Rep. Monique D. Davis

Filed: 4/11/2011

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 1284

2    AMENDMENT NO. ______. Amend House Bill 1284 by replacing
3everything after the enacting clause with the following:
 
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

 

 

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1residents of this State.
2    "Portable electronics" means electronic devices that are
3portable in nature, including their accessories and services
4related to the use of the device.
5    "Portable electronics insurance" means insurance providing
6coverage for the repair or replacement of portable electronics,
7which may provide coverage for portable electronics against any
8one or more of the following causes of loss: loss, theft,
9inoperability due to mechanical failure, malfunction, damage,
10or other similar causes of loss. "Portable electronics
11insurance" does not include a service contract pursuant to the
12Service Contract Act, a policy of insurance covering a seller's
13or a manufacturer's obligations under a warranty, or a
14homeowner's, renter's, private passenger automobile,
15commercial multi-peril, or similar policy.
16    "Portable electronics transaction" means the sale or lease
17of portable electronics by a vendor to a customer or the sale
18of a service related to the use of portable electronics by a
19vendor to a customer.
20    "Supervising entity" means a business entity that is a
21licensed insurance producer or insurer.
22    "Vendor" means a person in the business of engaging in
23portable electronics transactions directly or indirectly.
 
24    Section 10. Licensure of vendors.
25    (a) In order to sell or offer coverage under a policy of

 

 

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1portable electronics insurance, a vendor is required to hold a
2limited-lines license.
3    (b) A limited-lines license issued under this Act shall
4authorize any employee or authorized representative of the
5vendor to sell or offer coverage under a policy of portable
6electronics insurance to a customer at each location at which
7the vendor engages in portable electronics transactions.
8    (c) In connection with a vendor's application for licensure
9and quarterly thereafter, the vendor shall provide a list to
10the Director of all locations in this State at which it offers
11coverage.
12    (d) Notwithstanding any other provision of law, a license
13issued pursuant to this Act shall authorize the licensee and
14its employees or authorized representatives to engage only in
15those activities that are permitted in this Act.
 
16    Section 15. Requirements for sale of portable electronics
17insurance.
18    (a) At every location where portable electronics insurance
19is offered to customers, brochures or other written materials
20must be made available to a prospective customer. The brochures
21or other written materials shall do all of the following:
22        (1) disclose that portable electronics insurance may
23    provide a duplication of coverage already provided by a
24    customer's homeowner's insurance policy, renter's
25    insurance policy, or other source of coverage;

 

 

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1        (2) state that the enrollment by the customer in a
2    portable electronics insurance program is not required in
3    order to purchase or lease portable electronics or
4    services;
5        (3) summarize the material terms of the insurance
6    coverage, including:
7            (A) the identity of the insurer;
8            (B) the identity of the supervising entity;
9            (C) the amount of any applicable deductible and how
10        it is to be paid;
11            (D) benefits of the coverage; and
12            (E) key terms and conditions of coverage, such as
13        whether portable electronics may be repaired or
14        replaced with similar make and model reconditioned or
15        nonoriginal manufacturer parts or equipment;
16        (4) summarize the process for filing a claim, including
17    a description of how to return portable electronics and the
18    maximum fee applicable in the event the enrolled customer
19    fails to comply with any equipment return requirements; and
20        (5) state that the enrolled customer may cancel
21    enrollment for coverage under a portable electronics
22    insurance policy at any time and the person paying the
23    premium shall receive a refund of any applicable unearned
24    premium within 15 days after receipt of the refund by the
25    vendor.
26    (b) Portable electronics insurance may be offered on a

 

 

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1month-to-month or other periodic basis as a group or master
2commercial inland marine policy issued to a vendor of portable
3electronics for its enrolled customers.
4    (c) Eligibility and underwriting standards for customers
5electing to enroll in coverage shall be established for each
6portable electronics insurance program.
 
7    Section 20. Authority of vendors of portable electronics.
8    (a) The employees and authorized representatives of
9vendors may sell or offer portable electronics insurance to
10customers and shall not be subject to licensure as an insurance
11producer under the Illinois Insurance Code provided that:
12        (1) the vendor obtains a limited-lines license to
13    authorize its employees or authorized representatives to
14    sell or offer portable electronics insurance pursuant to
15    this Act;
16        (2) the insurer issuing the portable electronics
17    insurance either directly supervises or appoints a
18    supervising entity to supervise the administration of the
19    program, including development of a training program for
20    employees and authorized representatives of the vendors;
21    the training required by this subsection (a) shall comply
22    with the following:
23            (A) the training shall be delivered to employees
24        and authorized representatives of a vendor who is
25        directly engaged in the activity of selling or offering

 

 

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1        portable electronics insurance;
2            (B) the training may be provided in electronic
3        form; if conducted in electronic form, then the
4        supervising entity shall implement a supplemental
5        education program regarding portable electronics
6        insurance that is conducted and overseen by licensed
7        employees of the supervising entity; and
8            (C) each employee and authorized representative
9        shall receive basic instruction about the portable
10        electronics insurance offered to customers and the
11        disclosures required under Section 15 of this Act;
12        (3) no employee or authorized representative of a
13    vendor of portable electronics shall advertise, represent,
14    or otherwise hold himself or herself out as a
15    nonlimited-lines licensed insurance producer.
16    (b) The charges for portable electronics insurance
17coverage may be billed and collected by the vendor of portable
18electronics. If the portable electronics insurance coverage is
19included in the purchase or lease of portable electronics or
20related services, then the vendor shall clearly and
21conspicuously disclose to the customer that the portable
22electronics insurance coverage is included with the portable
23electronics or related services. If the charge for coverage is
24included in the cost associated with the purchase or lease of
25portable electronics or related services, then the vendor shall
26clearly and conspicuously disclose to the enrolled customer

 

 

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1that the charge for the portable electronics or related
2services includes the charge for coverage. Vendors billing and
3collecting such charges shall not be required to maintain the
4funds in a segregated account, provided that the vendor is
5authorized by the insurer to hold such funds in an alternative
6manner and remits the amounts to the supervising entity within
760 days after receipt. All funds received by a vendor from an
8enrolled customer for the sale of portable electronics
9insurance shall be considered funds held in trust by the vendor
10in a fiduciary capacity for the benefit of the insurer. Vendors
11may receive compensation for billing and collection services.
 
