BILL NUMBER: AB 690	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 25, 2011

INTRODUCED BY   Assembly Member Solorio

                        FEBRUARY 17, 2011

   An act to amend Sections 1758.6, 1758.61, 1758.62, 1758.63,
1758.64, 1758.65, 1758.66, 1758.661, 1758.67, 1758.68, 1758.69,
1758.691, and 1758.692 of  , and to repeal Section 1758.693
of,  the Insurance Code, relating to portable electronics
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 690, as amended, Solorio. Portable electronics insurance.
   (1) Existing law provides for the Insurance Commissioner to issue
a communications equipment insurance agent license to a
communications equipment vendor, as defined, authorizing the vendor
to sell or offer to its customers insurance covering communications
equipment and the sale or provision of services for communications
equipment. Existing law authorizes employees and franchisees of the
vendor to be listed as endorsees on the license for the purpose of
selling or offering communications equipment insurance under the
authority of the agent's license. Existing law imposes certain
requirements on the licensees and endorsees with respect to training
and other related matters. Existing law makes it a crime to sell or
offer for sale communications equipment insurance without a
production agency license.
   This bill would revise and recast the above provisions by deleting
 the term  communications equipment and replacing it with
 the term  portable electronics, as defined. The bill would
authorize  endorsees, defined as  employees and authorized
representatives of the portable electronics vendor  ,  to
sell or offer portable electronics insurance pursuant to the
authority of the vendor's portable electronics insurance agent
license, as provided. The bill would also make changes to vendor
reporting,  employee and authorized representative 
 endorsee  compensation, and recordkeeping requirements, and
would expand the  portable electronics insurance 
 types of products for which a  license to include
the sale or provision of accessories related to the use of portable
electronics   is required in order to sell portable
electronics insurance  .
   Because this bill would expand the scope of a crime by expanding
the scope of the products for which portable electronics insurance
license is required, the bill would impose a state-mandated local
program.
   (2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1758.6 of the Insurance Code is amended to
read:
   1758.6.   A   No  portable electronics
vendor shall  not  offer or sell any form of
portable electronics insurance in this state unless that person is
licensed as an insurance agent or broker pursuant to Article 3
(commencing with Section 1631) or has complied with the requirements
of this article and has been issued a license by the commissioner as
provided in this article.
  SEC. 2.  Section 1758.61 of the Insurance Code is amended to read:
   1758.61.  The commissioner may issue to an applicant that has
complied with the requirements of this article a portable electronics
insurance agent license that authorizes the licensee and its
 employees and authorized representatives  
endorsees  to offer or sell insurance in connection with, and
incidental to, the sale of portable electronics or the sale or
provision of accessories or services related to the use of portable
electronics.
  SEC. 3.  Section 1758.62 of the Insurance Code is amended to read:
   1758.62.  (a) An applicant for a portable electronics insurance
agent license under this article shall submit all of the following to
the commissioner:
   (1) A written application for licensure, signed by the applicant
or an officer of the applicant, in the form prescribed by the
commissioner.
   (2) A certificate by the insurer that is to be named in the
portable electronics insurance agent license, stating that the
insurer has satisfied itself that the named applicant is trustworthy
and competent to act as its insurance agent limited to this purpose
and that the insurer will appoint the applicant to act as its agent
to transact the kind or kinds of insurance that are permitted by this
article, if the portable electronics insurance agent license applied
for is issued by the commissioner. The certification shall be
subscribed by an officer or managing agent of the insurer on a form
prescribed by the commissioner.
   (3) An application fee, and for each license period thereafter, a
renewal fee, in an amount or amounts determined by the department as
sufficient to defray the department's actual cost of processing the
application or renewal and implementing this article. The limitation
on fee increases of 10 percent without prior approval of the
Legislature set forth in Section 12978 shall not apply to the
application or renewal fee set forth in this subdivision during the
years 2003, 2004, and 2005.
   (b) Notwithstanding any other provision of law to the contrary,
the provisions set forth in Sections 1667, 1668, 1668.5, 1669, 1670,
1738, and 1739 apply to any application for or issuance of a license
pursuant to this article.
   (c) Costs associated with any enforcement action or investigation
shall be paid for by the person or organization licensed pursuant to
this article.
  SEC. 4.  Section 1758.63 of the Insurance Code is amended to read:
   1758.63.   (a)    An 
employee or authorized representative   endorsee 
of a portable electronics vendor that has been issued a portable
electronics insurance agent license pursuant to this article may sell
or offer insurance products under the authority of the vendor's
portable electronics insurance agent license if all of the following
conditions have been met: 
   (1) The employee or authorized representative is 18 years of age
or older.  
   (2) The portable electronics vendor, at the time it submits its
portable electronics insurance agent's license application pursuant
to Section 1758.62, also establishes a list of all locations in this
state at which it offers coverage under a policy of portable
electronics insurance. The list shall be maintained by the portable
electronics vendor in a form prescribed by, or format acceptable to,
the commissioner. The list shall be maintained by the portable
electronics vendor and made available to the commissioner for review
and inspection upon request.  
   (3) The portable electronics vendor submits to the commissioner
with its initial portable electronics insurance agent license
application and annually thereafter a certification, subscribed by an
officer of the company on a form prescribed by the commissioner,
stating all of the following:  
   (A) The number of locations at which the portable electronics
vendor offers insurance products under the authority of the portable
electronics insurance agent license in this state for the applicable
period.  
   (B) A statement that no person other than an employee or
authorized representative of the portable electronics vendor sells or
offers insurance on its behalf.  
   (C) That all employees or authorized representatives offering
insurance have completed training as required by this article.
 
