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28th Legislature(2013-2014)

Bill Text 28th Legislature

00 Enrolled SB 52                                                                                                          
01 Providing that portable electronics insurance is not a service contract; providing that a                               
02 portable electronics manufacturer's warranty or extended warranty is not regulated as                                   
03 insurance; relating to portable electronics insurance; authorizing the director of insurance to                         
04 issue a limited producer license to a portable electronics vendor for the sale of portable                              
05 electronics insurance; and relating to authorization and training of employees and                                      
06 representatives of a vendor to transact portable electronics insurance; and providing for an                            
07 effective date.                                                                                                         
08                           _______________                                                                               
09    * Section 1. AS 21.03.021(e) is amended to read:                                                                   
10            (e)  This title does not apply to a service contract offered, issued for delivery,                           
11       delivered, or renewed in this state. In this subsection, "service contract"                                       
12                 (1)  means a service contract or agreement for a separate or additional                                 
13       consideration, for a specific duration, to                                                                        
01                      (A)  maintain, service, repair, or replace tangible personal                                       
02            property, or to indemnify for repair, replacement, or maintenance, for an                                    
03            operational or structural failure due to a defect in materials or workmanship or                             
04            normal wear and tear, with or without additional provision for incidental                                    
05            indemnity payments when service, repair, or replacement is not reasonably or                                 
06            commercially feasible;                                                                                       
07                      (B)  repair, replace, or maintain tangible personal property                                       
08            damaged as a result of power surges or as a result of accidental damage from                                 
09            the handling of property [DAMAGED BY POWER SURGES]; or                                                       
10                      (C)  repair, replace, or maintain household consumer goods,                                        
11            household appliances, and household systems, including damage resulting                                      
12            from operational or structural failure due to a defect in materials or                                       
13            workmanship or normal wear and tear;                                                                         
14                 (2)  does not include                                                                                   
15                      (A)  mechanical breakdown insurance;                                                               
16                      (B)  a contract that requires an indemnity payment per incident                                    
17            and the payment exceeds the purchase price of the property serviced;                                         
18                      (C)  a contract to provide service on a motor vehicle subject to                                   
19            registration under AS 28.10.011; [OR]                                                                        
20                      (D)  a home warranty; in this subparagraph, "home warranty"                                        
21            means a warranty that covers the entire home and does not include a warranty                                 
22            limited to a household system or appliance; or                                                           
23                      (E)  portable electronics insurance as defined in                                              
24            AS 21.36.515.                                                                                            
25    * Sec. 2. AS 21.03.021 is amended by adding a new subsection to read:                                              
26            (g)  This title does not apply to a portable electronics manufacturer's warranty                             
27       or extended warranty.                                                                                             
28    * Sec. 3. AS 21.27.060(d) is amended to read:                                                                      
29            (d)  This section does not apply to an applicant                                                             
30                 (1)  for a limited license under AS 21.27.150(a)(1), (4), [OR] (5), or                              
31       (8); or                                                                                                       
01                 (2)  who, at any time within the one-year period immediately preceding                                  
02       the date the current pending application is received by the division, had been licensed                           
03       in good standing in this state under a license requiring substantially similar                                    
04       qualifications as required by the license applied for.                                                            
05    * Sec. 4. AS 21.27.150(a) is amended to read:                                                                      
06            (a)  The director may issue a                                                                                
07                 (1)  travel insurance limited producer license to a person who is                                       
08       appointed under AS 21.27.100 and who sells insurance connected with transportation                                
09       provided by a common carrier, and limited to a specific trip, that covers                                         
10                      (A)  trip cancellation;                                                                            
11                      (B)  trip interruption; or                                                                         
12                      (C)  life, health, disability, or personal effects;                                                
13                 (2)  title insurance limited producer license to a person whose place of                                
14       business is located in this state and whose sole purpose is to be appointed by and act                            
15       on behalf of a title insurer;                                                                                     
16                 (3)  bail bond limited producer license to a person who is appointed by                                 
17       and acts on behalf of a surety insurer pertaining to bail bonds;                                                  
18                 (4)  motor vehicle rental agency limited producer license to a person                                   
19       and, subject to the approval of the director, to employees of the person licensed that                            
20       the licensee authorizes to transact the business of insurance on the licensee's behalf if,                        
21       as to an employee, the licensee complies with (D) of this paragraph and if the licensee                           
22                      (A)  rents to others, without operators,                                                           
23                           (i)  private passenger motor vehicles, including                                              
24                 passenger vans, minivans, and sport utility vehicles; or                                                
