Article
16.8. Home Protection Contracts
1758.1000.
As used in this article, the following terms have the following meanings: (a) “Endorsee” means an unlicensed employee or authorized representative of a licensee.
(b) “Established business relationship” means a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a consumer, not previously terminated by either party, based on either of the following:
(1) The consumer’s purchase or transaction, with or without an exchange of consideration, with the entity within the 18 months immediately preceding the date of the telephone call.
(2) The consumer’s inquiry or application regarding products or services offered by the entity within the three months immediately preceding the date of the call.
(c) “Home protection company” has the same meaning as in Section 12740.
(d) “Home protection contract” has the same meaning as in Section 12740.
(e) “Home protection contract holder” means a person who is the purchaser or holder of a home protection contract.
(f) “Licensee” means any individual or entity licensed pursuant to this article to transact, sell, or offer home protection contracts.
(g) (1) “License period” means all of that two-year period beginning as described in subparagraph (A) or
(B) of paragraph (2), as applicable, and ending the second succeeding year on the last calendar day of the month in which the initial license was issued.
(2) A license period shall be determined for each person or entity as follows:
(A) Upon initial licensing, the license period shall start on the date the license is issued.
(B) For a subsequent license, the license period shall start on the first day of the first month following the month in which the initial license was issued.
(3) A license shall be renewed on or before the expiration date of the license period.
(h) “Protection contract fee” has the same meaning as in Section 12740.
(i) “Sell or offer” has the same meaning as “solicit, negotiate, or effect” as used in Section 1631.
(j) “Telephone solicitation” means the initiation of an outbound telephone call or message for the purpose of encouraging the purchase of a home protection contract, which is transmitted to any person, but the term does not include a call or message to either of the following:
(1) A person with that person’s prior express invitation or permission.
(2) A person with whom the caller has an established business relationship.
1758.1001.
Notwithstanding Part 7 (commencing with Section 12740) of Division 2, a person or entity may sell or offer any form of a home protection contract in this state if that person or entity is any of the following:(a) Licensed as an insurance agent or broker pursuant to Article 3 (commencing with Section 1631).
(b) Exempt from licensing pursuant to subdivision (g) of Section 1634 or subdivision (j) of Section 1635.
(c) In compliance with the requirements of this article and issued a license by the commissioner as provided in this article.
1758.1002.
The commissioner may issue a license that authorizes a licensee and its endorsees to sell or offer a home protection contract to an applicant that has complied with the requirements of this article.1758.1003.
(a) An applicant for a license under this article shall submit all of the following to the commissioner:(1) A written application for licensure, signed by the applicant or an authorized representative of the applicant, in the form prescribed by the commissioner.
(2) A certificate by the home protection company or insurer that is to be named in the licensee’s license, stating that the home protection company or insurer has satisfied itself that the named applicant is trustworthy and competent to act as its agent limited to this purpose and that the home protection company or insurer will appoint the applicant to act as its agent to sell or offer the kind or kinds of
contracts that are permitted by this article, if the license applied for is issued by the commissioner. The certification shall be subscribed by an officer or managing agent of the home protection company or insurer on a form prescribed by the commissioner.
(3) An application fee of two hundred ninety-two dollars ($292).
(b) Notwithstanding any other law, Sections 1667, 1668, 1668.5, 1669, 1670, 1738, and 1739 shall apply to an application for, or issuance of, a license pursuant to this article.
(c) Costs associated with an enforcement action or investigation shall be paid by the person or organization licensed pursuant to this article.
1758.1004.
(a) An endorsee may act on behalf of, and under the supervision of, the licensee in matters relating to selling or offering home protection contracts and may sell or offer home protection contracts under the authority of the licensee if both of the following conditions have been met:(1) The endorsee is 18 years of age or older.
(2) A list of all endorsees is maintained by the licensee and updated no less than annually. The list shall be made available to the commissioner for review and inspection upon request.
(b) The conduct of an endorsee of a licensee acting within the scope of employment or agency shall
be deemed the conduct of the licensee for purposes of this article.
(c) The commissioner may request the licensee submit an annual certification, subscribed by an officer of the company on a form prescribed by the commissioner, including all of the following:
(1) The number of endorsees, if any, offering home protection contracts under the authority of the licensee for the applicable period.
(2) A statement that no person other than an endorsee sells or offers home protection contracts on the licensee’s behalf.
(3) A statement that all endorsees have completed training as required by this article.
1758.1005.
(a) The licensee shall provide for the training of its endorsees under a program developed by a home protection company or a property and casualty broker or agent prior to allowing its endorsees to sell or offer home protection contracts. Each endorsee shall receive instruction or training on all of the following:(1) The home protection contracts that are offered for sale to prospective customers.
(2) Ethical sales practices.
(3) The disclosures to be given to prospective customers pursuant to subparagraph (F) of paragraph (1) of subdivision (d) of Section 1758.1009.
(b) The licensee shall retrain endorsees whenever there is a material change in a home protection contract that requires modification of the training materials, but no less frequently than every two years for each endorsee.
