or “association” means any person, other than an authorized insurer, issuing service warranties.
(15) “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.
(16) “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.
(17) “Manufacturer” means any entity or its affiliate which:
(a) Derives a majority of its revenues from products manufactured, built, assembled, constructed, or produced under a product name wholly controlled by the applicant or an affiliate thereof;
(b) Issues service warranties only for consumer products manufactured, built, assembled, constructed, or produced under a product name wholly controlled by the applicant or an affiliate thereof;
(c) Is listed and traded on a recognized stock exchange, is listed in NASDAQ (National Association of Security Dealers Automated Quotation system) and publicly traded in the over-the-counter securities markets, is required to file either of Form 10-K, Form 10-Q, or Form 20-G with the United States Securities and Exchange Commission, or whose American Depository Receipts are listed on a recognized stock exchange and publicly traded;
(d) Maintains outstanding debt obligations, if any, rated in the top four rating categories by a recognized rating service;
(e) Has and maintains at all times, a minimum net worth of at least $10 million as evidenced by certified financial statements prepared by an independent certified public accountant in accordance with generally accepted accounting principles; and
(f) Is authorized to do business in this state.
(18) “Affiliate” means any entity which exercises control over or is controlled by, the service warranty association or insurer, directly or indirectly, through:
(a) Equity ownership of voting securities;
(b) Common managerial control; or
(c) Collusive participation by the management of the service warranty association or insurer or the affiliate.
History.—s. 5, ch. 78-255; s. 1, ch. 80-78; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 34, ch. 82-234; s. 3, ch. 83-265; ss. 1, 36, 37, 38, ch. 83-322; s. 10, ch. 85-321; s. 43, ch. 90-119; s. 3, ch. 90-153; s. 46, ch. 91-106; ss. 16, 20, ch. 93-195; s. 4, ch. 99-293; s. 1486, ch. 2003-261; s. 2, ch. 2005-151; s. 4, ch. 2005-258; s. 96, ch. 2006-1; s. 29, ch. 2010-175.
1Note.—As amended by s. 4, ch. 2005-258. The amendment by s. 2, ch. 2005-151, uses a comma between the words “contract” and “agreement.”
634.402 Powers of department, commission, and office; rules.—The office shall administer this part, and the commission may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of this part related to service warranty associations and service warranties. The department shall administer this part and may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of this part related to sales representatives. Such rules by the commission or department may identify specific methods of competition or acts or practices that are prohibited by s. 634.436, but shall not enlarge upon or extend the provisions of that section.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 20, ch. 93-195; s. 211, ch. 98-200; s. 28, ch. 2001-281; s. 1487, ch. 2003-261.
634.4025 Part exclusive; applicability of other laws.—
(1) 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.
(2) 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.
History.—ss. 11, 52, ch. 85-321; s. 20, ch. 88-206; s. 20, ch. 93-195.
634.403 License required; exemptions.—
(1) No person in this state shall provide or offer to provide service warranties to residents of this state 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.
(2) 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.
(3) 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.
(4) 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.
(5) A person is exempt from the license requirement in this section if the person complies with the following:
(a) The service warranties are only sold to nonresidents of this state and the person does not issue, market, or cause to be marketed service warranties to residents of this state.
(b) The person submits a letter of notification that provides the following information to the office upon the start of business from this state and annually thereafter by March 1:
1. The type of products offered and a statement certifying that the products are not regulated in the state in which the person is transacting business or that the person is licensed in the state in which the person is transacting business.
2. The name of the person; the state of domicile; the home address and address in this state of the person; the names of the owners and their percentage of ownership; the names of the officers and directors; the name, e-mail, and telephone number of a contact person; the states in which the person is transacting business; and how many individuals are employed in this state.
(c) If the person ceases to do business from this state, the person shall provide written notification to the office within 30 days after cessation of business.
(6) Any person who provides, offers to provide, or holds oneself out as providing or offering to provide a service warranty to residents of 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 47, ch. 91-106; s. 20, ch. 93-195; s. 281, ch. 96-410; s. 3, ch. 2003-168; s. 1488, ch. 2003-261; s. 30, ch. 2010-175; s. 14, ch. 2011-174.
634.404 Qualifications for license.—The office may not issue or allow a service warranty association to maintain a license unless the association:
(1) Is a warrantor with minimum net assets of $25,000 or a warranty seller with minimum net assets of $300,000.
(2) 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.
(3) 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.
(4) Makes the deposit or files the bond required under s. 634.405.
(5) 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.
(6) 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.
(a) The commission may require that the applicant show:
1. The state of the applicant’s incorporation;
2. The location of the applicant’s home office; and
3. The names and business addresses of the applicant’s board of directors and managing executive officer.
(b) The application, when filed, must be accompanied by:
1. A copy of the applicant’s articles of incorporation, certified by the public official having custody of the original, and a copy of the applicant’s bylaws, certified by the applicant’s corporate secretary;
2. Evidence that the applicant has complied with all applicable statutory requirements regarding registering to do business in this state; and
3. A license fee in the amount of $500.
(c) Upon submission of the application for license, the office shall examine the application to determine its compliance with applicable sections of this part. Applicants shall be advised of any inadequate responses or missing information.