   (b) Each portable electronics vendor licensed pursuant to this
article shall provide for the training of its employees and
authorized representatives under a program developed by a licensed
fire and casualty broker or agent prior to allowing its employees and
authorized representatives to offer or sell insurance products. The
training shall meet the following minimum standards: 

   (1) Each employee and authorized representative shall receive
instruction about the types of insurance specified in subdivision (d)
of Section 1758.69 that are offered for sale to prospective
customers.  
   (2) Each employee and authorized representative shall receive
training about ethical sales practices.  
   (3) Each employee and authorized representative shall receive
training about the disclosures to be given to prospective customers
pursuant to Section 1758.66.  
   (c) The training materials used by or on behalf of the portable
electronics vendor shall be submitted to the department by the
licensed property or casualty agent or broker that develops the
materials at the time the licensee applies for its portable
electronics insurance agent license. Any changes to previously
submitted training materials shall be submitted to the department
with the changes highlighted at least 30 days prior to their use by
the licensee. Training materials and changes to those materials
submitted to the department pursuant to this subdivision shall be
deemed approved for use by the company unless it is notified by the
department to the contrary. Failure by the portable electronics
insurance agent licensee to submit training materials or changes for
department review or use of unapproved or disapproved training
materials shall constitute grounds for denial of an application for a
license, nonrenewal of a license, or suspension of a license, as
appropriate.  
   (d) The retraining of employees and authorized representatives
shall be conducted whenever there is a material change in the
insurance products sold that requires modification of the training
materials, but in no event less frequently than every two years for
each employee and authorized representative.  
   (a) The portable electronics vendor, at the time it submits its
portable electronics insurance agent's license application pursuant
to Section 1758.62, also establishes a list of all locations in this
state at which it offers coverage under a policy of portable
electronics insurance. The list shall be maintained by the portable
electronics vendor in a form prescribed by, or format acceptable to,
the commissioner and shall be updated annually. The list shall be
maintained by the portable electronics vendor and made available to
the commissioner for review and inspection upon request.  
   (b) Each portable electronics vendor licensed pursuant to this
article shall provide for the training of its endorsees under a
program developed by a licensed fire and casualty broker or agent
prior to allowing its endorsees to offer or sell insurance products.
The training shall meet the following minimum standards:  
   (1) Each endorsee shall receive instruction about the types of
insurance specified in subdivision (e) of Section 1758.69 that are
offered for sale to prospective customers.  
   (2) Each endorsee shall receive training about ethical sales
practices.  
   (3) Each endorsee shall receive training about the disclosures to
be given to prospective customers pursuant to Section 1758.66. 

   (4) The retraining of endorsees shall be conducted whenever there
is a material change in the insurance products sold that requires
modification of the training materials, but in no event less
frequently than every three years for each endorsee. 
  SEC. 5.  Section 1758.64 of the Insurance Code is amended to read:

   1758.64.  (a) The manager at each location of a portable
electronics vendor or a franchisee of a portable electronics vendor
licensed pursuant to this article, or the direct supervisor of the
vendor's employees or authorized representatives at each location or
region shall be responsible for the supervision of each employee or
authorized representative at that location or in that region. Each
licensee shall maintain a list of who the manager or supervisor is at
each location or region for the purposes of this article. The list
shall be maintained by the portable electronics vendor and shall be
made available to the commissioner for review and inspection upon
request.
   (b) An employee or authorized representative may act 
    1758.64.   An endorsee may act  on behalf of
and under the supervision of the portable electronics insurance agent
in matters relating to transacting insurance under that agent's
license. The conduct of an  employee or authorized
representative   endorsee  of a portable
electronics insurance agent acting within the scope of employment or
agency shall be deemed the conduct of the portable electronics
insurance agent for purposes of this article.
  SEC. 6.  Section 1758.65 of the Insurance Code is amended to read:
   1758.65.  (a) If a licensee or  its employee or authorized
representative   endorsee  violates any provision
of this article or any other provision of this code, the commissioner
may do any of the following:
   (1) After notice and hearing, suspend or revoke the license of the
portable electronics insurance agent.
   (2) After notice and hearing, impose fines on the portable
electronics insurance agent for its conduct or that of its 
employees or authorized representatives   endorsees
 .
   (3) After notice and hearing, impose other penalties that the
commissioner deems necessary and convenient to carry out the purpose
of this code, including suspending the privilege of transacting
portable electronics insurance pursuant to this article at specific
business locations where violations have occurred, imposing fines on
the portable electronics insurance agent, and suspending or revoking
the ability of individual  employees or authorized
representatives   endorsees  to act under the
vendor's license.
   (b) If any person sells insurance in connection with, or
incidental to, the sale of portable electronics or the sale or
provision of accessories or services related thereto, or holds
himself or herself or an organization out as a portable electronics
insurance agent without obtaining the license required by this
article, or as being licensed pursuant to  Article 3
(commencing with Section 1631)   Chapter 5 (commencing
with Section 1621)  without obtaining that license, the
commissioner may issue a cease and desist order pursuant to Section
12921.8.
   (c) Notwithstanding any other provision of law to the contrary,
the provisions of Section 1748.5 are applicable to both the
organization issued a license pursuant to this article and any
 employee or authorized representative selling or offering to
sell portable electronics insurance pursuant to that license.
  endorsee to that license. 
  SEC. 7.  Section 1758.66 of the Insurance Code is amended to read:
   1758.66.  A portable electronics insurance agent shall not sell
insurance pursuant to this article by unsolicited telephone calls or
otherwise unless, at the time of sale, or reasonably thereafter with
respect to a sale or enrollment occurring by telephone, all of the
following conditions are satisfied:
   (a) The portable electronics insurance agent provides brochures or
other written materials to the prospective purchaser that do all of
the following:
   (1) Summarize the material terms and conditions of coverage
offered, including the identity of the insurer.
   (2) Describe the process for filing a claim, including a toll-free
telephone number to report a claim.
   (3) Disclose any additional information on the price, benefits,
exclusions, conditions, or other limitations of those policies that
the commissioner may, by rule, prescribe.
   (4) Provide the name, address, telephone number, and license
number of the licensee or the property  or   and
 casualty broker-agent appointed by the insurer issuing
portable electronics insurance coverage to the licensee, as well as
the department's toll-free consumer hotline.
   (b) The portable electronics insurance agent or its 
employee or authorized representative   endorsees 
makes all of the following disclosures, which shall be acknowledged
in writing by the purchaser, or displayed by clear and conspicuous
signs that are posted at every location where contracts are executed,
such as the counter where the purchaser signs the service agreement,
or provided in writing to the purchaser:
   (1) That the purchase by the customer of the kinds of insurance
prescribed in this article is not required in order to purchase
portable electronics, accessories, or related services.
   (2) That the insurance policies offered by the portable
electronics insurance agent may provide a duplication of coverage
already provided by other insurance policies covering the purchaser.
   (3) That the  employee or authorized representative
  endorsee  of the portable electronics insurance
agent is not qualified or authorized to evaluate the adequacy of the
purchaser's existing insurance coverages, unless that person is
licensed pursuant to Article 3 (commencing with Section 1631).
   (4) That the customer may cancel the insurance at any time. If the
customer cancels any unearned premium will be refunded in accordance
with applicable law.
   (c) The material terms and conditions of coverage are provided to
every person who elects to purchase that coverage.
   (d) Costs for the insurance are separately itemized in any billing
statement for the insurance. However, if the  charge for
  portable electronics  coverage is included
 in the cost associated with the purchase or lease
of portable electronics or related services, the vendor shall clearly
and conspicuously disclose to the customer that the  charge
for   coverage is included with the purchase of 
the portable electronics or related services  includes the
charge for coverage  .
   (e) The insurance is provided under an individual policy issued to
the purchaser, or under a group or master policy issued to an
organization licensed as a portable electronics insurance agent by an
insurer authorized to transact the applicable kinds or types of
insurance in this state.
  SEC. 8.  Section 1758.661 of the Insurance Code is amended to read:

   1758.661.  Charges for portable electronics insurance may be
billed and collected by a portable electronics insurance agent
licensee. A licensee shall not be required to  treat moneys
collected from consumers purchasing insurance pursuant to this
article as funds received in a fiduciary capacity if the insurer
represented by   maintain those funds in a segregated
account if the insurer represented by  the licensee has provided
in writing that the funds need not be segregated from funds received
by the portable electronics vendor on account of the sale or lease
of portable electronics or related services or accessories.  All
funds received by a vendor from a customer for the sale of portable
electronics insurance shall be considered funds held in trust by the
vendor in a fiduciary capacity for the benefit of the insurer. 
Licensees may receive compensation for billing and collection
services.
  SEC. 9.  Section 1758.67 of the Insurance Code is amended to read:
   1758.67.  Under the authority of the portable electronics
insurance agent license, a portable electronics insurance agent shall
not do any of the following:
   (a) Offer to sell insurance except in conjunction with, and
incidental to, the  sale of   business of
selling  portable electronics, their accessories, or 
the sale or provision of a related service.   related
services. 
   (b) Advertise, represent, or otherwise portray itself or its
 employees or authorized representatives as licensed
  endorsees as licensed  insurers or fire and
casualty broker-agents.
   (c) Pay any  employee or authorized representative any
compensation, fee, or commission   endorsee compensation
 based primarily on the number of customers electing coverage
under the portable electronics insurance agent's license. However,
nothing in this code shall prohibit the payment of compensation to
 employees and authorized representatives   an
endorsee  of a portable electronics insurance agent for
activities under the agent's license that is incidental to their
overall compensation.  The incidental compensation shall not
exceed fifteen dollars ($15) per customer who purchases portable
electronics insurance coverage.  
   (d) Unless lawfully transacting the business of insurance pursuant
to a certificate of authority issued pursuant to Section 700 for the
appropriate class, a person obligated to perform under a contract
offered in or from this state that meets the definition of portable
electronics insurance as set forth in Section 1758.69 shall be deemed
to be unlawfully transacting the business of insurance and shall be
subject to subdivision (b) of Section 700 and Section 12921.8. 
  SEC. 10.  Section 1758.68 of the Insurance Code is amended to read:

   1758.68.  Any insurer that provides insurance to be sold by an
organization licensed as a portable electronics insurance agent shall
file a copy of any individual policy issued to a purchaser, or any
policy or certificate issued under a group or master policy to an
organization licensed as a portable electronics insurance agent, with
the commissioner, who shall make that policy available to the
public.
  SEC. 11.  Section 1758.69 of the Insurance Code is amended to read:

   1758.69.  As used in this article, the following definitions have
the following meanings: 
   (a) "Endorsee" means an unlicensed employee or authorized
representative of a portable electronics vendor.  
   (b) "Enrollment" means the process of soliciting or accepting
enrollments or applications from a consumer under a portable
electronics insurance policy, which includes informing the consumer
of the availability of coverage, preparing and delivery of the
certificate of insurance or notice of proposed insurance, or
otherwise assisting the consumer in making an informed decision
whether or not to elect to purchase portable electronics insurance.
 
   (c) (1) "License period" means all of that two-year period
beginning as described in subparagraph (A) or (B) of paragraph (2),
as applicable, and ending the second succeeding year on the last
calendar day of the month in which the initial license was issued.
 
   (2) A license period shall be determined for each person as
follows:  
   (A) Upon initial licensing, the license period shall start on the
date the license is issued.  
   (B) For a subsequent license, the license period shall start on
the first day following the month in which the initial license was
issued.  
   (3) A license shall be renewed on or before the expiration date of
the license period.  
   (d) (1) "Portable electronics" means all of the following: 

   (A) Personal, self-contained, easily carried by an individual,
battery-operated electronic communication, viewing, listening,
recording, gaming, computing, or global positioning devices,
including cell or satellite phones, pagers, personal global
positioning satellite units, portable computers, portable audio
listening, video viewing or recording devices, digital cameras, video
camcorders, portable gaming systems, docking stations, automatic
answering devices, their accessories, and service related to the use
of those devices.  
   (B) Any other electronic device that is portable in nature that
the commissioner approves.  
   (2) "Portable electronics" does not include telecommunications
switching equipment, transmission wires, cell site transceiver
equipment, or other equipment and systems used by telecommunications
companies to provide telecommunications service to consumers. 

