Bill Text: MI SB0859 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Insurance; other; sale of portable electronics insurance; exempt from requirements for licensing of producers. Amends sec. 1202 of 1956 PA 218 (MCL 500.1202).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2012-12-31 - Assigned Pa 0552'12 With Immediate Effect 2012 Addenda [SB0859 Detail]
Download: Michigan-2011-SB0859-Introduced.html
SENATE BILL No. 859
December 1, 2011, Introduced by Senator HILDENBRAND and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 1201 (MCL 500.1201), as amended by 2001 PA 228,
and by adding chapter 29A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1201. As used in this chapter:
(a) "Agent" except as provided in section 1243 means an
insurance producer.
(b) "Business entity" means a corporation, association,
partnership, limited liability company, limited liability
partnership, or other legal entity.
(c) "Home state" means the District of Columbia or any state
or territory of the United States in which an insurance producer
maintains his or her principal place of residence or principal
place of business and is licensed to act as an insurance producer.
(d) "Insurance" means any of the lines of authority in chapter
6.
(e) "Insurance producer" means a person required to be
licensed under the laws of this state to sell, solicit, or
negotiate insurance.
(f) "License" means a document issued by this state's
commissioner authorizing a person to act as an insurance producer
for the qualifications specified in the document. The license
itself does not create any actual, apparent, or inherent authority
in the holder to represent or commit an insurer.
(g) "Limited line credit insurance" includes credit life,
credit disability, credit property, credit unemployment,
involuntary unemployment, mortgage life, mortgage guaranty,
mortgage disability, guaranteed automobile protection insurance,
and any other form of insurance offered in connection with an
extension of credit that is limited to partially or wholly
extinguishing that credit obligation that the commissioner
determines should be designated a form of limited line credit
insurance.
(h) "Limited line credit insurance producer" means a person
who sells, solicits, or negotiates 1 or more forms of limited line
credit insurance coverage to individuals through a master,
corporate, group, or individual policy.
(i) "Limited lines insurance" means any of the following:
(i) Marine insurance as defined in section 614.
(ii) Credit insurance as described in section 624(1)(e).
(iii) Surety and fidelity insurance as defined in section 628.
(iv) Legal expense insurance as defined in section 618.
(v) Livestock insurance as described in section 624(1)(g).
(vi) Malpractice insurance as described in section 624(1)(h).
(vii) Plate glass insurance as described in section 624(1)(c).
(viii) Any other miscellaneous insurance described in section
624(1)(i).
(ix) Portable electronics insurance as described in chapter
29A.
(x) (ix) Any
other line of insurance that the commissioner
considers necessary to recognize for the purposes of complying with
section 1206a(5).
(j) "Limited lines producer" means a person authorized by the
commissioner to sell, solicit, or negotiate limited lines
insurance.
(k) "Negotiate" means the act of conferring directly with or
offering advice directly to a purchaser or prospective purchaser of
a particular contract of insurance concerning any of the
substantive benefits, terms, or conditions of the contract,
provided that the person engaged in that act either sells insurance
or obtains insurance from insurers for purchasers.
(l) "Sell" means to exchange a contract of insurance by any
means, for money or its equivalent, on behalf of an insurance
company.
(m) "Solicit" means attempting to sell insurance or asking or
urging a person to apply for a particular kind of insurance from a
particular company.
(n) "Terminate" means the cancellation of the relationship
between an insurance producer and the insurer or the termination of
a producer's authority to transact insurance.
CHAPTER 29A
PORTABLE ELECTRONICS INSURANCE
Sec. 2960. As used in this chapter:
(a) "Customer" means a person that purchases portable
electronics or services.
(b) "Enrolled customer" means a customer that elects coverage
under a portable electronics insurance policy issued to a vendor.
(c) "Location" means any physical location in this state or
any website, call center site, or similar location directed to
residents of this state.
(d) "Office" means the office of financial and insurance
regulation.
(e) "Portable electronic device" means an electronic device
that is portable in nature and any accessories or services related
to the use of that device.
(f) "Portable electronics insurance" means insurance that
provides coverage for the repair or replacement of a portable
electronic device, including, but not limited to, insurance that
provides coverage for a portable electronic device against loss,
theft, inoperability because of mechanical failure, malfunction,
damage, or other similar causes of loss. Portable electronics
insurance does not include any of the following:
(i) A service contract or extended warranty that provides
coverage that is limited to the repair, replacement, or maintenance
of a portable electronic device if there is an operational or
structural failure of the device caused by a defect in materials or
workmanship, accidental damage from handling, or normal wear and
tear.
