Chapter 136
2012 -- S 2538 SUBSTITUTE A AS
AMENDED
Enacted 06/04/12
A N A C T
RELATING TO
INSURANCE - PORTABLE ELECTRONICS INSURANCE
Introduced By: Senator Joshua Miller
Date Introduced: February 28, 2012
It is enacted by the
General Assembly as follows:
SECTION 1. Title 27 of the General Laws entitled
"INSURANCE" is hereby amended
by adding thereto the following chapter:
CHAPTER
2.7
PORTABLE
ELECTRONICS INSURANCE
27-2.7-1.
Definitions. – For purposes of this section,
the following terms shall have the
following meanings:
(1) “Customer” means
a person who purchases portable electronics or services;
(2) “Department”
means the department of business regulation;
(3) “Enrolled customer”
means a customer who elects coverage under a portable
electronics insurance policy issued by a vendor of portable
electronics;
(4) “Insurance
commissioner” means the director of the department of business
regulation or his/her designee;
(5) “Location” means
any physical location in the state of
call center site or similar location directed to residents
of the state of
(6) “Portable
electronics” means electronic devices that are portable in nature, their
accessories and services related to the use of the device;
(7)(i) “Portable electronics insurance” means insurance
providing coverage for the repair
or replacement of portable electronics which may provide
coverage for portable electronics
against any one or more of the following causes of loss:
loss, theft, inoperability due to
mechanical failure, malfunction, damage or other similar causes
of loss.
(ii) “Portable electronics
insurance” does not include:
(A) A service
contract or extended warranty providing coverage limited to the repair,
replacement or maintenance of property for the operational or
structural failure of property due to
a defect in materials, workmanship, accidental damage
from handling, power surges, or normal
wear and tear;
(B) A policy of
insurance covering a seller’s or a manufacturer’s obligations under a
warranty; or
(C) A homeowner’s
renter’s, private passenger automobile, commercial multi-peril, or
similar policy;
(8) “Portable
electronics transaction” means:
(i)
The sale or lease of portable electronics by a vendor to a customer; or
(ii) The sale of a
service related to the use of portable electronics by a vendor to a
customer.
(9) “Supervising
entity” means a business entity that is a licensed insurer or insurance
producer that is authorized by an insurer to supervise the
administration of a portable electronics
insurance program.
(10) “Vendor” means a
person in the business of engaging in portable electronics
transactions directly or indirectly.
27-2.7-2.
Licensure of vendors. – (a) A
vendor is required to hold a portable electronics
insurance vendor license to sell or offer coverage under a
policy of portable electronics insurance.
(b) A portable
electronics insurance vendor license issued under this chapter shall
authorize any employee or authorized representative of the
vendor to sell or offer coverage under
a policy of portable electronics insurance to a
customer at each location at which the entity
engages in portable electronics transactions.
(c) The supervising
entity shall maintain a registry of vendor locations which are
authorized to sell or solicit portable electronics insurance
coverage in this state. Upon request by
the insurance commissioner and with ten (10) days notice
to the supervising entity, the registry
shall be open to inspection and examination by the
insurance commissioner during regular
business hours of the supervising entity.
(d) Notwithstanding
any other provision of law, a license issued pursuant to this section
shall authorize the licensee and its employees or
authorized representatives to engage in those
activities that are permitted in this section.
27-2.7-3.
Requirements for sale of portable electronics insurance. –
(a) At every
location where portable electronics insurance is offered to
customers, brochures or other written
materials must be made available to a prospective customer
which:
(1) Disclose that
portable electronics insurance may provide a duplication of coverage
already provided by a customer’s homeowner’s insurance
policy, renter’s insurance policy or
other source of coverage;
(2) State that the enrollment
by the customer in a portable electronics insurance program
is not required in order to purchase or lease portable
electronics or services;
(3) Summarize the
material terms of the insurance coverage, including:
(i)
The identity of the insurer;
(ii) The identity of
the supervising entity;
(iii) The amount of
any applicable deductible and how it is to be paid;
(iv)
Benefits of the coverage; and
(v) Key terms and
conditions of coverage such as whether portable electronics may be
repaired or replaced with similar make and model reconditioned
or non-original manufacturer
parts or equipment.
(4) Summarize the
process for filing a claim, including a description of how to return
portable electronics and the maximum fee applicable in the
event the customer fails to comply
with any equipment return requirements; and
(5) State that an
enrolled customer may cancel enrollment for coverage under a portable
electronics insurance policy at any time and the person paying
the premium shall receive a refund
of any applicable unearned premium.