(d) Information as required in this section shall be updated as to changes thereto no less than two times annually, once at the time of the submission of the service warranty association’s submission of its annual report, and the second time, no later than September 30 of each year.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 2, 36, 37, 38, ch. 83-322; s. 44, ch. 90-119; s. 48, ch. 91-106; s. 20, ch. 93-195; s. 39, ch. 95-211; s. 81, ch. 2000-158; s. 1489, ch. 2003-261.
634.405 Required deposit or bond.—
(1) 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:
(a) Warrantors.—
1. Any warrantor which:
a. Was licensed under this part before October 1, 1983;
b. Was transacting service warranty business in this state before June 14, 1978;
c. Has continuously transacted service warranty business in this state since June 14, 1978; and
d. Has not during any year since June 14, 1978, written more than $100,000 of gross written premiums,
shall place and maintain in trust with the department an amount equal to 50 percent of the gross written premiums in force.
2. A warrantor which has $300,000 or less of gross written premiums in this state and to which the provisions of subparagraph 1. do not apply shall place and maintain in trust with the department an amount not less than $50,000. A new warrantor, before the issuance of its license and before receiving any premiums, shall place and maintain in trust with the department the amount of $50,000.
3. A warrantor which has more than $300,000 but less than $750,000 of gross written premiums in this state shall place and maintain in trust with the department an amount not less than $75,000.
4. A warrantor which has $750,000 or more of gross written premiums in this state shall place and maintain in trust with the department an amount equal to $100,000.
5. All warrantors, upon receipt of written notice from the office, shall have 30 calendar days in which to make additional deposits.
(b) Warranty sellers.—A warranty seller shall, before the issuance of its license, place in trust with the department an amount not less than $100,000.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 3, 36, 37, 38, ch. 83-322; s. 40, ch. 87-226; s. 49, ch. 91-106; s. 184, ch. 91-108; s. 20, ch. 93-195; s. 5, ch. 96-377; s. 1490, ch. 2003-261.
634.4051 Levy upon deposit limited.—No judgment creditor or other claimant of a service warranty association shall have the right to levy upon any of the assets or securities held in this state as a deposit under s. 634.405.
History.—ss. 38, 52, ch. 85-321; s. 20, ch. 93-195.
634.406 Financial requirements.—
(1) 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.
(2) 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.
(3) 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:
(a) In the event that the service warranty association does not fulfill its obligation under contracts issued in this state for any reason, including insolvency, bankruptcy, or dissolution, the contractual liability insurer will pay losses and unearned premium refunds under such plans directly to the person making a claim under the contract.
(b) The insurer issuing the contractual liability policy shall assume full responsibility for the administration of claims in the event of the inability of the association to do so.
(c) The policy may not be canceled or not renewed by either the insurer or the association unless 60 days’ written notice thereof has been given to the office by the insurer before the date of such cancellation or nonrenewal.
(d) The contractual liability insurance policy shall insure all service warranty contracts which were issued while the policy was in effect whether or not the premium has been remitted to the insurer.
(e) In the event the issuer of the contractual liability policy is fulfilling the service warranty covered by policy and in the event the service warranty holder cancels the service warranty, it is the responsibility of the contractual liability policy issuer to effectuate a full refund of unearned premium to the consumer. This refund shall be subject to the cancellation fee provisions of s. 634.414. The salesperson or agent shall refund to the contractual liability policy issuer the unearned pro rata commission.
(f) An association may not utilize both the unearned premium reserve and contractual liability insurance simultaneously. However, an association shall be allowed to have contractual liability coverage on service warranties previously sold and sell new service warranties covered by the unearned premium reserve, and the converse of this shall also be allowed. An association must be able to distinguish how each individual service warranty is covered.
(4) 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:
(a) Holds licenses issued pursuant to the provisions of part I and this part, and
(b) Maintains net assets of at least $2.5 million, and
(c) Utilizes contractual liability insurance which reimburses the service warranty association for 100 percent of its paid claims, and
(d) The insurer issuing the contractual liability insurance policy maintains a policyholder surplus of at least $100 million and is rated “A” or higher by A.M. Best Company.
(5) No warranty seller may allow its gross written premiums in force to exceed a 7-to-1 ratio to net assets.
(6) An association that holds a license under this part may allow its premiums for service warranties written under this part to exceed the ratio to net assets limitations of this section if the association meets all of the following:
(a) Maintains net assets of at least $750,000.
(b) Uses a contractual liability insurance policy approved by the office that:
1. Reimburses the service warranty association for 100 percent of its claims liability and is issued by an insurer that maintains a policyholder surplus of at least $100 million; or
2. Complies with subsection (3) and is issued by an insurer that maintains a policyholder surplus of at least $200 million.
(c) The insurer issuing the contractual liability insurance policy:
1. Is rated “A” or higher by A.M. Best Company or an equivalent rating by another national rating service acceptable to the office.
2. In conjunction with the warranty association’s filing of the quarterly and annual reports, provides, on a form prescribed by the commission, a statement certifying the gross written premiums in force reported by the warranty association and a statement that all of the warranty association’s gross written premium in force is covered under the contractual liability policy, regardless of whether it has been reported.
