SP0455, LD 1464, item 1, An Act To Establish Standards for Portable Electronic Device Insurance

An Act To Establish Standards for Portable Electronic Device Insurance

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 24-A MRSA §601, sub-§29 is enacted to read:

29. Portable electronic device insurance vendor. Portable electronic device insurance vendor licensing fees may not exceed:

A. Original license issuance fee, $1,000; and

B. Annual renewal fee, $500.

Sec. 2. 24-A MRSA §1420-F, sub-§1, ¶K, as enacted by PL 2001, c. 259, §24, is amended to read:

K. Automobile mechanical breakdown contracts, which are a limited line; and

Sec. 3. 24-A MRSA §1420-F, sub-§1, ¶L, as repealed and replaced by PL 2007, c. 51, §3, is amended to read:

L. Insurance offered, sold or solicited in connection with and incidental to the rental of rental cars for a period of no more than 60 days, whether at the rental office or by preselection of coverage in master, corporate, group or individual agreements, that is nontransferable, applies only to the rental car that is the subject of the rental agreement and is limited to the following kinds of insurance:

(1) Personal accident insurance for renters and other rental car occupants for accidental death or dismemberment and for medical expenses resulting from an accident that occurs with the rental car during the rental period;

(2) Liability insurance that provides protection to the renters and other authorized drivers of a rental car for liability arising from the operation or use of the rental car during the rental period;

(3) Personal effects insurance that provides coverage to renters and other vehicle occupants for loss of, or damage to, personal effects in the rental car during the rental period;

(4) Roadside assistance and emergency sickness protection insurance; and

(5) Any other coverage designated by the superintendent . ; and

Sec. 4. 24-A MRSA §1420-F, sub-§1, ¶M is enacted to read:

M. Vendor’s portable electronic device insurance, which is a limited line.

Sec. 5. 24-A MRSA c. 89 is enacted to read:

CHAPTER 89

PORTABLE ELECTRONIC DEVICE INSURANCE

§ 7001. Definitions

As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.

1. Customer. "Customer" means a person who purchases a portable electronic device or service.

2. Enrolled customer. "Enrolled customer" means a customer who elects coverage under a portable electronic device insurance policy issued to a vendor.

3. Portable electronic device. "Portable electronic device" means an electronic device that is portable in nature, its accessories and services related to the use of the device.

4. Portable electronic device insurance. "Portable electronic device insurance" means insurance authorized under section 705 providing coverage for the repair or replacement of a portable electronic device that may cover a portable electronic device against any one or more of the following causes of loss: loss, theft, mechanical failure, malfunction, damage or other applicable perils. "Portable electronic device insurance" does not include:

A. A service contract governed by Title 11, Article 2;

B. A policy of insurance covering a seller's or a manufacturer's obligations under a warranty; or

C. Personal insurance, as defined in section 2169-B, subsection 1, paragraph H or any similar policy.

5. Portable electronic device transaction. "Portable electronic device transaction" means:

A. The sale or lease of a portable electronic device by a vendor to a customer; or

B. The sale of a service related to the use of a portable electronic device by a vendor to a customer.

6. Supervising agency. "Supervising agency" means a business entity that is a licensed insurance producer.

7. Vendor. "Vendor" means a person in the business of engaging in portable electronic device transactions directly or indirectly.

§ 7002. Licensure of vendors

1. License required. A vendor is required to hold a limited lines license pursuant to section 1420-F to sell or offer coverage under a policy of portable electronic device insurance.

2. Authority provided by license. A limited lines license issued under this chapter authorizes any employee or authorized representative of a vendor to sell or offer coverage under a policy of portable electronic device insurance to a customer at each location at which the vendor engages in portable electronic device transactions.

3. List of locations. In connection with a vendor's application for licensure and quarterly thereafter, the vendor shall provide a list to the superintendent of all locations in this State at which the vendor offers coverage.

