Legislative record

Insurance: home protection companies.

Existing law regulates home protection companies, which issue contracts for the repair or replacement of a component, system, or appliance of a home. Existing law prohibits a person from issuing home protection contracts in this state unless they hold a home protection company license issued by the Department of Insurance, except as specified. Existing law requires a home protection contract, as defined, to specify certain information in clear and conspicuous terms, including, but not limited to, every appliance, system, or component covered by the contract and all exclusions and limitations respecting the extent of the contract. This bill would, beginning on July 1, 2027, establish a license for a home protection contract limited lines agent, as defined, for an organization authorized to transact home protection contracts on behalf of a home protection company and in connection with a home protection contract vendor, as defined. The bill would additionally authorize a utility to solicit home protection contracts and transmit protection contract fees if it is a vendor acting on behalf of specified entities, including a licensed home protection contract limited lines agent. The bill would require an applicant for a license to submit specified items to the commissioner, including an application and a certificate stating the named applicant is trustworthy. The bill would authorize an agent to authorize a home protection contract vendor, as defined, to solicit contracts and collect protection contract fees on its behalf subject to specified conditions, and would authorize a purchaser to return the contract within 30 days of purchase if no claim has been made. The bill would allow a vendor to collect fees on behalf of an agent through the utility bill if the bill makes it clear that the home protection contract is issued by a third party and not the utility, lists the protection contract fees separately from the utility charges, and the bill includes a telephone number for customers to inquire about their contract. The bill would also require the contract to include specified disclosures. The bill would prohibit an unlicensed employee of a vendor from participating in the transaction of home protection contracts other than clerical or billing services, and would require the home protection contract limited lines agent or property and casualty insurance agent to ensure the home protection contract vendor informs its employees about the restrictions. The bill would authorize the commissioner to implement specified penalties if a vendor violates these provisions. The bill would also require a home protection company to maintain a single insurance policy covering 100% of the company's contractual obligation associated with the home protection contracts, among other specified requirements. The bill would prohibit a property and casualty insurance agent from acting as an agent of a home protection company in connection with a utility unless the company has filed a notice of appointment with the commissioner. The bill would require the notice of appointment to continue until specified documents are filed.