25                           (ii)  cargo motor vehicles, including cargo vans, pickup                                      
26                 trucks, and trucks with a gross vehicle weight of less than 26,000                                      
27                 pounds that do not require the operator to possess a commercial driver's                                
28                 license;                                                                                                
29                      (B)  rents motor vehicles only to persons under rental                                             
30            agreements that do not exceed a term of 90 days;                                                             
31                      (C)  transacts only the following kinds of insurance:                                              
01                           (i)  motor vehicle liability insurance with respect to                                        
02                 liability arising out of the use of a vehicle rented from the licensee                                  
03                 during the term of the rental agreement;                                                                
04                           (ii)  uninsured or underinsured motorist coverage, with                                       
05                 minimum limits described in AS 21.96.020(c) and (d) arising from the                                    
06                 use of a vehicle rented from the licensee during the term of the rental                                 
07                 agreement;                                                                                              
08                           (iii)  insurance against medical, hospital, surgical, and                                     
09                 disability benefits to an injured person and funeral and death benefits to                              
10                 dependents, beneficiaries, or personal representatives of a deceased                                    
11                 person if the insurance is issued as incidental coverage with or                                        
12                 supplemental to liability insurance and arises out of the use of a vehicle                              
13                 rented from the licensee during the term of the rental agreement;                                       
14                           (iv)  personal effects insurance, including loss of use,                                      
15                 with respect to damage to or loss of personal property of a person                                      
16                 renting the vehicle and other vehicle occupants while that property is                                  
17                 being loaded into, transported by, or unloaded from a vehicle rented                                    
18                 from the licensee during the term of the rental agreement;                                              
19                           (v)  towing and roadside assistance with respect to                                           
20                 vehicles rented from the licensee during the term of the rental                                         
21                 agreement; and                                                                                          
22                           (vi)  other insurance as may be authorized by regulation                                      
23                 by the director;                                                                                        
24                      (D)  notifies the director in writing, within 30 days of                                           
25            employment, of the name, date of birth, social security number, location of                                  
26            employment, and home address of an employee authorized by the licensee to                                    
27            transact insurance on the licensee's behalf; and                                                             
28                      (E)  provides other information as required by the director;                                       
29                 (5)  nonresident limited producer license to a person; a license that the                               
30       director issues under this paragraph grants the same scope of authority as a limited                              
31       lines producer license issued to the person by the person's home state;                                           
01                 (6)  credit insurance limited producer license to a person who sells                                    
02       limited lines credit insurance;                                                                                   
03                 (7)  miscellaneous limited producer license to a person who transacts                                   
04       insurance in this state that restricts the person's authority to less than the total authority                    
05       for a line of authority described in AS 21.27.115(1) - (6), (8), and (9);                                     
06                 (8)  portable electronics limited producer license to a vendor that                                 
07       sells or offers portable electronics insurance as defined in AS 21.36.515; the                                
08       following provisions apply to a license issued under this paragraph:                                          
09                      (A)  a vendor shall file with the director a sworn application                                 
10            for a license under this paragraph on a form prescribed and furnished by                                 
11            the director; the vendor shall provide the name, residence address,                                      
12            location of the vendor's home office, and other information required by                                  
13            the director for an employee or officer that is designated by the vendor as                              
14            the person responsible for the vendor's compliance with the requirements                                 
15            of this chapter; however, if the vendor derives more than 50 percent of its                              
16            revenue from the sale of portable electronics insurance, the vendor shall                                
17            provide the information required under this subparagraph for all officers,                               
18            directors, and shareholders of record having beneficial ownership of 10                                  
19            percent or more of any class of securities registered under the federal                                  
20            securities law;                                                                                          
21                      (B)  a portable electronics limited producer license issued                                    
22            under this paragraph must authorize the employees or authorized                                          
23            representatives of a vendor to transact portable electronics insurance at                                
24            each location at which a vendor offers portable electronics to customers in                              
25            this state; and                                                                                          
26                      (C)  the employees or authorized representatives of the                                        
27            vendor may transact portable electronics insurance and are not required                                  
28            to obtain a limited producer license if                                                                  
29                           (i)  the employees or authorized representatives are                                      
30                 not compensated based primarily on the number of customers                                          
31                 enrolled for coverage; however, an employee or authorized                                           
01                 representative may receive compensation for activities under the                                    
02                 license that is incidental to the employee's or authorized                                          
