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HB 1542 Home service contract providers; shifts responsibility for regulating to Commissioner of the DACS.

Introduced by: Terry G. Kilgore | all patrons    ...    notes | add to my profiles

SUMMARY AS PASSED: (all summaries)

Home service contract providers. Shifts responsibility for regulating home service contract providers from the State Corporation Commission to the Commissioner of the Department of Agriculture and Consumer Services. The measure provides that home service contracts are not contracts of insurance and are not subject to regulation under the Commonwealth's insurance laws. Home service contracts are agreements to perform the service repair, replacement, or maintenance, or indemnification therefor, with regard to components, parts, appliances, or systems of a residential home property. Providers of such contracts are required to register with the Commissioner, which registration shall not require filing of forms or rate information. Providers are required to maintain a funded reserve account for their obligations under the contracts that is not less than 40 percent of gross consideration received, less claims paid, on the sale of the home service contract for all in-force home service contracts sold in the Commonwealth. Providers are also required to file a bond with the Commissioner. In lieu of the requirements for a reserve account and bond, a provider may demonstrate financial responsibility by filing a copy of a liability insurance policy that covers 100 percent of the provider's home service contract liabilities. The measure includes provisions addressing the adoption of regulations, investigations, production of records, and penalties for violations that are similar to the existing provisions applicable to extended service contract providers. Providers with a net worth in excess of $100 million are exempt from the provisions of the measure. Certain maintenance and service agreements are exempted. The measure includes a minimum tax provision that requires such entities to pay income tax at a level that provides the same revenue as is currently paid in gross premium tax. The minimum tax is in lieu of all other state and local license fees or license taxes on providers and home service contracts. The measure has a delayed effective date of January 1, 2018.