   (e) (1) "Portable electronics insurance" means a contract
providing coverage for the repair or replacement of portable
electronics against any one or more of the following causes of loss:
loss, theft, mechanical failure, malfunction, damage, or other
applicable perils.  
   (2) "Portable electronics insurance" does not include any of the
following:  
   (A) A service contract governed by Article 4.5 (commencing with
Section 9855) of Chapter 20 of Division 3 of the Business and
Professions Code.  
   (B) A policy of insurance covering a seller's or a manufacturer's
obligations under a warranty.  
   (C) A homeowner's, renter's, private passenger automobile,
commercial multiperil, or similar policy.  
   (f) "Portable electronics insurance agent license" means an agent
license issued to an individual or organization for the enrollment
and sale of portable electronics insurance.  
   (g) "Portable electronics vendor" means any person in the
business, directly or indirectly, of selling, reselling, soliciting,
or leasing portable electronics, their accessories, and related
services to customers.  
   (a) "Enrollment" means the process of soliciting or accepting
enrollments or applications from a consumer under a portable
electronics insurance policy, which includes informing the consumer
of the availability of coverage, preparing and delivery of the
certificate of insurance or notice of proposed insurance, or
otherwise assisting the consumer in making an informed decision
whether or not to elect to purchase portable electronics insurance.
 
   (b) (1) "License period" means all of that two-year period
beginning as described in subparagraph (A) or (B) of paragraph (2),
as applicable, and ending the second succeeding year on the last
calendar day of the month in which the initial license was issued.
 
   (2) A license period shall be determined for each person as
follows:  
   (A) Upon initial licensing, the license period shall start on the
date the license is issued.  
   (B) Subsequently, the license period shall start on the first day
following the month in which the initial license was issued.
 
   (3) A license shall be renewed on or before the expiration date of
the license period.  
   (c) "Portable electronics" means electronic devices that are
portable in nature, and their accessories and services related to the
use of the device.  
   (d) (1) "Portable electronics insurance" means insurance providing
coverage for the repair or replacement of portable electronics that
may cover portable electronics against any one or more of the
following causes of loss: loss, theft, mechanical failure,
malfunction, damage, or other applicable perils.  
   (2) "Portable electronics insurance" does not include any of the
following:  
   (A) A service contract governed by Article 4.5 (commencing with
Section 9855) of Chapter 20 of Division 3 of the Business and
Professions Code.  
   (B) A policy of insurance covering a seller's or manufacturer's
obligations under a warranty.  
   (C) A homeowner's, renter's, private passenger automobile,
commercial multiperil, or similar insurance policy. 

   (e) "Portable electronics insurance agent license" means an agent
license issued to an individual or organization for the enrollment
and sale of portable electronics insurance.  
   (f) "Portable electronics vendor" means any person in the
business, directly or indirectly, of selling, reselling, soliciting,
or leasing portable electronics to customers. 
  SEC. 12.  Section 1758.691 of the Insurance Code is amended to
read:
   1758.691.  Nothing in this article regulating the sale of portable
electronics insurance shall be construed to impair or impede the
application of any other law regulating the sale of portable
electronics insurance.
  SEC. 13.  Section 1758.692 of the Insurance Code is amended to
read:
   1758.692.  (a) Not less than 60 days before a permanent license
will expire, the commissioner may  use an electronic delivery
method, including e-mail or other similar electronic method of
delivery, to deliver, or may mail, to the latest e-mail or mailing
  mail, to the latest  address appearing on his or
her records, an application to the licensee to
                     renew the license of a portable electronics
insurance agent for the appropriate succeeding license term. It is
the licensee's responsibility to renew, whether or not a renewal
notice is received.
   (b) The commissioner may accept a late renewal without penalty,
provided that the licensee's failure to comply is due to a clerical
error or inadvertence.
   (c) An application for renewal of a license may be filed on or
before the expiration date. An application for renewal of an expired
license may be filed after the expiration date and until that same
month and date of the next succeeding year.
   (d) The commissioner shall impose a penalty fee equal to one-half
of the renewal fee for the portable electronics insurance agent
license  and any endorsees  for any renewal that is
filed after the expiration date of the license. 
  SEC. 14.    Section 1758.693 of the Insurance Code
is repealed. 
   SEC. 15.   SEC. 14.   No reimbursement
is required by this act pursuant to Section 6 of Article XIII B of
the California Constitution because the only costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates a
crime or infraction, or changes the penalty for a crime or
infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.