(c) Training materials used by, or on behalf of, the licensee to train endorsees shall be submitted to the department at the time the licensee applies for a license under this article, and whenever modified thereafter.
(d) Training materials, and changes to those materials, submitted to the department pursuant to this section shall be deemed approved for use by, or on behalf of, the licensee unless otherwise notified by the department. Failure by a licensee to submit training materials or changes for departmental review, or the use of unapproved or disapproved training materials, shall constitute
grounds for denial of an application for a license, nonrenewal of a license, suspension of a license, or other action as deemed appropriate by the commissioner.
1758.1006.
(a) If a licensee or endorsee violates any provision of this article or any other provision of this code, in addition to the general disciplinary powers of the commissioner under Sections 1737 through 1748.5, inclusive, the commissioner may take any of the following disciplinary actions after notice and hearing:(1) Suspend or revoke the license of the licensee.
(2) Suspend or revoke the ability of individual endorsees to act under the licensee’s license.
(3) Impose fines on the licensee for its conduct or that of its endorsees.
(4) Impose other
penalties the commissioner deems necessary.
(b) If a person sells or offers a home protection contract or holds themselves or an organization out as a licensee without obtaining the license required by this article, or as being licensed pursuant to Chapter 5 (commencing with Section 1621) without obtaining that license, the commissioner may issue a cease and desist order pursuant to Section 12921.8.
(c) Notwithstanding any other law, Section 1748.5 is applicable to the individual or organization issued a license pursuant to this article and any endorsee to that license.
1758.1007.
(a) An endorsee shall not sell a home protection contract while in a prospective customer’s home. This section does not prohibit an endorsee from providing a prospective customer with written materials regarding the availability of a home protection contract.(b) A licensee or endorsee shall not sell or offer home protection contracts pursuant to this article through telephone solicitation.
1758.1008.
Protection contract fees may be billed and collected by a licensee. A licensee shall not be required to maintain those funds in a segregated account if the home protection company represented by the licensee has provided in writing that the funds need not be segregated from funds received by the licensee. All protection contract fees shall be considered funds held in trust by the licensee in a fiduciary capacity for the benefit of the home protection company. Licensees may receive compensation for billing and collection services.1758.1009.
A licensee shall not do any of the following:(a) Advertise, represent, or otherwise portray itself or its endorsees as a licensed insurer, home protection company, or property and casualty broker-agent.
(b) Pay compensation to an endorsee based primarily on the number of customers electing coverage under the license. Nothing in this code shall prohibit the payment of compensation to an endorsee of a licensee for activities under the licensee’s license that are incidental to their overall compensation. The incidental compensation shall not exceed fifteen dollars ($15) per customer who purchases a home protection contract.
(c) Provide anything of value to a real estate broker licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code in connection with their licensed functions authorized by Section 10131 or 10131.6 of the Business and Professions Code.
(d) (1) Sell a home protection contract pursuant to this article without providing all of the following information to the prospective customer:
(A) The material terms and conditions of the home protection contract, including the identity of the home protection company.
(B) How to file a claim, including a toll-free telephone number to report a claim.
(C) The price, benefits, and any material exclusions or conditions of the home
protection contract.
(D) The licensee’s name, address, telephone number, and license number.
(E) The department’s toll-free consumer hotline.
(F) The following disclosures:
(i) The purchase of the home protection contract is not required to receive any other goods or services, including, but not limited to, utility services.
(ii) The endorsee is not qualified or authorized to evaluate the adequacy of the prospective customer’s existing insurance coverage, if any.
(2) A licensee may comply with this subdivision by providing the consumer with a brochure, or other written material, containing the information or by directing the
consumer to an internet website that displays a brochure and a sample of the terms and conditions of the home protection contract.
1758.1010.
A home protection contract sold by a licensee or endorsee shall permit the home protection contract holder to return the contract within 30 days of the start date of the contract, if no claim has been made under the contract prior to its return. Upon return of the home protection contract to the licensee or home protection company within the applicable time period, the contract is void and the home protection company shall refund to the home protection contract holder the full purchase price of the contract.1758.1011.
(a) Not less than 60 days before a license period expires, the commissioner may use an electronic delivery method, including email or other similar electronic method of delivery, to deliver, or may mail, to the latest email or mailing address appearing on their records, an application to the licensee to renew the license for the appropriate succeeding license term. It is the licensee’s responsibility to renew, whether or not a renewal notice is received.(b) The commissioner may accept a late renewal without penalty, provided that the licensee’s failure to comply is due to a clerical error or inadvertence by the department.
(c) An application for renewal of a license may
be filed on or before the expiration date. An application for renewal of an expired license may be filed after the expiration date and until that same month and date of the next succeeding year.
(d) An application for renewal shall be accompanied by a renewal fee of two hundred ninety-two dollars ($292).
(e) The commissioner shall impose a penalty fee equal to one-half of the renewal fee for the licensee for any renewal that is filed after the expiration date of the license.
1758.1012.
Notwithstanding any other law, licensees under this article may be paid on a commission basis.1758.1013.
Nothing in this article regulating the sale of home protection contracts by a licensee shall be construed to impair or impede the application of any other law regulating the sale of home protection contracts.