Senate Bill sb2102c1

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    Florida Senate - 2002                           CS for SB 2102

    By the Committee on Banking and Insurance; and Senator
    Villalobos




    311-1985-02

  1                      A bill to be entitled

  2         An act relating to motor vehicle service

  3         agreements; amending s. 634.011, F.S.; revising

  4         the definition of the term "motor vehicle

  5         service agreement" to include contracts

  6         covering vehicle-protection products; defining

  7         the terms "vehicle-protection expenses" and

  8         "vehicle-protection product"; amending s.

  9         634.041, F.S.; redefining the term

10         "corporation", requiring service agreement

11         companies to maintain contractual liability

12         insurance and limiting those to whom vehicle

13         protection products may be sold; amending s.

14         634.121, F.S.; providing service agreement form

15         requirements; amending s. 634.191, F.S.;

16         revising the definition of unfair competition

17         or unfair or deceptive acts or practices for

18         purposes of disciplinary actions against

19         salespersons; providing an effective date.

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21  Be It Enacted by the Legislature of the State of Florida:

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23         Section 1.  Subsection (8) of section 634.011, Florida

24  Statutes, is amended to read:

25         634.011  Definitions.--As used in this part, the term:

26         (8)  "Motor vehicle service agreement" or "service

27  agreement" means any contract or agreement indemnifying the

28  service agreement holder for the motor vehicle listed on the

29  service agreement and arising out of the ownership, operation,

30  and use of the motor vehicle against loss caused by failure of

31  any mechanical or other component part, or any mechanical or

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    Florida Senate - 2002                           CS for SB 2102
    311-1985-02




  1  other component part that does not function as it was

  2  originally intended; however, nothing in this part shall

  3  prohibit or affect the giving, free of charge, of the usual

  4  performance guarantees by manufacturers or dealers in

  5  connection with the sale of motor vehicles; and provided

  6  further, however, transactions exempt under s. 624.125 shall

  7  be expressly excluded from this definition and are exempt from

  8  the provisions of this part. The term "motor vehicle service

  9  agreement" includes any contract or agreement which provides:

10         (a)  The coverage or protection defined in this

11  subsection and is issued or provided in conjunction with an

12  additive product applied to the motor vehicle which is the

13  subject of such contract or agreement; or

14         (b)  For payment of vehicle protection product. For

15  purposes of this paragraph:

16         1.  "Vehicle protection expenses" means payments to the

17  holder of a service agreement in the event of the failure of a

18  vehicle protection product. Such payments may include

19  unreimbursed expenses that may be incurred by the service

20  agreement holder only for:

21         a.  Loss or damage to the vehicle as a result of the

22  failure of the vehicle protection product to prevent the theft

23  of the motor vehicle or to assist in the recovery of the

24  stolen motor vehicle; or

25         b.  Incidental expenses that may be incurred by the

26  service agreement holder, including expenses for a replacement

27  vehicle, temporary vehicle rental expenses, or sales tax

28  expenses or registration expenses for a replacement vehicle.

29         2.  "Vehicle protection product" means a product or

30  system that is installed or applied to a motor vehicle and

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    Florida Senate - 2002                           CS for SB 2102
    311-1985-02




  1  designed to prevent the theft of the motor vehicle or assist

  2  in the recovery of the stolen motor vehicle.

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  4  Payment under this paragraph excludes the cash value of the

  5  stolen vehicle and may not duplicate any benefits or expenses

  6  paid to the service agreement holder by the insurer providing

  7  comprehensive motor vehicle insurance coverage on the stolen

  8  motor vehicle.

  9         Section 2.  Subsection (1) of section 634.041, Florida

10  Statutes, is amended and subsection (11) is added to that

11  section to read:

12         634.041  Qualifications for license.--To qualify for

13  and hold a license to issue service agreements in this state,

14  a service agreement company must be in compliance with this

15  part, with applicable rules of the department, with related

16  sections of the Florida Insurance Code, and with its charter

17  powers and must comply with the following:

18         (1)  Any service agreement company applying for a

19  license must be a solvent corporation formed under the laws of

20  this state or of another state or district of the United

21  States and must meet minimum requirements under this section.

22         (11)  A service agreement company offering vehicle

23  protection products that provide vehicle protection expenses

24  may meet the requirements for this part only by maintaining

25  contractual liability insurance in accordance with s.

