97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1284

 

Introduced 02/08/11, by Rep. Monique D. Davis

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Portable Electronics Insurance Act. Requires vendors of portable electronics to hold a limited-lines license to sell or offer coverage under a policy of portable electronics insurance. Provides that a limited-lines license issued under the Act shall authorize any employee or authorized representative of the vendor to sell or offer coverage under a policy of portable electronics insurance. Establishes requirements for the sale of portable electronics insurance. Sets forth the conditions under which a vendor of portable electronics shall not be subject to licensure as an insurance producer under the Illinois Insurance Code. Sets forth provisions concerning billing, suspension or revocation of license, termination of insurance, and application for licensure.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning insurance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Portable Electronics Insurance Act.
 
6    Section 5. Definitions. For purposes of this Act, the
7following terms have the following meanings:
8    "Customer" means a person who purchases portable
9electronics or services.
10    "Covered customer" means a customer who elects coverage
11under a portable electronics insurance policy issued to a
12vendor of portable electronics.
13    "Department" means the Department of Insurance.
14    "Director" means the Director of Insurance.
15    "Portable electronics" means electronic devices that are
16portable in nature, including their accessories and services
17related to the use of the device.
18    "Portable electronics insurance" means insurance providing
19coverage for the repair or replacement of portable electronics,
20which may cover portable electronics against any one or more of
21the following causes of loss: loss, theft, mechanical failure,
22malfunction, damage, or other applicable perils. "Portable
23electronics insurance" does not include a service contract, a

 

 

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1policy of insurance covering a seller's or a manufacturer's
2obligations under a warranty, or a homeowner's, renter's,
3private passenger automobile, commercial multi-peril, or
4similar policy.
5    "Portable electronics transaction" means the sale or lease
6of portable electronics by a vendor to a customer or the sale
7of a service related to the use of portable electronics by a
8vendor to a customer.
9    "Supervising agency" means a business entity that is a
10licensed insurance producer.
11    "Vendor" means a person in the business of engaging in
12portable electronics transactions directly or indirectly.
 
13    Section 10. Licensure of vendors.
14    (a) A vendor is required to hold a limited-lines license to
15sell or offer coverage under a policy of portable electronics
16insurance.
17    (b) A limited-lines license issued under this Act shall
18authorize any employee or authorized representative of the
19vendor to sell or offer coverage under a policy of portable
20electronics insurance to a customer at each location at which
21the vendor engages in portable electronics transactions.
22    (c) In connection with a vendor's application for licensure
23and quarterly thereafter, the vendor shall provide a list to
24the Director of all locations in this State at which it offers
25coverage.

 

 

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1    (d) Notwithstanding any other provision of law, a license
2issued pursuant to this Act shall authorize the licensee and
3its employees or authorized representatives to engage only in
4those activities that are expressly permitted in this Act.
 
5    Section 15. Requirements for sale of portable electronics
6insurance.
7    (a) At every location where portable electronics insurance
8is offered to customers, brochures or other written materials
9must be made available to a prospective customer. The brochures
10or other written materials shall do all of the following:
11        (1) disclose that portable electronics insurance may
12    provide a duplication of coverage already provided by a
13    customer's homeowner's insurance policy, renter's
14    insurance policy, or other source of coverage;
15        (2) state that the enrollment by the customer in a
16    portable electronics insurance program is not required in
17    order to purchase or lease portable electronics or
18    services;
19        (3) summarize the material terms of the insurance
20    coverage, including:
21             (A) the identity of the insurer;
22             (B) the identity of the supervising agency;
23             (C) the amount of any applicable deductible and
24        how it is to be paid;
25             (D) benefits of the coverage; and

 

 

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1             (E) key terms and conditions of coverage, such as
2        whether portable electronics may be repaired or
3        replaced with similar make and model reconditioned or
4        nonoriginal manufacturer parts or equipment;
5         (4) summarize the process for filing a claim,
6    including (i) a description of any requirements to return
7    portable electronics and the maximum fee applicable in the
8    event the customer fails to comply with any equipment
9    return requirements and (ii) any proof of loss
10    requirements; and
11         (5) state that the customer may cancel enrollment for
12    coverage under a portable electronics insurance policy at
13    any time and receive a refund of any applicable premium.
14    (b) Portable electronics insurance may be offered on a
15month-to-month or other periodic basis as a group or master
16commercial inland marine policy issued to a vendor of portable
17electronics under which individual customers may elect to
18enroll for coverage.
19    (c) Eligibility and underwriting standards for customers
20electing to enroll in coverage shall be established for each
21portable electronics insurance program.
 