(7) 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:
(a) The association or, if the association is a direct or indirect wholly owned subsidiary of a parent corporation, its parent corporation has, and maintains at all times, a minimum net worth of at least $100 million and provides the office with the following:
1. A copy of the association’s annual audited financial statements or the audited consolidated financial statements of the association’s parent corporation, prepared by an independent certified public accountant in accordance with generally accepted accounting principles, which clearly demonstrate the net worth of the association or its parent corporation to be $100 million and a quarterly written certification to the office that such entity continues to maintain the net worth required under this paragraph.
2. The association’s, or its parent corporation’s, Form 10-K, Form 10-Q, or Form 20-F as filed with the United States Securities and Exchange Commission or such other documents required to be filed with a recognized stock exchange, which shall be provided on a quarterly and annual basis within 10 days after the last date each such report must be filed with the Securities and Exchange Commission, the National Association of Security Dealers Automated Quotation system, or other recognized stock exchange.
Failure to timely file the documents required under this paragraph may, at the discretion of the office, subject the association to suspension or revocation of its license under this part. An association or parent corporation demonstrating compliance with subparagraphs 1. and 2. must maintain outstanding debt obligations, if any, rated in the top four rating categories by a recognized rating service.
(b) If the net worth of a parent corporation is used to satisfy the net worth provisions of paragraph (a), the following provisions must be met:
1. The parent corporation must guarantee all service warranty obligations of the association, wherever written, on a form approved in advance by the office. No cancellation, termination, or modification of the guarantee shall become effective unless the parent corporation provides the office written notice at least 90 days before the effective date of the cancellation, termination, or modification and the office approves the request in writing. Prior to the effective date of cancellation, termination, or modification of the guarantee, the association must demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, including whether the association will meet the requirements of this section by the purchase of contractual liability insurance, establishing required reserves, or other method allowed under this section. If the association or parent corporation does not demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, it shall immediately cease writing new and renewal business upon the effective date of the cancellation, termination, or modification.
2. The association must maintain at all times net assets of at least $750,000.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 4, 36, 37, 38, ch. 83-322; s. 50, ch. 91-106; ss. 17, 20, ch. 93-195; s. 6, ch. 95-245; s. 6, ch. 97-74; s. 475, ch. 97-102; s. 5, ch. 99-293; s. 5, ch. 2002-86; s. 1491, ch. 2003-261; s. 41, ch. 2004-374; s. 31, ch. 2010-175; s. 3, ch. 2014-111.
634.4061 Assets and liabilities.—
(1) 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:
(a) Cash in the possession of the service warranty association, or in transit under its control, including the true balance of any deposit in a solvent bank, savings and loan association, or trust company which is domiciled in the United States.
(b) Investments, securities, properties, and loans acquired or held in accordance with this part, and in connection therewith the following items:
1. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.
2. Declared and unpaid dividends on stock and shares, unless the amount of the dividends has otherwise been allowed as an asset.
3. Interest due or accrued upon a collateral loan which is not in default in an amount not to exceed 1 year’s interest thereon.
4. Interest due or accrued on deposits or certificates of deposit in solvent banks, savings and loan associations, and trust companies domiciled in the United States, and interest due or accrued on other assets, if such interest is in the judgment of the office a collectible asset.
5. Interest due or accrued on current mortgage loans, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 90 days be allowed as an asset.
6. Rent due or accrued on real property if such rent is not in arrears for more than 3 months. However, in no event shall rent accrued for a period in excess of 90 days be allowed as an asset.
7. The unaccrued portion of taxes paid prior to the due date on real property.
(c) Furniture, fixtures, furnishings, vehicles, and equipment, if the original cost of each item is at least $200, which cost shall be amortized in full over a period not to exceed 5 calendar years, unless otherwise approved by the office.
(d) Part inventories maintained for the purpose of servicing products warranted. Part inventories must be listed at cost. Associations are required to maintain records to support valuation of parts inventories.
(e) The liquidation value of prepaid expenses.
(f) Other assets, not inconsistent with the provisions of this section, deemed by the office to be available for the payment of losses and claims, at values to be determined by it.
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.
(2) 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:
(a) Goodwill, agreement holder lists, patents, trade names, agreements not to compete, and other like intangible assets.
(b) Any note or account receivable from or advances to officers, directors, or controlling stockholders, whether secured or not, and advances to employees, agents, or other persons on personal security only.
(c) Stock of the service warranty association owned by it directly or owned by it through any entity in which the organization owns or controls, directly or indirectly, more than 25 percent of the ownership interest.
(d) Leasehold improvements, stationery, and literature, except that leasehold improvements made prior to October 1, 1991, shall be allowed as an asset and shall be amortized over the shortest of the following periods:
1. The life of the lease.
2. The useful life of the improvements.
3. The 3-year period following October 1, 1991.
(e) Furniture, fixtures, furnishings, vehicles, and equipment, other than those items authorized under paragraph (1)(c).
(f) Notes or other evidences of indebtedness which are secured by mortgages or deeds of trust which are in default and beyond the express period specified in the instrument for curing the default.
(g) Bonds in default for more than 60 days.
(h) Deferred costs other than the liquidation value of prepaid expenses.