26  634.041(8)(b). Vehicle protection products that provide

27  vehicle protection expenses may be sold only to a service

28  agreement holder that has in-force comprehensive motor vehicle

29  insurance coverage for the vehicle to be covered by the

30  vehicle protection product.

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    Florida Senate - 2002                           CS for SB 2102
    311-1985-02




  1         Section 3.  Paragraph (c) is added to subsection (1) of

  2  section 634.121, Florida Statutes, to read:

  3         634.121  Filing of forms, required procedures,

  4  provisions.--

  5         (1)  A service agreement form or related form may not

  6  be issued or used in this state unless it has been filed with

  7  and approved by the department.  Upon application for a

  8  license, the department shall require the applicant to submit

  9  for approval each brochure, pamphlet, circular, form letter,

10  advertisement, or other sales literature or advertising

11  communication addressed or intended for distribution. The

12  department shall disapprove any document which is untrue,

13  deceptive, or misleading or which contains misrepresentations

14  or omissions of material facts.

15         (c)  The department may disapprove any service

16  agreement form providing for payment of vehicle protection

17  expenses which does not clearly indicate the method for

18  calculating the benefit to be paid to the service agreement

19  holder. All service agreement forms providing vehicle

20  protection expenses must clearly indicate the term of the

21  service agreement and whether new or used cars are eligible

22  for the vehicle protection product, and must be provided to a

23  service agreement holder on a form that only provides vehicle

24  protection expenses. A service agreement form providing

25  vehicle protection expenses must state that the service

26  agreement holder must have in-force at the time of loss,

27  comprehensive motor vehicle insurance coverage, as a condition

28  precedent to requesting payment of vehicle protection

29  expenses.

30         Section 4.  Subsection (5) of section 634.191, Florida

31  Statutes, is amended to read:

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    Florida Senate - 2002                           CS for SB 2102
    311-1985-02




  1         634.191  Grounds for discretionary refusal, suspension,

  2  or revocation of license or appointment of salespersons.--The

  3  department may, in its discretion, deny, suspend, revoke, or

  4  refuse to renew or continue the license or appointment of any

  5  salesperson if it finds that as to the salesperson any one or

  6  more of the following applicable grounds exist under

  7  circumstances for which such denial, suspension, revocation,

  8  or refusal is not mandatory under s. 634.181:

  9         (5)  If, in the conduct of business under the license

10  or appointment, the salesperson has engaged in unfair methods

11  of competition or in unfair or deceptive acts or practices, as

12  such methods, acts, or practices are or may be defined under

13  this part IX of chapter 626, or has otherwise shown herself or

14  himself to be a source of injury or loss to the public or

15  detrimental to the public interest.

16         Section 5.  This act shall take effect July 1, 2002.

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    Florida Senate - 2002                           CS for SB 2102
    311-1985-02




  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                         Senate Bill 2102

  3

  4  Clarifies that motor vehicle theft prevention coverage may
    only be sold on a vehicle that is covered by a comprehensive
  5  motor vehicle insurance policy.

  6  Provides that the vehicle theft prevention coverage would not
    take the place of regular theft coverage under a comprehensive
  7  motor vehicle insurance policy, but would supplement such
    insurance.
  8
    Mandates that motor vehicle service agreement companies that
  9  intend to offer theft prevention coverage must meet financial
    solvency requirements through the purchase of contractual
10  liability insurance, rather than maintaining reserves.

11  Grants to the Department of Insurance authority to disapprove
    motor vehicle service agreement forms that do not contain
12  certain specific information and clear benefits.

13  Deletes an out-of-date reference to the unfair trade practices
    act.
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    Provides that a motor vehicle service agreement company
15  applying for a license from the Department of Insurance must
    be a solvent corporation which may be formed under the laws of
16  another state or district of the United States.

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