| 1 | A bill to be entitled |
| 2 | An act relating to motor vehicle service agreement |
| 3 | companies; amending s. 634.041, F.S.; providing an |
| 4 | exception to a prohibition against service agreement |
| 5 | companies using certain reserves and contractual liability |
| 6 | insurance simultaneously; authorizing service agreement |
| 7 | companies maintaining certain net assets to use certain |
| 8 | reserves and certain contractual liability coverage |
| 9 | insurance simultaneously; providing a requirement; |
| 10 | providing an effective date. |
| 11 |
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| 12 | Be It Enacted by the Legislature of the State of Florida: |
| 13 |
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| 14 | Section 1. Subsection (9) of section 634.041, Florida |
| 15 | Statutes, is amended to read: |
| 16 | 634.041 Qualifications for license.--To qualify for and |
| 17 | hold a license to issue service agreements in this state, a |
| 18 | service agreement company must be in compliance with this part, |
| 19 | with applicable rules of the commission, with related sections |
| 20 | of the Florida Insurance Code, and with its charter powers and |
| 21 | must comply with the following: |
| 22 | (9)(a) In meeting the requirements of this part, except as |
| 23 | provided in paragraph (b), a service agreement company may not |
| 24 | utilize both the 50-percent reserve and contractual liability |
| 25 | insurance simultaneously. However, a company may have |
| 26 | contractual liability coverage on service agreements previously |
| 27 | sold and sell new service agreements covered by the 50-percent |
| 28 | reserve, and the converse of this is also allowed. A service |
| 29 | agreement company must be able to distinguish how each |
| 30 | individual service agreement is covered. |
| 31 | (b) A service agreement company that maintains net assets |
| 32 | of at least $5 million may use simultaneously the 50-percent |
| 33 | reserve and the contractual liability coverage for specific |
| 34 | blocks of new service agreements produced by specific |
| 35 | salespersons. A service agreement company must be able to |
| 36 | distinguish how each individual service agreement is covered. |
| 37 | Section 2. This act shall take effect July 1, 2005. |