(i) Any note, account receivable, advance, or other evidence of indebtedness, or investment in:
1. The parent of the service warranty association;
2. Any entity directly or indirectly controlled by the service warranty association parent; or
3. An affiliate of the parent or the service warranty association; however, receivables from the parent or affiliated companies shall be considered an admitted asset of the company when the office is satisfied that the repayment of receivables, loans, and advances from the parent or the affiliated company are guaranteed by an organization in accordance with s. 634.4065.
4. Officers, directors, shareholders, employees, or salespersons of the association. However, premium receivables under 45 days old may be considered an admitted asset.
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.
(3) 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:
(a) The amount, in conformity with generally accepted accounting principles, necessary to pay all of its unpaid losses and claims incurred for or on behalf of an agreement holder, on or prior to the end of the reporting period, whether reported or unreported.
(b) Taxes, expenses, and other obligations due or accrued at the date of the statement.
(c) Reserve for unearned premiums.
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.
History.—s. 51, ch. 91-106; s. 476, ch. 97-102; s. 1492, ch. 2003-261.
634.4062 Prohibited investments and loans.—A service warranty association shall not directly or indirectly invest in or lend its funds upon the security of any note or other evidence of indebtedness of any director, officer, or controlling stockholder of the service warranty association. This prohibition applies only to investments and loans initially reported on a service warranty association’s financial statements after the third quarterly statement for 2006.
History.—s. 8, ch. 2006-272.
634.4065 Guarantee agreements.—In order to include receivables from affiliated companies as assets under s. 634.401(9), the service warranty association may provide a written guarantee to assure repayment of all receivables, loans, and advances from affiliated companies, provided that the written guarantee is made by a guaranteeing organization which:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) The filings made by a guarantee organization pursuant to this section are confidential and exempt from the provisions of s. 119.07(1).
(6) 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.
History.—s. 4, ch. 90-153; s. 20, ch. 91-201; s. 4, ch. 93-117; s. 20, ch. 93-195; s. 396, ch. 96-406; s. 282, ch. 96-410; s. 1493, ch. 2003-261.
634.407 Application for and issuance of license.—
(1) 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.
(2) In addition to information relative to its qualifications as required under s. 634.404, the commission may require that the application show:
(a) The location of the applicant’s home office.
(b) The name and residence address of each director, officer, and 10-percent or greater stockholder of the applicant.
(c) Such other pertinent information as may be required by the commission.
(3) The commission may require that the application, when filed, be accompanied by:
(a) A copy of the applicant’s articles of incorporation, certified by the public official having custody of the original, and a copy of the applicant’s bylaws, certified by the applicant’s secretary.
(b) A copy of the most recent financial statement of the applicant, verified under oath of at least two of its principal officers.
(c) A license fee in the amount of $200, as required under s. 634.403.
(4) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 5, 36, 37, 38, ch. 83-322; s. 52, ch. 91-106; s. 20, ch. 93-195; s. 1494, ch. 2003-261.
634.408 License continuance.—A license issued under this part shall continue in force as long as the service warranty association is entitled thereto under this part and until suspended, revoked, or terminated at the request of the service warranty association. However, to continue the license, annually in conjunction with the March 1 filing of the annual statement, each service warranty association shall file a $200 license fee.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 6, 36, 37, 38, ch. 83-322; s. 53, ch. 91-106; s. 20, ch. 93-195.
634.4085 Acquisition.—Except for manufacturers as defined in this part, every service warranty association shall be subject to the provisions of s. 628.4615.
History.—ss. 24, 38, ch. 83-322; ss. 6, 17, ch. 86-250; s. 4, ch. 87-50; s. 45, ch. 90-119; s. 10, ch. 90-248; s. 184, ch. 91-108; s. 115, ch. 92-318; s. 20, ch. 93-195.
634.409 Grounds for suspension or revocation of license.—
(1) 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.
(2) The license of any service warranty association shall be suspended or revoked if it is determined that such association:
(a) Is in an unsound financial condition, or is in such condition as would render its further transaction of service warranties in this state hazardous or injurious to its warranty holders or to the public.
(b) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers have refused to give information with respect to its affairs or have refused to perform any other legal obligation as to such examination, when required by the office.
(c) Has failed to pay any final judgment rendered against it in this state within 60 days after the judgment became final.
(d) Has, without just cause, refused to pay proper claims arising under its service warranties or, without just cause, has compelled warranty holders to accept less than the amount due them, or to employ attorneys, or to bring suit against the association to secure full payment or settlement of such claims.
(e) Is affiliated with, and under the same general management or interlocking directorate or ownership as, another service warranty association which transacts direct warranties in this state without having a license therefor.
(f) Is using such methods or practices in the conduct of its business as would render its further transaction of service warranties in this state hazardous or injurious to its warranty holders or to the public.
(3) 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) The association is insolvent or impaired as defined in s. 631.011.
(b) The association’s reserve account required by s. 634.406(1) is not being maintained.
(c) A proceeding for receivership, conservatorship, or rehabilitation or any other delinquency proceeding regarding the association has been commenced in any state.
(d) The financial condition or business practices of the association otherwise pose an imminent threat to the public health, safety, or welfare of the residents of this state.
(e) The association fails to affirm or deny coverage of claims upon the written request of the agreement holder within a reasonable time after notification of the claim.