(ii) A policy of insurance covering a seller's or
manufacturer's obligations under a warranty.
(iii) A homeowner's, renter's, private passenger automobile,
commercial multi-peril, or similar insurance policy.
(g) "Portable electronics transaction" means any of the
following:
(i) A sale or lease of a portable electronic device by a vendor
to a customer.
(ii) A sale of a service related to the use of a portable
electronic device by a vendor to a customer.
(h) "Supervising entity" means a business entity that is an
insurance producer or insurer licensed under this code.
(i) "Vendor" means a person in the business of directly or
indirectly engaging in portable electronic device transactions.
Sec. 2961. (1) A vendor shall not sell or offer coverage under
a policy of portable electronics insurance to a customer unless the
vendor is licensed as a limited lines producer under chapter 12.
This license authorizes any employee or authorized representative
of the vendor to sell or offer coverage under a policy of portable
electronics insurance to a customer at any location at which the
vendor engages in portable electronics transactions.
(2) A vendor shall maintain a registry of locations that are
authorized to sell or solicit portable electronics insurance in
this state. Upon the commissioner's request and within 10 days'
notice to the vendor, the registry shall be open to inspection and
examination by the commissioner during the vendor's regular
business hours.
Sec. 2962. (1) At every location where a vendor offers
portable electronics insurance to customers, the vendor shall make
brochures or other written materials available to a prospective
customer. The brochures or other written materials shall do all of
the following:
(a) Disclose that portable electronics insurance may provide a
duplication of coverage already provided by the customer's
homeowner's insurance policy, renter's insurance policy, or other
insurance coverage.
(b) State that the enrollment by the customer in a portable
electronics insurance program is not required to purchase or lease
a portable electronic device or services for the device.
(c) Summarize the material terms of the portable electronics
insurance coverage, including at least all of the following:
(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.
(v) Key terms and conditions of the coverage, such as whether
portable electronics may be repaired or replaced with similar make
and model reconditioned or nonoriginal manufacturer parts or
equipment.
(d) Summarize the process for filing a claim, including a
description of how to return a portable electronic device and the
maximum fee applicable if the customer fails to comply with any
equipment return requirements.
(e) State that the customer may cancel enrollment for coverage
under a portable electronics insurance policy at any time and that
the person paying the premium will receive a refund of any
applicable unearned premium.
(2) A vendor may offer portable electronics insurance on a
month-to-month or other periodic basis as a group or master
commercial inland marine policy issued to the vendor for its
enrolled customers.
(3) An insurer issuing a policy of portable electronics
insurance shall establish eligibility and underwriting standards
for customers electing to enroll in coverage for each portable
electronics insurance program.
Sec. 2963. (1) The employees and authorized representatives of
a vendor may sell or offer portable electronics insurance under
this chapter to customers without a limited lines producer license
if either of the following is met:
(a) The vendor that employs the employees and authorized
representatives has a limited lines producer license that
authorizes its employees or authorized representatives to sell or
offer portable electronics insurance.
(b) The insurer issuing the portable electronics insurance
coverage either directly supervises or appoints a supervising
entity to supervise the administration of the portable electronics
insurance coverage program, including development of a training
program for employees and authorized representatives of the
vendors. The training required under this subdivision shall comply
with all of the following:
(i) 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
coverage.
(ii) The training may be provided in electronic form. If the
training is conducted in 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.
(iii) The training shall provide basic instruction about the
portable electronics insurance coverage offered to customers and
the disclosures required under section 2962.
(2) An employee or authorized representative of a vendor
described in subsection (1) shall not advertise, represent, or
otherwise hold himself or herself out as a limited lines licensed
insurance producer.
(3) A vendor may bill and collect the charges for portable
electronics insurance coverage. A vendor shall separately itemize
on the enrolled customer's bill any charge for coverage that is not
included in the cost associated with the purchase or lease of a
portable electronic device or related services. If the portable
electronics insurance coverage is included with the purchase or
lease of a portable electronic device 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 electronic device or related services.
