HB1284 EngrossedLRB097 06019 RPM 46090 b

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    "Department" means the Department of Insurance.
11    "Director" means the Director of Insurance.
12    "Enrolled customer" means a customer who elects coverage
13under a portable electronics insurance policy issued to a
14vendor of portable electronics.
15    "Location" means any physical location in this State or any
16website, call center site, or similar location directed to
17residents of this State.
18    "Portable electronics" means electronic devices that are
19portable in nature, including their accessories and services
20related to the use of the device.
21    "Portable electronics insurance" means insurance providing
22coverage for the repair or replacement of portable electronics,
23which may provide coverage for portable electronics against any

 

 

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1one or more of the following causes of loss: loss, theft,
2inoperability due to mechanical failure, malfunction, damage,
3or other similar causes of loss. "Portable electronics
4insurance" does not include a service contract pursuant to the
5Service Contract Act, a policy of insurance covering a seller's
6or a manufacturer's obligations under a warranty, or a
7homeowner's, renter's, private passenger automobile,
8commercial multi-peril, or similar policy.
9    "Portable electronics transaction" means the sale or lease
10of portable electronics by a vendor to a customer or the sale
11of a service related to the use of portable electronics by a
12vendor to a customer.
13    "Supervising entity" means a business entity that is a
14licensed insurance producer or insurer.
15    "Vendor" means a person in the business of engaging in
16portable electronics transactions directly or indirectly.
 
17    Section 10. Licensure of vendors.
18    (a) In order to sell or offer coverage under a policy of
19portable electronics insurance, a vendor is required to hold a
20limited-lines license.
21    (b) A limited-lines license issued under this Act shall
22authorize any employee or authorized representative of the
23vendor to sell or offer coverage under a policy of portable
24electronics insurance to a customer at each location at which
25the vendor engages in portable electronics transactions.

 

 

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

 

 

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1            (B) the identity of the supervising entity;
2            (C) the amount of any applicable deductible and how
3        it is to be paid;
4            (D) benefits of the coverage; and
5            (E) key terms and conditions of coverage, such as
6        whether portable electronics may be repaired or
7        replaced with similar make and model reconditioned or
8        nonoriginal manufacturer parts or equipment;
9        (4) summarize the process for filing a claim, including
10    a description of how to return portable electronics and the
11    maximum fee applicable in the event the enrolled customer
12    fails to comply with any equipment return requirements; and
13        (5) state that the enrolled customer may cancel
14    enrollment for coverage under a portable electronics
15    insurance policy at any time and the person paying the
16    premium shall receive a refund of any applicable unearned
17    premium within 15 days after receipt of the refund by the
18    vendor.
19    (b) Portable electronics insurance may be offered on a
20month-to-month or other periodic basis as a group or master
21commercial inland marine policy issued to a vendor of portable
22electronics for its enrolled customers.
23    (c) Eligibility and underwriting standards for customers
24electing to enroll in coverage shall be established for each
25portable electronics insurance program.
 

 

 

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1    Section 20. Authority of vendors of portable electronics.
2    (a) The employees and authorized representatives of
3vendors may sell or offer portable electronics insurance to
4customers and shall not be subject to licensure as an insurance
5producer under the Illinois Insurance Code provided that:
6        (1) the vendor obtains a limited-lines license to
7    authorize its employees or authorized representatives to
8    sell or offer portable electronics insurance pursuant to
9    this Act;
10        (2) the insurer issuing the portable electronics
11    insurance either directly supervises or appoints a
12    supervising entity to supervise the administration of the
13    program, including development of a training program for
14    employees and authorized representatives of the vendors;
15    the training required by this subsection (a) shall comply
16    with the following:
17            (A) the training shall be delivered to employees
18        and authorized representatives of a vendor who is
19        directly engaged in the activity of selling or offering
20        portable electronics insurance;
21            (B) the training may be provided in electronic
22        form; if conducted in electronic form, then the
23        supervising entity shall implement a supplemental
24        education program regarding portable electronics
25        insurance that is conducted and overseen by licensed
26        employees of the supervising entity; and

 

 

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1            (C) each employee and authorized representative
2        shall receive basic instruction about the portable
3        electronics insurance offered to customers and the
4        disclosures required under Section 15 of this Act;
5        (3) no employee or authorized representative of a
6    vendor of portable electronics shall advertise, represent,
7    or otherwise hold himself or herself out as a
8    nonlimited-lines licensed insurance producer.
9    (b) The charges for portable electronics insurance
10coverage may be billed and collected by the vendor of portable
11electronics. If the portable electronics insurance coverage is
12included in the purchase or lease of portable electronics or
13related services, then the vendor shall clearly and
14conspicuously disclose to the customer that the portable
15electronics insurance coverage is included with the portable
16electronics or related services. If the charge for coverage is
17included in the cost associated with the purchase or lease of
18portable electronics or related services, then the vendor shall
19clearly and conspicuously disclose to the enrolled customer
20that the charge for the portable electronics or related
21services includes the charge for coverage. Vendors billing and
22collecting such charges shall not be required to maintain the
23funds in a segregated account, provided that the vendor is
24authorized by the insurer to hold such funds in an alternative
25manner and remits the amounts to the supervising entity within
2660 days after receipt. All funds received by a vendor from an

 

 

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1enrolled customer for the sale of portable electronics
2insurance shall be considered funds held in trust by the vendor
3in a fiduciary capacity for the benefit of the insurer. Vendors
4may receive compensation for billing and collection services.
 