(f) The association fails to promptly provide a reasonable explanation in writing to the agreement holder of the basis in the service agreement, in relation to the facts or applicable law, for denial of a claim or for the offer of a compromise settlement.
(4) A violation of this part by an insurer is grounds for suspension or revocation of the insurer’s certificate of authority in this state.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 7, 36, 37, 38, ch. 83-322; s. 54, ch. 91-106; s. 20, ch. 93-195; s. 1495, ch. 2003-261.
634.411 Order; notice of suspension or revocation of license; effect; publication.—
(1) 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.
(2) 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.
(3) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 55, ch. 91-106; s. 20, ch. 93-195; s. 1496, ch. 2003-261.
634.412 Duration of suspension; obligations of association during suspension; reinstatement.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 8, 36, 37, 38, ch. 83-322; s. 20, ch. 93-195.
634.413 Administrative fine in lieu of suspension or revocation.—If the office finds that one or more grounds exist for the discretionary revocation or suspension of a certificate of authority issued under this part, the office may, in lieu of such suspension or revocation, impose a fine upon the insurer or service warranty association in an amount not to exceed $1,000 per violation; however, if it is found that an insurer or service warranty association has knowingly and willfully violated a lawful rule or order of the commission or office or a provision of this part, the office may impose a fine upon the insurer or association in an amount not to exceed $10,000 for each violation.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 9, 36, 37, 38, ch. 83-322; s. 20, ch. 93-195; s. 1497, ch. 2003-261.
634.414 Forms; required provisions.—
(1) 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. Service warranty associations may effectuate refunds through the issuing sales representative.
(2) Refunds owed pursuant to this section may be made by cash, check, store credit, gift card, or other similar means. Upon request of the service warranty holder, the refund shall be remitted by check.
(3) 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.
(4) Each service warranty contract must be mailed, delivered, or electronically transmitted to the warranty holder within 45 days after the date of purchase. Electronic transmission of a service warranty contract constitutes delivery to the warranty holder. The electronic transmission must notify the warranty holder of his or her right to receive the contract via United States mail rather than electronic transmission. If the warranty holder communicates to the service warranty company electronically or in writing that he or she does not agree to receipt by electronic transmission, a paper copy of the contract shall be provided to the warranty holder.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 56, ch. 91-106; ss. 18, 20, ch. 93-195; s. 7, ch. 95-245; s. 1498, ch. 2003-261; s. 32, ch. 2010-175; s. 8, ch. 2012-77; s. 4, ch. 2014-111.
634.4145 Noncompliant forms.—The office may order a service warranty association to stop using any contract form that:
(1) Violates this part;
(2) Is misleading in any respect;
(3) Is reproduced so that any material provision is substantially illegible; or
(4) Contains provisions which are unfair or inequitable or which encourage misrepresentation.
History.—ss. 10, 38, ch. 83-322; s. 57, ch. 91-106; s. 20, ch. 93-195; s. 1499, ch. 2003-261; s. 33, ch. 2010-175.
634.415 Tax on premiums; annual statement; reports.—
(1) 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.
(2) The gross amount of premiums and assessments is subject to the sales tax imposed by s. 212.0506.
(3) 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.
(4) The office may suspend or revoke the license of a service warranty association failing to file its annual statement when due.
(5) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 11, 36, 37, 38, ch. 83-322; s. 30, ch. 87-99; s. 11, ch. 88-206; s. 37, ch. 89-356; s. 46, ch. 90-119; s. 58, ch. 91-106; ss. 19, 20, ch. 93-195; s. 21, ch. 2001-281; s. 1500, ch. 2003-261; s. 34, ch. 2010-175.
634.416 Examination of associations.—
(1) Service warranty associations 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 that apply to insurers under part II of chapter 624. The office is not required to conduct periodic examinations pursuant to this section, but may examine a service warranty company at its discretion. An examination conducted pursuant to this section may cover a period of only the most recent 5 years. The costs of examinations conducted pursuant to ss. 624.316(2)(e) and 624.3161(3) may not exceed 10 percent of the companies’ reported net income for the prior year.
(2) 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.
(3) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 12, 36, 37, 38, ch. 83-322; s. 20, ch. 93-195; s. 1501, ch. 2003-261; s. 35, ch. 2010-175; s. 9, ch. 2012-77.
634.4165 Office records required.—As a minimum requirement for permanent office records, each licensed service warranty association shall maintain:
(1) 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.
(2) 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.
(3) 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.
History.—ss. 13, 38, ch. 83-322; s. 20, ch. 93-195; s. 6, ch. 2008-178.
634.417 Service of process.—Service warranty associations are subject to service of process in the same manner and subject to the same terms, conditions, and fees as apply to insurers under chapter 624.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 14, 36, 37, 38, ch. 83-322; s. 20, ch. 93-195.
634.419 License and appointment required.—No person or entity shall solicit, negotiate, advertise, or effectuate service warranty contracts in this state unless such person or entity is licensed and appointed as a sales representative. Sales representatives shall be responsible for the actions of persons under their supervision. However, a service warranty association licensed as such under this part shall not be required to be licensed and appointed as a sales representative to solicit, negotiate, advertise, or effectuate its products.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 59, ch. 91-106; s. 150, ch. 91-108; s. 20, ch. 93-195; s. 22, ch. 2001-281.