03                 representative's overall compensation;                                                              
04                           (ii)  the insurer issuing the portable electronics                                        
05                 insurance provides a training program for employees and                                             
06                 authorized representatives of the portable electronics limited                                      
07                 producer licensee that includes instruction about the portable                                      
08                 electronics insurance offered to customers and the disclosures                                      
09                 required under AS 21.36.515; and                                                                    
10                           (iii)  the vendor maintains a register of each location                                   
11                 in the state where the vendor offers portable electronics insurance                                 
12                 and submits the register to the director within 30 days after the                                   
13                 director requests the register.                                                                     
14    * Sec. 5. AS 21.36 is amended by adding a new section to article 5 to read:                                        
15            Sec. 21.36.515. Portable electronics insurance. (a) Portable electronics                                   
16       insurance may be offered, issued for delivery, issued, or renewed only if the insurer                             
17       makes available to customers written material stating                                                             
18                 (1)  a summary of the material terms of the insurance, including                                        
19                      (A)  the identity of the insurer;                                                                  
20                      (B)  the identity of the vendor offering or selling the portable                                   
21            electronics insurance;                                                                                       
22                      (C)  the amount of the premium for coverage to be paid by the                                      
23            customer;                                                                                                    
24                      (D)  the period for which coverage is effective;                                                   
25                      (E)  deductible amounts, and how the deductible is to be paid;                                     
26                      (F)  the benefits of the coverage;                                                                 
27                      (G)  the process for filing a claim;                                                               
28                      (H)  requirements for returning a device to the vendor or                                          
29            insurer, including related costs;                                                                            
30                      (I)  proof-of-loss requirements;                                                                   
31                 (2)  whether the portable electronic device may be repaired or replaced                                 
01       by the insurer in response to a claim;                                                                            
02                 (3)  whether similar make and model reconditioned devices or                                            
03       nonoriginal manufacturer parts and equipment may be used by the insurer in response                               
04       to a claim;                                                                                                       
05                 (4)  that the insurance offered may duplicate coverage in a                                             
06       homeowner's, renter's, or other similar insurance policy;                                                         
07                 (5)  that the customer is not obligated to purchase insurance to                                        
08       purchase, lease, or service a portable electronic device; and                                                     
09                 (6)  that the customer may cancel enrollment for coverage at any time                                   
10       and receive a refund or credit based on a proration of the premium amount paid by the                             
11       customer for the period that coverage was effective.                                                              
12            (b)  The written materials required by this section are not subject to the                                   
13       requirements of AS 21.42.120.                                                                                     
14            (c)  Portable electronics insurance may be offered on a month-to-month or                                    
15       other periodic basis as a group or master policy issued to a vendor under which an                                
16       individual customer may elect to enroll for coverage. The insurer offering coverage                               
17       under a group or master policy shall establish eligibility and underwriting standards                             
18       for customers electing to enroll in coverage for each portable electronics insurance                              
19       program.                                                                                                          
20            (d)  Portable electronics insurance may be offered as commercial inland marine                               
21       insurance.                                                                                                        
22            (e)  A premium for portable electronics insurance may be billed and collected                                
23       by the vendor of portable electronics. A charge to the customer for coverage that is not                          
24       included in the cost associated with the purchase or lease of portable electronics or                             
25       related services must be itemized separately from the charges for the purchase, lease,                            
26       or service of a portable electronic device. If the coverage is included with the purchase                         
27       or lease of portable electronics or related services, the vendor shall clearly and                                
28       conspicuously disclose to the consumer that the coverage is included with the portable                            
29       electronics or related services. Vendors collecting premiums for portable electronics                             
30       insurance are not required to maintain premiums in a segregated account if the vendor                             
31       is authorized by the producer or insurer to hold premiums in an alternative manner and                            
01       pays the premiums to the insurer within 60 days after receipt. Premiums received by a                             
02       vendor from a customer purchasing portable electronics insurance shall be held in a                               
03       fiduciary capacity for the benefit of the insurer. A vendor may receive compensation                              
04       for billing and collection services.                                                                              
05            (f)  A portable electronics insurance policy may be changed or terminated as                                 
06       follows:                                                                                                          
07                 (1)  an insurer may cancel or change the terms and conditions of the                                    
08       policy; the insurer shall provide the vendor and enrolled customers with at least 30                              
09       days' notice and shall provide the vendor with a revised policy or endorsement and                                
10       each enrolled customer with a revised certificate, endorsement, updated brochure, or                              