Vendors billing and collecting charges described in this subsection
are not required to maintain the proceeds in a segregated account
if the vendor is authorized by the insurer to hold the proceeds in
an alternative manner and remits those proceeds to the supervising
entity within 60 days after receiving them. All money received by a
vendor from an enrolled customer from the purchase of portable
electronics insurance is considered money held in trust by the
vendor in a fiduciary capacity for the benefit of the insurer. A
vendor may receive compensation for billing and collection services
described in this subsection.
Sec. 2964. If a vendor or an employee or authorized
representative of a vendor violates this chapter, the commissioner
may do any of the following:
(a) After notice and hearing, impose an administrative fine of
not more than $500.00 for each violation. However, the commissioner
may not assess administrative fines under this chapter against any
person that in the aggregate are more than $5,000.00 for multiple
violations that involve the same conduct, action, or practice.
(b) After notice and hearing, impose other penalties that the
commissioner considers necessary and reasonable to carry out the
purpose of this chapter, including, but not limited to, any of the
following:
(i) Suspending the privilege of transacting portable
electronics insurance under this chapter at specific locations
where violations have occurred.
(ii) Suspending or revoking the ability of individual employees
or authorized representatives to act under the vendor's license.
Sec. 2965. (1) Except as provided in subsections (2) and (3),
an insurer may terminate or otherwise change the terms and
conditions of a policy of portable electronics insurance only if it
provides the vendor that is the policyholder and enrolled customers
with at least 30 days' notice of the termination or change. If the
insurer changes the terms and conditions of the policy, the insurer
shall provide the vendor that is the policyholder with a revised
policy or endorsement and each enrolled customer with a revised
certificate, endorsement, updated brochure, or other evidence
indicating that a change in the terms and conditions has occurred
and a summary of material changes.
(2) An insurer may terminate an enrolled customer's enrollment
under a portable electronics insurance policy 15 days after
providing notice to the customer if the insurer discovers fraud or
material misrepresentation in obtaining coverage or in the
presentation of a claim under the policy.
(3) An insurer may immediately terminate an enrolled
customer's enrollment under a portable electronics insurance policy
for any of the following reasons:
(a) Nonpayment of premium.
(b) The enrolled customer has ceased to have an active service
with the vendor of the portable electronic device.
(c) The enrolled customer has exhausted the aggregate limit of
liability, if any, under the terms of the portable electronics
insurance policy and the insurer has sent notice of termination to
the enrolled customer within 30 calendar days after exhaustion of
the limit. However, if notice is not timely sent, enrollment shall
continue notwithstanding that the aggregate limit of liability has
been exhausted until the insurer sends notice of termination to the
enrolled customer.
(4) If a portable electronics insurance policy is terminated
by a vendor policyholder, the vendor 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 before the
termination.
(5) Any notice required under this section shall be in
writing. An insurer may mail or deliver a notice to a vendor at the
vendor's mailing address and to its affected enrolled customers'
last known mailing addresses on file with the insurer. If a notice
is mailed, the insurer or vendor that sent the notice 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 under this section by providing
electronic notice to a vendor or its affected enrolled customers,
as applicable, by electronic means. If notice is provided by
electronic means, the insurer or vendor shall maintain proof that
the notice was sent.
Sec. 2966. (1) A person seeking a license under this chapter
shall file a sworn application for a license with the office on
forms prescribed and furnished by the office.
(2) An application for a license under this chapter shall do
all of the following:
(a) Provide the name, residence address, and other information
required by the office 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 50% of its revenue from
the sale of portable electronics insurance, the vendor shall
provide the name, residence address, and other information required
by the office of all of the vendor's officers, directors, and
shareholders of record who have beneficial ownership of 10% or more
of any class of securities registered under federal securities
laws.
(b) Provide the location of the applicant's home office.
(3) An application for a license under this chapter shall be
made within 90 days after the application is made available by the
office.
(4) An initial license issued under this chapter expires 24
months after the issue date assigned by the office.
(5) Each vendor licensed under this chapter shall pay the
office a fee in the amount determined by the office. The fee
established by the office shall not exceed $1,000.00 for an initial
portable electronics limited lines license or $500.00 for each
renewal of that license. However, if a vendor is engaged in
portable electronic device transactions at 10 or fewer locations in
this state, the fee shall not exceed $100.00 for an initial license
or a renewal.
