HB 0769 2003
1	CHAMBER ACTION
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6	The Committee on Insurance recommends the following:
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8	Committee Substitute
9	Remove the entire bill and insert:
10	A bill to be entitled
11	An act relating to motor vehicle service agreements;
12	amending s. 634.011, F.S.; revising criteria within a
13	definition of a motor vehicle service agreement relating
14	to preestablished flat amounts; providing a limitation;
15	amending s. 634.041, F.S.; revising service agreement
16	company licensure qualifications; providing a limited
17	exception to certain liability insurance requirements
18	under certain circumstances; amending s. 634.121, F.S.;
19	providing for disapproval of certain service agreement
20	forms for not indicating the preestablished flat amount
21	payable under the agreement; providing an effective date.
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23	Be It Enacted by the Legislature of the State of Florida:
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25	Section 1. Paragraph (b) of subsection (8) of section
26	634.011, Florida Statutes, is amended to read:
27	634.011 Definitions.--As used in this part, the term:
28	(8) "Motor vehicle service agreement" or "service
29	agreement" means any contract or agreement indemnifying the
30	service agreement holder for the motor vehicle listed on the
31	service agreement and arising out of the ownership, operation,
32	and use of the motor vehicle against loss caused by failure of
33	any mechanical or other component part, or any mechanical or
34	other component part that does not function as it was originally
35	intended; however, nothing in this part shall prohibit or affect
36	the giving, free of charge, of the usual performance guarantees
37	by manufacturers or dealers in connection with the sale of motor
38	vehicles. Transactions exempt under s. 624.125 are expressly
39	excluded from this definition and are exempt from the provisions
40	of this part. The term "motor vehicle service agreement"
41	includes any contract or agreement that provides:
42	(b) For payment of vehicle protection expenses.
43	1.a. "Vehicle protection expenses" means a preestablished
44	flat amount payable for the loss of or damage to a vehicle or
45	expenses incurred by the service agreement holder for loss or
46	damage to a covered vehicle, including, but not limited to,
47	applicable deductibles under a motor vehicle insurance policy;
48	temporary vehicle rental expenses; expenses for a replacement
49	vehicle that is at least the same year, make, and model of the
50	stolen motor vehicle; sales taxes or registration fees for a
51	replacement vehicle that is at least the same year, make, and
52	model of the stolen vehicle; or other incidental expenses
53	specified in the agreement.
54	b. "Vehicle protection product" means a product or system
55	installed or applied to a motor vehicle or designed to prevent
56	the theft of the motor vehicle or assist in the recovery of the
57	stolen motor vehicle.
58	2. Vehicle protection expenses shall be payable in the
59	event of loss or damage to the vehicle as a result of the
60	failure of the vehicle protection product to prevent the theft
61	of the motor vehicle or to assist in the recovery of the stolen
62	motor vehicle. Vehicle protection expenses covered under the
63	agreement shall be clearly stated in the service agreement form,
64	unless the agreement provides for the payment of a
65	preestablished flat amount, in which case the service agreement
66	form shall clearly identify such amount.
67	3. Motor vehicle service agreements providing for the
68	payment of vehicle protection expenses shall either:
69	a. Reimburse a service agreement holder for the following
70	expenses, at a minimum: deductibles applicable to comprehensive
71	coverage under the service agreement holder's motor vehicle
72	insurance policy; temporary vehicle rental expenses; sales taxes
73	and registration fees on a replacement vehicle that is at least
74	the same year, make, and model of the stolen motor vehicle; and
75	the difference between the benefits paid to the service
76	agreement holder for the stolen vehicle under the service
77	agreement holder's comprehensive coverage and the actual cost of
78	a replacement vehicle that is at least the same year, make, and
79	model of the stolen motor vehicle; or
80	b. Pay a preestablished flat amount to the service
81	agreement holder.
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83	Payments shall not duplicate any benefits or expenses paid to
84	the service agreement holder by the insurer providing
85	comprehensive coverage under a motor vehicle insurance policy
86	covering the stolen motor vehicle, however, the payment of
87	vehicle protection expenses at a preestablished flat amount of
88	up to $5,000 does not duplicate any benefits or expenses payable
89	under any comprehensive motor vehicle insurance policy.
90	Section 2. Subsection (11) of section 634.041, Florida
91	Statutes, is amended to read:
92	634.041 Qualifications for license.--To qualify for and
93	hold a license to issue service agreements in this state, a
94	service agreement company must be in compliance with this part,
95	with applicable rules of the department, with related sections
96	of the Florida Insurance Code, and with its charter powers and
97	must comply with the following:
98	(11)(a) A service agreement company offering a service
99	agreementagreementsproviding vehicle protection expenses may
100	meet the requirements for this part only by maintaining
101	contractual liability insurance policy covering 100 percent of
102	its vehicle protection claim exposurein accordance with
103	paragraph (8)(b), which insurance must be issued by an insurance
104	company not affiliated with the service agreement company,
105	unless the insurance company had issued a contractual liability
106	insurance policy to a service agreement company on or before
107	January 1, 2002. Service agreements providing vehicle protection
108	expenses may be sold only to a service agreement holder that has
109	in-force comprehensive motor vehicle insurance coverage for the
110	vehicle to be covered by the service agreement.
111	(b) Notwithstanding any other requirement of this part, a
112	service agreement company maintaining an unearned premium
113	reserve on all service agreements in accordance with paragraph
114	(8)(a) may offer service agreements providing vehicle protection
115	expenses if it maintains contractual liability insurance only on
116	all service agreements providing vehicle protection expenses and
117	continues to maintain the 50 percent reserve for all service
118	agreements not providing vehicle protection expenses. A service
119	agreement company maintaining contractual liability insurance
120	for all service agreements providing vehicle protection expenses
121	and the 50 percent reserve for all other service agreements
122	shall distinguish, in the service agreement register required
123	pursuant to s. 634.136(4), between insured service agreements
124	providing vehicle protection expenses and service agreements not
125	providing vehicle protection expenses.
126	Section 3. Paragraph (c) of subsection (1) of section
127	634.121, Florida Statutes, is amended to read:
128	634.121 Filing of forms, required procedures,
129	provisions.--
130	(1) A service agreement form or related form may not be
131	issued or used in this state unless it has been filed with and
132	approved by the department. Upon application for a license, the
133	department shall require the applicant to submit for approval
134	each brochure, pamphlet, circular, form letter, advertisement,
135	or other sales literature or advertising communication addressed
136	or intended for distribution. The department shall disapprove
137	any document which is untrue, deceptive, or misleading or which
138	contains misrepresentations or omissions of material facts.
139	(c) The department shall disapprove any service agreement
140	form providing vehicle protection expenses which does not
141	clearly indicate eitherthe method for calculating the benefit
142	to be paid or provided to the service agreement holder or the
143	preestablished flat amount payable pursuant to the terms of the
144	service agreement. All service agreement forms providing vehicle
145	protection expenses shall clearly indicate the term of the
146	service agreement, whether new or used cars are eligible for the
147	vehicle protection product, and that the service agreement
148	holder may not make any claim against the Florida Insurance
149	Guarantee Association for vehicle protection expenses. The
150	service agreement shall be provided to a service agreement
151	holder on a form that provides only vehicle protection expenses.
152	A service agreement form providing vehicle protection expenses
153	must state that the service agreement holder must have in force
154	at the time of loss comprehensive motor vehicle insurance
155	coverage as a condition precedent to requesting payment of
156	vehicle protection expenses.
157	Section 4. This act shall take effect upon becoming a law.