12    Section 25. Suspension or revocation of license and other
13penalties. If a vendor of portable electronics or its employee
14or authorized representative violates any provision of this
15Act, then the Director may do any of the following:
16        (1) take any action in accordance with Section 500-70
17    of the Illinois Insurance Code;
18        (2) impose other penalties that the Director deems
19    necessary and reasonable to carry out the purpose of this
20    Act, including, but not limited to:
21            (A) suspending the privilege of transacting
22        portable electronics insurance pursuant to this
23        Section at specific business locations where
24        violations have occurred; and
25            (B) suspending or revoking the ability of

 

 

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1        individual employees or authorized representatives to
2        act under the license.
3    A supervising entity that violates any provision of this
4Act shall be subject to all appropriate regulatory action as
5set forth in the Illinois Insurance Code.
 
6    Section 30. Termination of portable electronics insurance.
7Notwithstanding any other provision of law:
8        (1) An insurer may terminate or otherwise change the
9    terms and conditions of a policy of portable electronics
10    insurance only upon providing the policyholder and
11    enrolled customers with at least 60 days notice.
12        (2) If the insurer changes the terms and conditions,
13    then the insurer shall provide the vendor policyholder with
14    a revised policy or endorsement and each enrolled customer
15    with a revised certificate, endorsement, updated brochure,
16    or other evidence indicating that a change in the terms and
17    conditions has occurred and a summary of the material
18    changes.
19        (3) Notwithstanding item (2) of this Section, an
20    insurer may terminate an enrolled customer's enrollment
21    under a portable electronics insurance policy upon 15 days
22    notice for discovery of fraud or material
23    misrepresentation in obtaining coverage or in the
24    presentation of a claim thereunder.
25        (4) Notwithstanding item (2) of this Section, an

 

 

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1    insurer may immediately terminate an enrolled customer's
2    enrollment under a portable electronics insurance policy:
3            (A) for nonpayment of premium;
4            (B) if the enrolled customer ceases to have an
5        active service with the vendor of portable
6        electronics; or
7            (C) if an enrolled customer exhausts the aggregate
8        limit of liability, if any, under the terms of the
9        portable electronics insurance policy and the insurer
10        sends notice of termination to the enrolled customer
11        within 30 calendar days after exhaustion of the limit;
12        however, if notice is not timely sent, enrollment shall
13        continue, notwithstanding the aggregate limit of
14        liability, until the insurer sends notice of
15        termination to the enrolled customer.
16        (5) When a portable electronics insurance policy is
17    terminated by a policyholder, the policyholder shall mail
18    or deliver written notice to each enrolled customer
19    advising the enrolled customer of the termination of the
20    policy and the effective date of termination. The written
21    notice shall be mailed or delivered to the enrolled
22    customer at least 30 days prior to the termination.
23        (6) Whenever notice is required pursuant to this
24    Section, it shall be in writing and may be mailed or
25    delivered to the vendor of portable electronics at the
26    vendor's mailing address and to its affected enrolled

 

 

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1    customers' last known mailing addresses on file with the
2    insurer. If notice is mailed, then the insurer or vendor of
3    portable electronics, as the case may be, shall maintain
4    proof of mailing in a form authorized or accepted by the
5    United States Postal Service or other commercial mail
6    delivery service. Alternatively, an insurer or vendor
7    policyholder may comply with any notice required by this
8    Section by providing electronic notice to a vendor or its
9    affected enrolled customers, as the case may be, by
10    electronic means. If notice is accomplished through
11    electronic means, then the insurer or vendor of portable
12    electronics shall maintain proof that the notice was sent.
 
13    Section 35. Application for license and fees.
14     (a) A sworn application for a license under this Act shall
15be made to and filed with the Department on forms prescribed
16and furnished by the Director.
17    (b) In addition to other information required by the
18Director, the application shall provide the following:
19        (1) the name, residential address, and other
20    information required by the Director for an employee or
21    officer of the vendor that is designated by the applicant
22    as the person responsible for the vendor's compliance with
23    the requirements of this Act; however, if the vendor
24    derives more than 50% of its revenue from the sale of
25    portable electronics insurance, then the information

 

 

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1    required pursuant to this paragraph (1) shall be provided
2    for all officers, directors, and shareholder of record
3    having beneficial ownership of 10% or more of any class of
4    securities registered under the federal securities laws;
5    and
6        (2) the location of the applicant's home office.
7    (c) Any vendor engaging in portable electronics insurance
8transactions on or before the effective date of this Act must
9apply for licensure within 90 days after the effective date of
10this Act. Any applicant commencing operations after the
11effective date of this Act must obtain a license prior to
12offering portable electronics insurance.
13    (d) Initial licenses issued pursuant to this Act shall be
14valid for a period of 24 months and expire on May 31 of the
15renewal year assigned by the Director.
16    (e) Each vendor of portable electronics licensed under this
17Act shall pay to the Department a fee of $500 for an initial
18and renewal portable electronics limited-lines license.
 
19    Section 99. Effective date. This Act takes effect January
201, 2012.".