5    Section 25. Suspension or revocation of license and other
6penalties. If a vendor of portable electronics or its employee
7or authorized representative violates any provision of this
8Act, then the Director may do any of the following:
9        (1) take any action in accordance with Section 500-70
10    of the Illinois Insurance Code;
11        (2) impose other penalties that the Director deems
12    necessary and reasonable to carry out the purpose of this
13    Act, including, but not limited to:
14            (A) suspending the privilege of transacting
15        portable electronics insurance pursuant to this
16        Section at specific business locations where
17        violations have occurred; and
18            (B) suspending or revoking the ability of
19        individual employees or authorized representatives to
20        act under the license.
21    A supervising entity that violates any provision of this
22Act shall be subject to all appropriate regulatory action as
23set forth in the Illinois Insurance Code.
 
24    Section 30. Termination of portable electronics insurance.

 

 

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1Notwithstanding any other provision of law:
2        (1) An insurer may terminate or otherwise change the
3    terms and conditions of a policy of portable electronics
4    insurance only upon providing the policyholder and
5    enrolled customers with at least 60 days notice.
6        (2) If the insurer changes the terms and conditions,
7    then the insurer shall provide the vendor policyholder with
8    a revised policy or endorsement and each enrolled customer
9    with a revised certificate, endorsement, updated brochure,
10    or other evidence indicating that a change in the terms and
11    conditions has occurred and a summary of the material
12    changes.
13        (3) Notwithstanding item (2) of this Section, an
14    insurer may terminate an enrolled customer's enrollment
15    under a portable electronics insurance policy upon 15 days
16    notice for discovery of fraud or material
17    misrepresentation in obtaining coverage or in the
18    presentation of a claim thereunder.
19        (4) Notwithstanding item (2) of this Section, an
20    insurer may immediately terminate an enrolled customer's
21    enrollment under a portable electronics insurance policy:
22            (A) for nonpayment of premium;
23            (B) if the enrolled customer ceases to have an
24        active service with the vendor of portable
25        electronics; or
26            (C) if an enrolled customer exhausts the aggregate

 

 

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1        limit of liability, if any, under the terms of the
2        portable electronics insurance policy and the insurer
3        sends notice of termination to the enrolled customer
4        within 30 calendar days after exhaustion of the limit;
5        however, if notice is not timely sent, enrollment shall
6        continue, notwithstanding the aggregate limit of
7        liability, until the insurer sends notice of
8        termination to the enrolled customer.
9        (5) When a portable electronics insurance policy is
10    terminated by a policyholder, the policyholder shall mail
11    or deliver written notice to each enrolled customer
12    advising the enrolled customer of the termination of the
13    policy and the effective date of termination. The written
14    notice shall be mailed or delivered to the enrolled
15    customer at least 30 days prior to the termination.
16        (6) Whenever notice is required pursuant to this
17    Section, it shall be in writing and may be mailed or
18    delivered to the vendor of portable electronics at the
19    vendor's mailing address and to its affected enrolled
20    customers' last known mailing addresses on file with the
21    insurer. If notice is mailed, then the insurer or vendor of
22    portable electronics, as the case may be, shall maintain
23    proof of mailing in a form authorized or accepted by the
24    United States Postal Service or other commercial mail
25    delivery service. Alternatively, an insurer or vendor
26    policyholder may comply with any notice required by this

 

 

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1    Section by providing electronic notice to a vendor or its
2    affected enrolled customers, as the case may be, by
3    electronic means. If notice is accomplished through
4    electronic means, then the insurer or vendor of portable
5    electronics shall maintain proof that the notice was sent.
 
6    Section 35. Application for license and fees.
7    (a) A sworn application for a license under this Act shall
8be made to and filed with the Department on forms prescribed
9and furnished by the Director.
10    (b) In addition to other information required by the
11Director, the application shall provide the following:
12        (1) the name, residential address, and other
13    information required by the Director for an employee or
14    officer of the vendor that is designated by the applicant
15    as the person responsible for the vendor's compliance with
16    the requirements of this Act; however, if the vendor
17    derives more than 50% of its revenue from the sale of
18    portable electronics insurance, then the information
19    required pursuant to this paragraph (1) shall be provided
20    for all officers, directors, and shareholder of record
21    having beneficial ownership of 10% or more of any class of
22    securities registered under the federal securities laws;
23    and
24        (2) the location of the applicant's home office.
25    (c) Any vendor engaging in portable electronics insurance

 

 

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1transactions on or before the effective date of this Act must
2apply for licensure within 90 days after the effective date of
3this Act. Any applicant commencing operations after the
4effective date of this Act must obtain a license prior to
5offering portable electronics insurance.
6    (d) Initial licenses issued pursuant to this Act shall be
7valid for a period of 24 months and expire on May 31 of the
8renewal year assigned by the Director.
9    (e) Each vendor of portable electronics licensed under this
10Act shall pay to the Department a fee of $500 for an initial
11and renewal portable electronics limited-lines license.
 
12    Section 99. Effective date. This Act takes effect January
131, 2012.