(b) Portable
electronics insurance may be offered on a month-to-month or other periodic
basis as a group or master commercial inland marine policy
issued to a vendor of portable
electronics for its enrolled customers.
(c) Eligibility and
underwriting standards for customers electing to enroll in coverage
shall be established for each portable electronics
insurance program.
27-2.7-4.
Authority of vendors of portable electronics. – (a)
The employees and
authorized representatives of vendors may sell or offer portable
electronics insurance to
customers and shall not be subject to licensure as an insurance
producer under this title provided
that:
(1) The vendor
obtains a portable electronics insurance vendor license to authorize its
employees or authorized representatives to sell or offer
portable electronics insurance pursuant to
this section;
(2) The insurer
issuing the portable electronics insurance either directly supervises or
appoints a supervising entity to supervise the administration
of the program including
development of a training program for employees and authorized
representatives of the vendors.
The training required by this subdivision shall comply
with the following:
(i)
The training shall be delivered to employees and authorized representatives of
vendors who are directly engaged in the activity of selling
or offering portable electronics
insurance;
(ii) The training may
be provided in electronic form. However, if conducted in an
electronic form, the supervising entity shall implement a
supplemental education program
regarding the portable electronics insurance product that is
conducted and overseen by licensed
employees of the supervising entity; and
(iii) Each employee
and authorized representative shall receive basic instruction about the
portable electronics insurance offered to customers and the
disclosures required under section 27-
2.7-3.
(3) No employee or
authorized representative of a vendor of portable electronics shall
advertise, represent or otherwise hold himself or herself out
as a licensed insurance producer.
(b) Notwithstanding
any other provision of law, employees or authorized representatives
of a vendor of portable electronics shall not be
compensated based primarily on the number of
customers enrolled for portable electronics insurance coverage
but may receive compensation for
activities under the limited lines license which is incidental
to their overall compensation.
(c) The charges for
portable electronics insurance coverage may be billed and collected
by the vendor of portable electronics. Any charge to the
enrolled customer for coverage that is not
included in the cost associated with the purchase or lease of
portable electronics or related
services shall be separately itemized on the enrolled
customer’s bill. If the portable electronics
insurance coverage is included with the purchase or lease of
portable electronics or related
services the vendor shall clearly and conspicuously disclose
to the enrolled customer that the
portable electronics insurance coverage is included with the
portable electronics or related
services. Vendors billing and collecting such charges shall
not be required to maintain such funds
in a segregated account provided that the vendor is
authorized by the insurer to hold such funds in
an alternative manner and remits such amounts to the
supervising entity within sixty (60) days of
receipt. All funds received by a vendor from an enrolled
customer for the sale of portable
electronics insurance shall be considered funds held in trust by
the vendor in a fiduciary capacity
for the benefit of the insurer. Vendors may receive
compensation for billing and collection
services.
27-2.7-5.
Suspension or revocation of license. – If a
portable electronics insurance
vendor or its employee or authorized representative violates
any provision of this section, the
insurance commissioner may do any of the following:
(1) After notice and
hearing, impose fines not to exceed five hundred dollars ($500) per
violation or five thousand dollars ($5,000) in the aggregate
for such conduct.
(2) After notice and
hearing, impose other penalties that the commissioner deems
necessary and reasonable to carry out the purposes of this
chapter including:
(i)
Suspending the privilege of transacting portable electronics insurance pursuant
to this
section at specific business locations where violations have
occurred; and
(ii) Suspending or
revoking the ability of individual employees or authorized
representatives to act under the license; and
(3) Any other
penalties appropriate under section 42-14-16.
27-2.7-6.
Termination of portable electronics insurance. – Notwithstanding
any other
provision of law:
(1) An insurer may
terminate or otherwise change the terms and conditions of a policy of
portable electronics insurance only upon providing the vendor
and its enrolled customers with at
least thirty (30) days notice. An insurer may not change
the terms and conditions of a policy of
portable electronics insurance more than once in any six (6)
month period.
(2) If the insurer
changes the terms and conditions, then the insurer shall provide the
vendor with a revised policy or endorsement and each
enrolled customer with a revised
certificate, endorsement, updated brochure, or other evidence
indicating a change in the terms and
conditions has occurred and a summary of material changes.
(3) Notwithstanding
subdivision (1) of this section, an insurer may terminate an enrolled
customer’s enrollment under a portable electronics insurance
policy upon fifteen (15) days notice
for discovery of fraud or material misrepresentation in
obtaining coverage or in the presentation
of a claim thereunder.
