Diane Papan

Existing law regulates home protection companies, which issue contracts for the repair or replacement of a component, system, or appliance of a home. Existing law prohibits a person from issuing home protection contracts in this state unless they hold a home protection company license issued by the Department of Insurance, except as specified. Existing law requires a home protection contract, as defined, to specify certain information in clear and conspicuous terms, including, but not limited to, every appliance, system, or component covered by the contract and all exclusions and limitations respecting the extent of the contract. 

This bill would, beginning on July 1, 2027, establish a license for a home protection contract limited lines agent, as defined, for a person authorized to transact home protection contracts through, or in connection with, a utility, as defined. The bill would require an applicant for a license to submit specified items to the commissioner, including an application and a certificate stating the named applicant is trustworthy. The bill would authorize an agent to authorize a home protection contract vendor, as defined, to transact contracts on its behalf subject to specified conditions, and would authorize a purchaser to return the contract within 30 days of purchase if no claim has been made.

The bill would allow a vendor to collect fees on behalf of an agent if the invoice or utility bill lists the protection contract fees separately from the utility charges and the bill includes a telephone number for customers to inquire about their contract. The bill would also require the contract to include specified disclosures. The bill would require a home protection contract vendor and its employees to, among other things, act in good faith and provide a specified disclosure as prescribed when offering a home protection contract. The bill would authorize the commissioner to implement specified penalties if a vendor violates these provisions. The bill would also require a home protection company that issues or offers protection contracts to file a copy of an insurance policy covering 100% of the company's contractual obligations, among other specified requirements.

The bill would prohibit a property and casualty insurance agent from acting as an agent of a home protection company in connection with a utility unless the company has filed a notice of appointment with the commissioner. The bill would require the notice of appointment to continue until specified documents are filed.

This bill would, until December 31, 2027, authorize a utility to collect home protection fees on behalf of an agent if it was already collecting those fees prior to January 1, 2025.