4. Activities authorized by license. Notwithstanding any other provision of law, a license issued pursuant to this chapter authorizes the licensee and its employees or authorized representatives to engage only in those activities that are expressly permitted in this chapter.

§ 7003. Requirements for sale of portable electronic device insurance

1. Brochures. At every location where portable electronic device insurance is offered to customers, brochures or other written materials must be made available to a prospective customer that:

A. Disclose that portable electronic device 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;

B. State that the enrollment by the customer in a portable electronic device insurance policy is not required in order to purchase or lease a portable electronic device or service;

C. Summarize the material terms of the insurance coverage, including:

(1) The identity of the insurer;

(2) The identity of the supervising agency;

(3) The amount of any applicable deductible and how it is to be paid;

(4) Benefits of the coverage; and

(5) Key terms and conditions of coverage such as whether the portable electronic device may be replaced with a similar make and model or repaired using reconditioned or nonoriginal manufacturer parts or equipment;

D. Summarize the process for filing a claim, including a description of any requirements:

(1) To return the portable electronic device and the maximum fee applicable if the customer fails to comply with any equipment return requirements; and

(2) For proof of loss; and

E. State that the customer may cancel enrollment for coverage under a portable electronic device insurance policy at any time and receive a refund of any applicable premium.

2. Periodic basis of coverage. Portable electronic device insurance may be offered on a month-to-month or other periodic basis as a group or inland marine policy issued to a vendor under which individual customers may elect to enroll for coverage.

3. Eligibility and underwriting standards. Eligibility and underwriting standards for customers electing to enroll in coverage must be established by an insurer for each portable electronic device insurance policy.

§ 7004. Authority of vendors

1. Requirements for employees and authorized representatives of vendors. An employee or authorized representative of a vendor may sell or offer portable electronic device insurance to a customer and is not subject to licensure as an insurance producer under this chapter if:

A. The vendor obtains a limited lines license to authorize its employees or authorized representatives to sell or offer portable electronic device insurance pursuant to this section;

B. The insurer issuing the portable electronic device insurance appoints a supervising agency to supervise the administration of the sale of insurance, including development of a training program for employees and authorized representatives of the vendors. The training required by this paragraph must comply with the following:

(1) The training must be delivered to all employees and authorized representatives of the vendor who sell or offer portable electronic device insurance. The training may be provided in electronic form. If conducted in electronic form the supervising agency shall implement a program of in-person training conducted by licensed employees of the supervising agency to supplement the electronic training; and

(2) Each employee and authorized representative must receive basic instruction about the portable electronic device insurance offered to customers and the disclosures required under section 7003, subsection 1; and

C. The employee or authorized representative of the vendor does not advertise, represent or otherwise hold that employee or authorized representative out as a nonlimited lines licensed insurance producer.

2. Charges. The charges for portable electronic device insurance coverage may be billed and collected by the vendor. Any charge to the customer for coverage that is not included in the cost associated with the purchase or lease of a portable electronic device or related services must be separately itemized on the customer's bill. If the charge for coverage is included in the cost associated with the purchase or lease of a portable electronic device or related services, the vendor shall clearly and conspicuously disclose to the customer that the charge for the portable electronic device or related services includes the charge for coverage. A vendor billing and collecting charges for coverage is not required to maintain those funds in a segregated account as long as the vendor is authorized by the insurer to hold such funds in an alternative manner and remits the funds to the supervising agency within 60 days of receipt. All funds received by a vendor from a customer for the sale of portable electronic device insurance are considered funds 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.

§ 7005. Violations

1. Penalties. If a vendor or its employee or authorized representative violates any provision of this chapter, the superintendent may:

A. After notice and hearing, impose fines not to exceed $500 per violation or $5,000 in the aggregate for such conduct; and

B. After notice and hearing, impose other penalties that the superintendent considers necessary and reasonable to carry out the purpose of this chapter, including:

(1) Suspending the authority for transacting portable electronic device insurance pursuant to this chapter at specific business locations where violations have occurred; and

(2) Suspending or revoking the authority for an individual employee or authorized representative of a vendor to act under the license under section 7002.