22    Section 20. Authority of vendors of portable electronics.
23    (a) The employees and authorized representatives of
24vendors may sell or offer portable electronics insurance to
25customers and shall not be subject to licensure as an insurance

 

 

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1producer under the Illinois Insurance Code provided that:
2         (1) the vendor obtains a limited-lines license to
3    authorize its employees or authorized representatives to
4    sell or offer portable electronics insurance pursuant to
5    this Act;
6         (2) the insurer issuing the portable electronics
7    insurance appoints a supervising agency to supervise the
8    administration of the program, including development of a
9    training program for employees and authorized
10    representatives of the vendors; the training required by
11    this subsection (a) shall comply with the following:
12             (A) the training shall be delivered to all
13        employees and authorized representatives of the
14        vendors who sell or offer portable electronics
15        insurance;
16             (B) the training may be provided in electronic
17        form; however, if conducted in electronic form, then
18        the supervising agency shall implement a program of
19        in-person training conducted by licensed employees of
20        the supervising agency to supplement the electronic
21        training; and
22             (C) each employee and authorized representative
23        shall receive basic instruction about the portable
24        electronics insurance offered to customers and the
25        disclosures required under Section 15 of this Act;
26        (3) no employee or authorized representative of a

 

 

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1    vendor of portable electronics shall advertise, represent,
2    or otherwise hold himself or herself out as a
3    nonlimited-lines licensed insurance producer.
4    (b) The charges for portable electronics insurance
5coverage may be billed and collected by the vendor of portable
6electronics. Any charge to the customer for coverage that is
7not included in the cost associated with the purchase or lease
8of portable electronics or related services shall be separately
9itemized on the customer's bill. If the charge for coverage is
10included in the cost associated with the purchase or lease of
11portable electronics or related services, then the vendor shall
12clearly and conspicuously disclose to the customer that the
13charge for the portable electronics or related services
14includes the charge for coverage. Vendors billing and
15collecting such charges shall not be required to maintain the
16funds in a segregated account, provided that the vendor is
17authorized by the insurer to hold such funds in an alternative
18manner and remits the amounts to the supervising agency within
1960 days after receipt. All funds received by a vendor from a
20customer for the sale of portable electronics insurance shall
21be considered funds held in trust by the vendor in a fiduciary
22capacity for the benefit of the insurer. Vendors may receive
23compensation for billing and collection services.
 
24    Section 25. Suspension or revocation of license. If a
25vendor of portable electronics or its employee or authorized

 

 

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1representative violates any provision of this Act, then the
2Director may do any of the following:
3        (1) After notice and hearing, impose fines not to
4    exceed $500 per violation or $5,000 in the aggregate for
5    the violative conduct.
6        (2) After notice and hearing, impose other penalties
7    that the Director deems necessary and reasonable to carry
8    out the purpose of this Act, including:
9             (A) suspending the privilege of transacting
10        portable electronics insurance pursuant to this
11        Section at specific business locations where
12        violations have occurred; and
13             (B) suspending or revoking the ability of
14        individual employees or authorized representatives to
15        act under the license.
 