634.420 License and appointment of sales representatives.—Sales representatives for service warranty associations or insurers shall be licensed, appointed, renewed, continued, reinstated, or terminated in accordance with procedures as prescribed in chapter 626 for insurance representatives in general. However, they shall be exempt from all other provisions of chapter 626, including fingerprinting, photo identification, education, and examination. License, appointment, and other fees shall be those prescribed in s. 624.501. A licensed and appointed sales representative shall be directly responsible and accountable for all acts of the licensed sales representative’s employees or other representatives. Each service warranty association or insurer shall, on forms prescribed by the department, within 30 days after termination of the appointment, notify the department of such termination. No employee or sales representative of a service warranty association or insurer may directly or indirectly solicit or negotiate insurance contracts, or hold herself or himself out in any manner to be an insurance agent, unless so qualified, licensed, and appointed therefor under the insurance code.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 15, 36, 37, 38, ch. 83-322; s. 20, ch. 85-208; s. 60, ch. 91-106; s. 151, ch. 91-108; s. 20, ch. 93-195; s. 477, ch. 97-102; s. 78, ch. 98-199; s. 95, ch. 2003-1; s. 71, ch. 2003-267; s. 62, ch. 2003-281.
634.421 Reporting and accounting for funds.—
(1) 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.
(2) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 16, 36, 37, 38, ch. 83-322; s. 61, ch. 91-106; s. 152, ch. 91-108; s. 4, ch. 92-79; s. 20, ch. 93-195; s. 478, ch. 97-102.
634.422 Grounds for compulsory refusal, suspension, or revocation of license or appointment of sales representatives.—The department shall deny, suspend, revoke, or refuse to renew or continue the license or appointment of any sales representative if it is found that any one or more of the following grounds applicable to the sales representative exist:
(1) Material misstatement, misrepresentation, or fraud in obtaining or attempting to obtain a license or appointment.
(2) The license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this part.
(3) 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.
(4) 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.
(5) Demonstrated lack of fitness or trustworthiness to engage in the business of service warranty.
(6) Demonstrated lack of adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.
(7) Fraudulent or dishonest practices in the conduct of business under the license or appointment.
(8) 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.
(9) Unlawfully rebating, or attempting to unlawfully rebate, or unlawfully dividing, or offering to divide, her or his commission with another.
(10) 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.
(11) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 17, 36, 37, 38, ch. 83-322; s. 52, ch. 88-166; s. 62, ch. 91-106; s. 153, ch. 91-108; s. 20, ch. 93-195; s. 479, ch. 97-102; s. 1502, ch. 2003-261.
634.4225 Rebating; when allowed.—
(1) No sales representative shall rebate any portion of his or her commission except as follows:
(a) The rebate shall be available to all consumers in the same actuarial class.
(b) The rebate shall be in accordance with a rebating schedule filed with and approved by the association issuing the service warranty to which the rebate applies. The association shall maintain a copy of all rebating schedules for a period of 3 years.
(c) The rebating schedule shall be uniformly applied so all consumers who purchase the same service warranty through the sales representative for the same coverage shall receive the same percentage rebate.
(d) The rebate schedule shall be prominently displayed in public view in the sales representative’s place of business, and a copy shall be made available to consumers on request at no charge.
(e) The age, sex, place of residence, race, nationality, ethnic origin, marital status, or occupation of the consumer shall not be used in determining the percentage of the rebate or whether a rebate is available.
(2) No rebate shall be withheld or limited in amount based on factors which are unfairly discriminatory.
(3) No rebate shall be given which is not reflected on the rebate schedule.
(4) No rebate shall be refused or granted based upon the purchase of or failure to purchase collateral business.
History.—s. 42, ch. 2004-374; s. 36, ch. 2010-175.
634.423 Grounds for discretionary refusal, suspension, or revocation of license or appointment of sales representatives.—The department may deny, suspend, revoke, or refuse to renew or continue the license or appointment of any sales representative if it is found that any one or more of the following grounds applicable to the sales representative exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 634.422:
(1) Any cause for which granting of the license or appointment could have been refused had it then existed and been known to the department.
(2) 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.
(3) Violation of any lawful order or rule of the department or commission.
(4) 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.
(5) 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.
(6) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 18, 36, 37, 38, ch. 83-322; s. 53, ch. 88-166; s. 63, ch. 91-106; s. 154, ch. 91-108; s. 20, ch. 93-195; s. 480, ch. 97-102; s. 1503, ch. 2003-261.
634.424 Procedure for refusal, suspension, or revocation of license or appointment of sales representatives.—
(1) 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.
(2) 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.
(3) 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.
(4) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 19, 36, 37, 38, ch. 83-322; s. 64, ch. 91-106; s. 155, ch. 91-108; s. 20, ch. 93-195.
634.425 Duration of suspension or revocation.—
(1) 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.
(2) 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.
(3) The department may not grant or issue any license or appointment to any individual whose license or appointment has been revoked twice.
(4) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 20, 36, 37, 38, ch. 83-322; s. 65, ch. 91-106; s. 156, ch. 91-108; s. 20, ch. 93-195.