§ 7006. Termination of portable electronic device insurance

1. Notice. Notwithstanding any other provision of law, an insurer may terminate or otherwise change the terms and conditions of a policy of portable electronic device insurance only upon providing the vendor policyholder and enrolled customers with at least 60 days' notice.

2. Revised documents. Notwithstanding any other provision of law, if the insurer changes the terms and conditions of a policy of portable electronic device insurance, the insurer shall provide the vendor policyholder with a revised policy or endorsement and each enrolled customer with a revised certificate or endorsement, an updated brochure or other evidence indicating that a change in the terms and conditions has occurred and a summary of material changes.

3. Notice in case of fraud or material misrepresentation. Notwithstanding subsection 1 or any other provision of law, an insurer may upon 15 days' notice terminate an enrolled customer's enrollment under a portable electronic device insurance policy for discovery of fraud or material misrepresentation in obtaining coverage or in the presentation of a claim thereunder.

4. Immediate termination of enrollment allowed. Notwithstanding subsection 1 or any other provision of law, an insurer may immediately terminate an enrolled customer's enrollment under a portable electronic device insurance policy:

A. For nonpayment of premium;

B. If the enrolled customer ceases to have an active service with the vendor; or

C. If an enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronic device insurance policy and the insurer sends notice of termination to the customer within 30 calendar days after exhaustion of the limit. If this notice is not timely sent, enrollment must continue notwithstanding the aggregate limit of liability until the insurer sends notice of termination to the enrolled customer.

5. Policy terminated by vendor policyholder. Notwithstanding any other provision of law, when a portable electronic device insurance policy is terminated by a vendor policyholder, the vendor policyholder shall mail or deliver written notice to each enrolled customer advising the customer of the termination of the policy and the effective date of termination. The written notice must be mailed or delivered to the customer at least 30 days prior to the termination.

6. Method of notice. Notwithstanding any other provision of law, whenever notice is required pursuant to this section, it must be in writing and may be mailed or delivered to the vendor at the vendor's mailing address and to the vendor's affected enrolled customers at the last known mailing addresses on file with the insurer. If notice is mailed, the insurer or vendor, 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 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, as the case may be, shall maintain proof that the notice was sent.

§ 7007. Application for license and fees

1. Application for license to be filed with superintendent. A sworn application for a license under this chapter must be made to and filed with the superintendent on forms prescribed and furnished by the superintendent.

2. Contents of application. In addition to other information required by the superintendent, the application must:

A. Provide the name, residence address and other information required by the superintendent 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. If the vendor derives more than 50% of its revenue from the sale of portable electronic device insurance, the information specified in this paragraph must be provided for all officers, directors and shareholders of record having beneficial ownership of 10% or more of any class of securities registered under the federal securities laws;

B. Appoint the superintendent as the applicant's attorney to receive service of all legal process issued against it in any civil action or proceeding in this State and agree that process so served is valid and binding against the applicant. The appointment is irrevocable, binds the company and any successor in interest as well as the assets or liabilities of the applicant and must remain in effect as long as the applicant's license remains in force in this State; and

C. Provide the location of the applicant's home office.

3. Time of application. An application for licensure under this chapter must be made within 90 days of the application being made available by the superintendent.

4. Initial license valid for 24 months. An initial license issued pursuant to this chapter is valid for 24 months and expires on the last day of the 24th month.

5. Fee. Each vendor licensed under this chapter shall pay to the superintendent a fee as prescribed by section 601, subsection 29.

summary

This bill establishes portable electronic device insurance as a limited line of insurance and regulates its provision.

SP0455 LD 1464	First Regular Session - 125th Maine Legislature		LR 1882 Item 1
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