GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2011

H                                                                                                                                                    1

HOUSE BILL 617

 

 

Short Title:        Portable Electronics Insurance Coverage.

(Public)

Sponsors:

Representative Dockham (Primary Sponsor).

For a complete list of Sponsors, see Bill Information on the NCGA Web Site.

Referred to:

Insurance.

April 6, 2011

A BILL TO BE ENTITLED

AN ACT to provide for the regulation of portable electronics insurance.

The General Assembly of North Carolina enacts:

SECTION 1.  Chapter 58 of the General Statutes is amended by adding a new Article to read:

"Article 44A.

"Portable Electronics Insurance.

"§ 58-44A-1.  Definitions.

As used in this Article, the following definitions apply:

(1)        Customer. - A person who purchases portable electronics or services.

(2)        Enrolled customer. - A customer who elects coverage under a portable electronics insurance policy issued to a vendor of portable electronics.

(3)        Location. - Any physical location in the State of North Carolina or any Web site, call center site, or similar location directed to residents of the State of North Carolina.

(4)        Portable electronics. - Electronic devices that are portable in nature, their accessories, and services related to the use of the device.

(5)        Portable electronics insurance. - 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. The term does not include the following:

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 the 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.

c.         A homeowner's, renter's, private passenger automobile, commercial multiperil, or similar policy.

(6)        Portable electronics transaction. - Either of the following:

a.         The sale or lease of portable electronics by a vendor to a customer.

b.         The sale of a service related to the use of portable electronics by a vendor to a customer.

(7)        Supervising entity. - A business entity that is a licensed insurer or insurance producer.

(8)        Vendor. - A person in the business of engaging in portable electronics transactions directly or indirectly.

"§ 58-44A-5. Licensure of vendors.

(a)        A vendor is required to hold a limited lines license to sell or offer coverage under a policy of portable electronics insurance.

(b)        A limited lines license issued under this subdivision 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 vendor engages in portable electronics transactions.

(c)        In connection with a vendor's application for licensure, and quarterly thereafter, the vendor shall provide a list to the Commissioner of all locations in this State at which it offers coverage.

(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.

"§ 58-44A-10.  Requirements for sale of portable electronics insurance.

(a)        At every location where portable electronics insurance is offered to customers, brochures or other written materials shall be made available to a prospective customer. Those materials shall do the following:

(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:

a.         The identity of the insurer.

b.         The identity of the supervising entity.

c.         The amount of any applicable deductible and how it is to be paid.

d.         Benefits of the coverage.

e.         Key terms and conditions of coverage, such as whether portable electronics may be repaired or replaced with similar make and model reconditioned or nonoriginal 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 enrolled customer fails to comply with any equipment return requirements.

(5)        State that the 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.

"§ 58-44A-15.  Authority of venders 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 Chapter provided that the following are true:

(1)        The vendor obtains a limited lines 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:

a.         The training shall be delivered to employees and authorized representatives of a vendor who are directly engaged in the activity of selling or offering portable electronics insurance.

b.         The training may be provided in electronic form. If conducted in an electronic form, the supervising entity shall implement a supplemental education program regarding portable electronics insurance that is conducted and overseen by licensed employees of the supervising entity.

c.         Each employee and authorized representative shall receive basic instruction about the portable electronics insurance offered to customers and the disclosures required under G.S. 50-44A-10.

(3)        No employee or authorized representative of a vendor of portable electronics shall advertise, represent, or otherwise hold himself or herself out as a non-limited lines licensed insurance producer.

(b)        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 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.

"§ 58-44A-20.  Suspension or revocation of license.

If a vendor of portable electronics or its employee or authorized representative violates any provision of this section, the Commissioner may do any of the following:

(1)        After notice and hearing, impose fines not to exceed five hundred dollars ($500.00) 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 purpose of this Article, including the following:

a.         Suspending the privilege of transacting portable electronics insurance pursuant to this section at specific business locations where violations have occurred.

b.         Suspending or revoking the ability of individual employees or authorized representatives to act under the license.

"§ 58-44A-25.  Termination of portable electronics insurance.

(a)        An insurer may terminate or otherwise change the terms and conditions of a policy of portable electronics insurance only upon providing the policyholder and enrolled customers with at least 30 days' notice.

(b)        If the insurer changes the terms and conditions, then the insurer shall provide the vendor policyholder 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.

(c)        Notwithstanding subsection (a) of this section, an insurer may terminate an enrolled customer's enrollment under a portable electronics insurance policy upon 15 days' notice for discovery of fraud or material misrepresentation in obtaining coverage or in the presentation of a claim thereunder.

(d)        Notwithstanding subsection (a) of this section, an insurer may immediately terminate an enrolled customer's enrollment under a portable electronics insurance policy for any of the following reasons:

(1)        Nonpayment of premium.

(2)        The enrolled customer ceases to have an active service with the vendor of portable electronics.

(3)        An enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronics insurance policy and the insurer sent notice of termination to the enrolled customer within 30 calendar days after exhaustion of the limit. However, if notice was not timely sent, then enrollment shall continue, notwithstanding the aggregate limit of liability until the insurer sends notice of termination to the enrolled customer.

(e)        Where a portable electronics insurance policy is terminated by a policyholder, the policyholder 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 30 days prior to the termination.

(f)         Whenever notice is required pursuant to this section, it shall be in writing and may be mailed or delivered to the vendor of portable electronics at the vendor's mailing address and to its affected enrolled customers' last known mailing addresses on file with the insurer. If notice is mailed, 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 United States Postal Service or other commercial mail delivery service. Alternatively, an insurer or vendor policyholder may comply with any notice required by this section by providing electronic notice to a vendor or its affected enrolled customers, as the case may be, by electronic means. If notice is accomplished through electronic means, the insurer or vendor of portable electronics, as the case may be, shall maintain proof that the notice was sent.

"§ 58-44A-30.  Application for license and fees.

(a)        A sworn application for a license under this Article shall be made to and filed with the Department of Insurance on forms prescribed and furnished by the Commissioner.

(b)        The application shall do the following:

(1)        Provide the name, residence address, and other information required by the Commissioner 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, then the information noted above shall be provided for all officers, directors, and shareholders of record having beneficial ownership of ten percent (10%) or more of any class of securities registered under the federal securities law.

(2)        Appoint the Commissioner as the applicant's attorney to receive service of all legal process issued against it in any civil action or proceeding in this State brought in connection with portable electronics insurance coverage and agreeing that process so served shall be valid and binding against the applicant. The appointment shall be irrevocable, shall bind the company and any successor in interest as the assets or liabilities of the applicant, and shall remain in effect as long as the applicant's licensure remains in force in this State.

(3)        Provide the location of the applicant's home office.

(c)        Applications for licensure under this Article shall be made within 90 days of the application being made available by the Commissioner.

(d)        Initial licenses issued pursuant to this Article shall be valid for a period of 24 months.

(e)        Each vendor of portable electronics licensed under this Chapter shall pay to the Commissioner a fee as prescribed by the Commissioner, subject to the following fee maximums:

(1)        One thousand dollars ($1,000) for an initial license.

(2)        Five hundred dollars ($500.00) for each renewal.

(3)        One hundred dollars ($100.00) either for an initial license or for each renewal if the vendor is engaged in portable electronics transactions at 10 or fewer locations in the State."

SECTION 2.  This act becomes effective October 1, 2011.