634.426 Administrative fine in lieu of suspension or revocation of license or appointment.—
(1) 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.
(2) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 21, 36, 37, 38, ch. 83-322; s. 66, ch. 91-106; s. 157, ch. 91-108; s. 20, ch. 93-195; s. 1504, ch. 2003-261.
634.427 Disposition of taxes and fees.—All license fees, taxes on premiums, registration fees, and administrative fines and penalties collected under this part from service warranty associations and sales representatives shall be deposited to the credit of the Insurance Regulatory Trust Fund.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 22, 36, 37, 38, ch. 83-322; s. 20, ch. 93-195; s. 1505, ch. 2003-261.
634.428 Insurance business not authorized.—Nothing in the Florida Insurance Code or in this part shall be deemed to authorize any service warranty association to transact any insurance business other than that of service warranty as herein defined or otherwise to engage in any other type of insurance unless the association is authorized under a certificate of authority issued by the office under the provisions of the Florida Insurance Code.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 12, ch. 85-321; s. 20, ch. 93-195; s. 1506, ch. 2003-261.
634.429 Fronting not permitted.—No authorized insurer or licensed service warranty association may act as a fronting company for any unauthorized insurer or unlicensed service warranty association. A “fronting company” is an authorized insurer or licensed service warranty association which, by reinsurance or otherwise, generally transfers to one or more unauthorized insurers or unlicensed service warranty associations the risk of loss under warranties written by it in this state.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 23, 36, 37, 38, ch. 83-322; s. 20, ch. 93-195.
634.430 Dissolution or liquidation.—
(1) 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.
(2) 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.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 47, ch. 90-119; s. 20, ch. 93-195; s. 1507, ch. 2003-261.
634.431 Penalty for violation.—Except as otherwise provided in this part, any person who knowingly makes a false or otherwise fraudulent application for license or registration under this part, or who knowingly violates any provision hereof, in addition to being subject to any applicable denial, suspension, revocation, or refusal to renew or continue any license or registration, is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. Each instance of violation shall be considered a separate offense.
History.—s. 5, ch. 78-255; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 36, 37, 38, ch. 83-322; s. 162, ch. 91-224; s. 20, ch. 93-195.
634.433 Civil remedy.—
(1) 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.
(2) 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:
(a) Willful, wanton, and malicious; or
(b) In reckless disregard for the rights of any insured.
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.
(3) 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.
(4) 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.
History.—ss. 25, 38, ch. 83-322; s. 20, ch. 93-195; s. 481, ch. 97-102; s. 1508, ch. 2003-261.
634.435 Unfair methods of competition and unfair or deceptive acts or practices prohibited.—No person may engage in this state in any trade practice which is defined in this part as, or determined pursuant to s. 634.437 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of service warranty.
History.—ss. 27, 38, ch. 83-322; s. 20, ch. 93-195.
634.436 Unfair methods of competition and unfair or deceptive acts or practices defined.—The following methods, acts, or practices are defined as unfair methods of competition and unfair or deceptive acts or practices:
(1) 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:
(a) Misrepresents the benefits, advantages, conditions, or terms of any service warranty contract.
(b) Is misleading or is a misrepresentation as to the financial condition of any person.
(c) Uses any name or title of any contract misrepresenting the true nature thereof.
(d) Is a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any service warranty contract.
(2) 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:
(a) In a newspaper, magazine, or other publication;
(b) In the form of a notice, circular, pamphlet, letter, or poster;
(c) Over any radio or television station; or
(d) In any other way,
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.
(3) 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.
(4) FALSE STATEMENTS AND ENTRIES.—
(a) Knowingly:
1. Filing with any supervisory or other public official;
2. Making, publishing, disseminating, or circulating;
3. Delivering to any person;
4. Placing before the public; or
5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,
any false statement.
(b) Knowingly making any false entry of a material fact in any book, report, or statement of any person.
(5) UNFAIR CLAIM SETTLEMENT PRACTICES.—
(a) Attempting to settle claims on the basis of an application or any other material document which was altered without notice to, or knowledge or consent of, the warranty holder;
(b) Making a material misrepresentation to the warranty holder for the purpose and with the intent of effecting settlement of such claims, loss, or damage under such contract on less favorable terms than those provided in, and contemplated by, such contract;
(c) Committing or performing with such frequency as to indicate a general business practice any of the following practices:
1. Failure properly to investigate claims;
2. Misrepresentation of pertinent facts or contract provisions relating to coverages at issue;
3. Failure to acknowledge and act promptly upon communications with respect to claims;
4. Denial of claims without conducting reasonable investigations based upon available information;
5. Failure to affirm or deny coverage of claims upon written request of the warranty holder within a reasonable time after proof-of-loss statements have been completed; or
6. Failure to promptly provide a reasonable explanation to the warranty holder of the basis in the contract in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; or
(d) Denying a claim solely on the basis that the association was not able to confirm that the warranty holder in fact purchased a service warranty because the association did not obtain the name and address as set forth in s. 634.4165(2).
(6) 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.
(7) 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.
(8) FREE SERVICE WARRANTIES.—
(a) Advertising, offering, or providing a free service warranty as an inducement to the purchase or sale of real or personal property or of services directly or indirectly connected with such real or personal property.