16    Section 30. Termination of portable electronics insurance.
17Notwithstanding any other provision of law:
18         (1) An insurer may terminate or otherwise change the
19    terms and conditions of a policy of portable electronics
20    insurance only upon providing the policyholder and
21    enrolled customers with at least 60 days notice.
22         (2) If the insurer changes the terms and conditions,
23    then the insurer shall provide the vendor policyholder with
24    a revised policy or endorsement and each enrolled customer
25    with a revised certificate, endorsement, updated brochure,

 

 

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1    or other evidence indicating that a change in the terms and
2    conditions has occurred and a summary of the material
3    changes.
4         (3) Notwithstanding paragraph (1) of this subsection,
5    an insurer may terminate an enrolled customer's enrollment
6    under a portable electronics insurance policy upon 15 days
7    notice for discovery of fraud or material
8    misrepresentation in obtaining coverage or in the
9    presentation of a claim thereunder.
10         (4) Notwithstanding paragraph (2) of this subsection,
11    an insurer may immediately terminate an enrolled
12    customer's enrollment under a portable electronics
13    insurance policy:
14             (A) for nonpayment of premium;
15             (B) if the enrolled customer ceases to have an
16        active service with the vendor of portable
17        electronics; or
18             (C) if an enrolled customer exhausts the aggregate
19        limit of liability, if any, under the terms of the
20        portable electronics insurance policy and the insurer
21        sends notice of termination to the customer within 30
22        calendar days after exhaustion of the limit; however,
23        if notice is not timely sent, enrollment shall
24        continue, notwithstanding the aggregate limit of
25        liability, until the insurer sends notice of
26        termination to the enrolled customer.

 

 

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1     (5) When a portable electronics insurance policy is
2terminated by a policyholder, the policyholder shall mail or
3deliver written notice to each enrolled customer advising the
4customer of the termination of the policy and the effective
5date of termination. The written notice shall be mailed or
6delivered to the customer at least 30 days prior to the
7termination.
8     (6) Whenever notice is required pursuant to this Section,
9it shall be in writing and may be mailed or delivered to the
10vendor of portable electronics at the vendor's mailing address
11and to its affected enrolled customers' last known mailing
12addresses on file with the insurer. If notice is mailed, then
13the insurer or vendor of portable electronics, as the case may
14be, shall maintain proof of mailing in a form authorized or
15accepted by the United States Postal Service or other
16commercial mail delivery service. Alternatively, an insurer or
17vendor policyholder may comply with any notice required by this
18Section by providing electronic notice to a vendor or its
19affected enrolled customers, as the case may be, by electronic
20means. If notice is accomplished through electronic means, then
21the insurer or vendor of portable electronics shall maintain
22proof that the notice was sent.
 
23    Section 35. Application for license and fees.
24     (a) A sworn application for a license under this Act shall
25be made to and filed with the Department on forms prescribed

 

 

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1and furnished by the Director.
2     (b) In addition to other information required by the
3Director, the application shall:
4        (1) provide the name, residential address, and other
5    information required by the Director for an employee or
6    officer of the vendor that is designated by the applicant
7    as the person responsible for the vendor's compliance with
8    the requirements of this Act; however, if the vendor
9    derives more than 50% of its revenue from the sale of
10    portable electronics insurance, then the information
11    required pursuant to this paragraph (1) shall be provided
12    for all officers, directors, and shareholder of record
13    having beneficial ownership of 10% or more of any class of
14    securities registered under the federal securities laws;
15        (2) appoint the Director as the applicant's attorney to
16    receive service of all legal process issued against it in
17    any civil action or proceeding in this State and agreeing
18    that process so served shall be valid and binding against
19    the applicant; the appointment shall be irrevocable, shall
20    bind the company and any successor in interest as the
21    assets or liabilities of the applicant, and shall remain in
22    effect as long as the applicant's license remains in force
23    in this State; and
24        (3) the location of the applicant's home office.
25     (c) Applications for licensure under this Act shall be
26made within 90 days after the application is made available by

 

 

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1the Director.
2     (d) Initial licenses issued pursuant to this Act shall be
3valid for a period of 24 months and expire on April 1 of the
4renewal year assigned by the Director.
5     (e) Each vendor of portable electronics licensed under
6this Act shall pay to the Department a fee as prescribed by the
7Director, but in no event shall the fee exceed $1,000 for an
8initial portable electronics limited-lines license and $500
9for each renewal thereof. However, for a vendor that is engaged
10in portable electronics transactions at 10 or fewer locations
11in the State, the fee shall not exceed $100 for an initial
12license and for each renewal thereof.