11       other evidence indicating that a change in the terms and conditions has occurred and a                            
12       summary of material changes;                                                                                      
13                 (2)  an insurer may, upon 15 days' notice, terminate an enrolled                                        
14       customer's enrollment under a portable electronics insurance policy for fraud or                                  
15       material misrepresentation in obtaining coverage or in the presentation of a claim                                
16       under the terms of the policy;                                                                                    
17                 (3)  an insurer may, without prior notice, immediately terminate an                                     
18       enrolled customer's enrollment under a portable electronics insurance policy                                      
19                      (A)  for nonpayment of premium;                                                                    
20                      (B)  if the enrolled customer ceases to have an active service                                     
21            contract with the vendor; or                                                                                 
22                      (C)  if an enrolled customer exhausts the aggregate limit of                                       
23            liability, if any, under the terms of the portable electronics insurance policy                              
24            and the insurer sends notice of termination to the enrolled customer within 30                               
25            calendar days after exhaustion of the limit; however, if notice is not sent within                           
26            30 calendar days, enrollment shall continue, notwithstanding the exhaustion of                               
27            the aggregate limit of liability, until the insurer sends notice of termination to                           
28            the enrolled customer;                                                                                       
29                 (4)  if a portable electronics insurance policy is terminated by a vendor,                              
30       the vendor shall mail or deliver written notice to each enrolled customer advising the                            
31       enrolled customer of the termination of the policy and the effective date of                                      
01       termination; the written notice shall be mailed or delivered to the enrolled customer at                          
02       least 30 days before the termination;                                                                             
03                 (5)  if a policy of portable electronics insurance is terminated by an                                  
04       insurer or a vendor, the insurer or vendor shall, within 60 days after termination, return                        
05       any unearned premium to the person who paid the premium;                                                          
06                 (6)  if notice or correspondence with respect to a policy of portable                                   
07       electronics insurance is required under this section or is otherwise required by law, the                         
08       notice or correspondence must be in writing; notices and correspondence may be sent                               
09       either by mail or by electronic means as follows:                                                                 
10                      (A)  if the notice or correspondence is mailed, it shall be sent to                                
11            the vendor of portable electronics at the vendor's mailing address specified for                             
12            that purpose and to the vendor's affected enrolled customers' last known                                     
13            mailing addresses on file with the insurer; the insurer or vendor of portable                                
14            electronics shall maintain proof of mailing in a form authorized or accepted by                              
15            the United States Postal Service or other commercial mail delivery service;                                  
16                      (B)  if the notice or correspondence is sent by electronic means,                                  
17            it shall be sent to the vendor of portable electronics at the vendor's electronic                            
18            mail address specified for that purpose and to the vendor's affected enrolled                                
19            customers' last known electronic mail addresses as provided by each enrolled                                 
20            customer to the insurer or vendor of portable electronics; for purposes of this                              
21            subparagraph, an enrolled customer's provision of an electronic mail address to                              
22            the insurer or vendor of portable electronics shall be considered consent to                                 
23            receive notices and correspondence electronically; the insurer or vendor of                                  
24            portable electronics shall maintain proof that the notice or correspondence was                              
25            sent;                                                                                                        
26                 (7)  notice or correspondence required by this section or otherwise                                     
27       required by law may be sent on behalf of an insurer or vendor by a producer appointed                             
28       by the insurer.                                                                                                   
29            (g)  A portable electronics insurance policy must provide that, in the event of a                            
30       covered loss under more than one policy, the portable electronics policy will provide                             
31       primary coverage.                                                                                                 
01            (h)  In this section,                                                                                        
02                 (1)  "portable electronics insurance"                                                                   
03                      (A)  means insurance offered, issued for delivery, delivered, or                                   
04            renewed by a vendor engaged in the business of selling, leasing, or servicing                                
05            portable electronic devices to cover the loss, theft, mechanical failure,                                    
06            malfunction, damage, repair, or replacement of a small electronic device,                                    
07            including a cell phone, laptop computer, electronic tablet, GPS device, radio,                               
08            portable music player, or associated accessory;                                                              
09                      (B)  does not include                                                                              
10                           (i)  a service contract described in AS 21.03.021(e);                                         
11                           (ii)  a policy of insurance covering a seller's or a                                          
12                 manufacturer's obligations under a warranty; or                                                         
13                           (iii)  a homeowner's, renter's, private passenger                                             
14                 automobile, commercial multiperil, or similar policy that covers loss or                                
15                 theft of portable electronics;                                                                          
16                 (2)  "vendor" means a business entity in the business of selling or                                     
17       leasing portable electronics and related services and accessories.                                                
18    * Sec. 6. This Act takes effect January 1, 2014.                                                                   
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