(4) Notwithstanding
subdivision (1) of this section, an insurer may immediately terminate
an enrolled customer’s enrollment under a portable
electronics insurance policy:
(i)
For nonpayment of premium;
(ii) If the enrolled
customer ceases to have an active service with the vendor of portable
electronics; or
(iii) If an enrolled customer
exhausts the aggregate limit of liability, if any, under the
terms of the portable electronics insurance policy and the
insurer sends notice of termination to
the enrolled customer within thirty (30) calendar days
after exhaustion of the limit. However, if
notice is not timely sent, enrollment shall continue
notwithstanding the aggregate limit of liability
until the insurer sends notice of termination to the
enrolled customer.
(5) When a portable
electronics insurance policy is terminated by a vendor, the vendor
shall mail or deliver written notice to each enrolled
customer advising the enrolled customer of
the termination of the policy and the effective date of
termination. The written notice shall be
mailed or delivered to the enrolled customer at least thirty
(30) days prior to the termination.
(6) Whenever notice
or correspondence with respect to a policy of portable electronics
insurance is required pursuant to this section or is otherwise required
by law, it shall be in writing
and sent within the notice period, if any, specified
within the statute or regulation requiring the
notice or correspondence. Notwithstanding any other
provision of law, notices and
correspondence may be sent either by mail or by electronic means as
set forth in this subdivision.
If the notice or correspondence is mailed, it shall be
sent to the vendor of portable electronics at
the vendor’s mailing address specified for such purpose
and to its affected enrolled customers’
last known mailing addresses on file with the insurer. The
insurer or vendor of portable
electronics, as the case may be, shall maintain proof of mailing
in a form authorized or accepted
by the
correspondence is sent by electronic means, it shall be sent to the
vendor of portable electronics at
the vendor’s electronic mail address specified for such
purpose and to its affected enrolled
customers’ last known electronic mail address as provided by
each enrolled customer to the
insurer or vendor of portable electronics, as the case may
be. For purposes of this subdivision, an
enrolled customer’s provision of an electronic mail address to
the insurer or vendor of portable
electronics, as the case may be, shall be deemed consent to
receive notices and correspondence by
electronic means. The insurer or vendor of portable electronics,
as the case may be, shall maintain
proof that the notice or correspondence was sent.
(7) Notice or
correspondence required by this section or otherwise required by law may
be sent on behalf of an insurer or vendor, as the case
may be, by the supervising entity appointed
by the insurer.
27-2.7-7.
Application for license and fees. – (a) A sworn
application for a license under
this chapter shall be made to and filed with the
department on forms prescribed and furnished by
the department in accordance with the provisions of
subdivision 27-2.4- 9(a)(8).
(b) The application
shall:
(1) Provide the name,
residence address, and other information required by the
department for an employee or officer of the vendor that is
designated by the applicant as the
person responsible for the vendor’s compliance with the requirements
of this chapter. However, if
the vendor derives more than fifty percent (50%) of its
revenue from the sale of portable
electronics insurance the information noted above shall be
provided for all officers, directors, and
shareholder of record having beneficial ownership of ten percent
(l0%) or more of any class of
securities registered under the federal securities law; and
(2) The location of
the applicant’s home office.
(c) Any license under
this chapter is subject to all applicable provisions of chapter 2.4 of
this title, including, but not limited to, notification of
change of address, lapse of license,
notification of administrative actions, assumed names and basis
for suspension or revocation of
license; provided however, in the event there is a conflict
between the provisions of this chapter
and chapter 27-2.4, this chapter shall prevail.
(d) Any vendor
engaging in portable electronics insurance transactions on or before the
effective date of this chapter must apply for licensure within
ninety (90) days of the application
being made available by the department. Any applicant
commencing operations after the effective
date of this chapter must obtain a license prior to
offering portable electronics insurance.
(e) Initial licenses
issued pursuant to this chapter shall be valid for a period of two (2)
calendar years expiring on May 31st of the second (2nd)
renewal year. Applicants for an initial
license shall pay the full two (2) year fee regardless of the
number of months of the initial
licensure. Renewal licenses shall be effective for twenty-four
(24) months effective and expiring
on May 31st..
(f) Each vendor of
portable electronics licensed under this chapter shall pay to the
department a fee of two hundred dollars ($200) for an initial
license and for each renewal thereof.
The department is authorized to institute
miscellaneous fees for this license type in accordance
with section 27-2.4-4.
SECTION 2. This act shall take effect on July 1, 2012.
=======
LC01595/SUB A
=======