SB 1690 — Warranty Associations

Florida Senate - 2019 CS for SB 1690 By Senatorthe BroxsonCommittee 1-01137B-19on 20191690__Banking Aand billInsurance; to be entitled An act relating to warranty associations;

and Senator Broxson 597-03483-19 20191690c1 A bill to be entitled An act relating to warranty associations;

requiring that such reserve account be a separate auditable account;account for contracts in force in this state;

requiring certain home warranty associations to comply with other states’ laws;

prohibiting home warranties from excluding coverage solely because of the presence of rust or corrosion, except under certain circumstances;

requiring that such reserve account be a separate auditable account;account for contracts in force in this state;

providingrevising anthe effectiverequirements date.regarding the ratio of gross written premiums to net assets for service warranties;

20requiring Becertain Itservice Enactedwarranty byassociations theto Legislaturecomply ofwith theother Statestates’ oflaws; Florida:

22providing Sectioneffective 1. Subsectionsdates. (1) and (2) of section 634.3077, Florida Statutes, are amended to read:

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

29 Section 1. Subsections (1) and (2) of section 634.3077, Florida Statutes, are amended, and subsection (5) is added to that section, to read:

Such reserve account must be a separate auditable account.account for contracts in force in this state.

Such reserve account must be a separate auditable account.account for contracts in force in this state.

Section(5) An 2. Sectionassociation 634.346,operating Floridain Statutes,this isstate createdthat toissues read:home warranty or home service contracts in other states must comply with all financial requirement laws of such other states.

634.346 HomeSection warranty2. Effective coverageJanuary requirements.—1, (1) A2020, homesection warranty634.346, soldFlorida inStatutes, thisis statecreated mayto notread: exclude coverage solely because of the presence of rust or corrosion unless the rust or corrosion was a contributing cause of the mechanical breakdown or failure of a covered appliance, unit, or system.

(2) A634.346 Home home warranty contract providing coverage forrequirements.– wear(1) A andhome tearwarranty failuressold ofin componentsthis ofstate amay heating,not ventilation,exclude andcoverage airbecause conditioningof (HVAC)the system,presence andof whichrust containsor ancorrosion exclusionunless ofthe replacementrust coverageor forcorrosion anywas othera functionalcontributing componentscause of the HVACmechanical systembreakdown onor thefailure basis of operationala compatibilitycovered orappliance, operationalunit, efficiencyor requirementssystem. as set by the manufacturer, must:

(a) Set(2) A forth a disclosure in conspicuous boldface type that the home warranty contract doesproviding notcoverage coverfor replacementwear ofand functionaltear componentsfailures of HVACcomponents systemsof foran reasonsHVAC ofsystem, compatibilitywhich orcontains efficiencyan requirementsexclusion of thereplacement manufacturer unless additional coverage for suchany circumstanceother isfunctional purchased,components andof provide the websiteHVAC orsystem telephoneon numberthe forbasis theof consumeroperational tocompatibility contactor tooperational addefficiency suchrequirements additionalas coverageset toby the homemanufacturer, warrantymust: contract;

(a) Set forth a disclosure in conspicuous boldfaced type that the home warranty contract does not cover replacement of functional components of HVAC systems for reasons of compatibility or efficiency requirements of the manufacturer unless additional coverage for such circumstance is purchased, and provide the website or telephone number for the consumer to contact to add such additional coverage to the home warranty contract;

Section 3. Subsections (1)(1), (2), and (2)(5) of section 634.406, Florida Statutes, are amendedamended, and subsection (8) is added to that section, to read:

Such reserve account must be a separate auditable account.account for contracts in force in this state.

(2) An association utilizing an unearned premium reserve shall deposit with the department a reserve deposit for contracts in force in this state equal to 10 percent of the gross written premium received on all warranty contracts in force in this state.

Section(5) No 4. Thiswarranty actseller shallmay takeallow effectits Julygross 1,written 2019.premiums in force for contracts written in this state to exceed a 7-to-1 ratio to net assets.

(8) An association operating in this state that issues service warranty or service contracts in other states must comply with all financial requirement laws of such other states.

Section 4. Except as otherwise expressly provided in this act, this act shall take effect July 1, 2019.