(b) For the purposes of this subsection, a “free” service warranty is:
1. A service warranty for which no identifiable and additional charge is made to the purchaser of such real property, personal property, or services.
2. A service warranty for which an identifiable or additional charge is made in an amount less than the cost of such service warranty as to the seller or other person, other than the service warranty association, providing the same.
3. A service warranty with respect to which the word “free” or words implying that the provision of the service warranty is without cost are used in connection with the advertising or offering for sale of any kind of goods, merchandise, or services.
(9) 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.
History.—ss. 28, 38, ch. 83-322; s. 20, ch. 93-195; s. 23, ch. 2001-281; s. 7, ch. 2008-178; s. 37, ch. 2010-175.
634.437 Power of department and office to examine and investigate.—The department and office have the power, within their respective regulatory jurisdictions, to examine and investigate the affairs of every person involved in the business of service warranty in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by s. 634.435, and each shall have the powers and duties specified in ss. 634.438-634.442 in connection therewith.
History.—ss. 29, 38, ch. 83-322; s. 20, ch. 93-195; s. 1509, ch. 2003-261.
634.438 Prohibited practices; hearings; procedure; service of process.—
(1) 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.
(2) 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.
(3) 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.
History.—ss. 30, 38, ch. 83-322; s. 20, ch. 93-195; s. 283, ch. 96-410; s. 1750, ch. 97-102; s. 1510, ch. 2003-261.
634.4385 Unauthorized entities; gifts and grants.—A governmental unit, public agency, institution, person, firm, or legal entity may provide money to the department to enable the department to pursue unauthorized entities operating in violation of this part. The department may transfer funds to the office to investigate, discipline, sanction, and take all action consistent with this part relative to unauthorized entities. All donations or grants of moneys to the department shall be deposited into the Insurance Regulatory Trust Fund and shall be separately accounted for in accordance with this section. Moneys deposited into the Insurance Regulatory Trust Fund pursuant to this section may be appropriated by the Legislature, pursuant to chapter 216, for the purpose of enabling the department or the office to carry out the provisions of this section. Notwithstanding s. 216.301 and pursuant to s. 216.351, any balance of moneys deposited into the Insurance Regulatory Trust Fund pursuant to this section remaining at the end of any fiscal year shall be available for carrying out the duties and responsibilities of the department or the office.
History.—s. 10, ch. 2012-77.
634.439 Cease and desist and penalty orders.—After the hearing provided for in s. 634.438, the department or office shall enter a final order in accordance with s. 120.569. If it is determined that the person charged has engaged in an unfair or deceptive act or practice or the unlawful transaction of service warranty business, the department or office also shall issue an order requiring the violator to cease and desist from engaging in such method of competition, act, or practice or the unlawful transaction of service warranty business. Further, the department or office may, at its discretion, order any one or more of the following penalties:
(1) 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.
(2) 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.
History.—ss. 31, 38, ch. 83-322; s. 20, ch. 85-62; s. 20, ch. 93-195; s. 284, ch. 96-410; s. 1751, ch. 97-102; s. 1511, ch. 2003-261.
634.44 Appeals from orders of the department or office.—Any person subject to an order of the department or office under s. 634.439 may obtain a review of such order by filing an appeal therefrom in accordance with the provisions and procedures for appeal from the orders of the department or office in general under s. 120.68.
History.—ss. 32, 38, ch. 83-322; s. 20, ch. 93-195; s. 1512, ch. 2003-261.
634.441 Penalty for violation of cease and desist order.—Any person who violates a cease and desist order of the department or office under s. 634.439 while such order is in effect, after notice and hearing as provided in s. 634.438, is subject, at the discretion of the department or office, to any one or more of the following penalties:
(1) A monetary penalty of not more than $50,000 as to all matters determined in such hearing.
(2) The suspension or revocation of such person’s license or eligibility to hold a license.
History.—ss. 33, 38, ch. 83-322; s. 20, ch. 93-195; s. 1513, ch. 2003-261.
634.442 Injunctive proceedings.—In addition to the penalties and other enforcement provisions of this part, if any person violates s. 634.403 or s. 634.420 or any rule adopted pursuant thereto, the department or office may resort to a proceeding for injunction in the circuit court of the county where such person resides or has her or his or its principal place of business, and therein apply for such temporary and permanent orders as the department or office deems necessary to restrain such person from engaging in any such activities, until such person has complied with such provision or rule.
History.—ss. 34, 38, ch. 83-322; s. 20, ch. 93-195; s. 482, ch. 97-102; s. 1514, ch. 2003-261.
634.443 Civil liability.—The provisions of this part are cumulative to rights under the general civil and common law, and no action of the department or office will abrogate such rights to damages or other relief in any court.
History.—ss. 35, 38, ch. 83-322; s. 20, ch. 93-195; s. 1515, ch. 2003-261.
634.444 Investigatory records.—All active examination or investigatory records of the department or office made or received pursuant to this part 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 or office 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 or office is proceeding with reasonable dispatch, and there is good faith belief that action may be initiated by the department or office or other administrative law enforcement agency.
History.—ss. 26, 38, ch. 83-322; s. 5, ch. 93-117; s. 20, ch. 93-195; s. 397, ch. 96-406; s. 1516, ch. 2003-261.