BILL NUMBER: AB 690	ENROLLED
	BILL TEXT

	PASSED THE SENATE  JULY 11, 2011
	PASSED THE ASSEMBLY  JULY 14, 2011
	AMENDED IN SENATE  MAY 27, 2011
	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 the Insurance Code, relating to portable
electronics insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 690, 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, endorsee compensation, and recordkeeping
requirements, and would expand the types of products for which a
license 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.


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.  No portable electronics vendor shall 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
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.  An 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:
   (a) The endorsee is 18 years of age or older.
   (b) 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.
   (c) Each portable electronics vendor licensed pursuant to this
article shall provide for the training of its endorsees under a
program developed by a licensed property 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.  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 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 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 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 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 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
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 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 endorsees make
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 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 portable electronics
coverage is included with the purchase or lease of portable
electronics or related services, the vendor shall clearly and
conspicuously disclose to the customer that the coverage is included
with the purchase of the portable electronics or related services.
   (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 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 business of selling portable electronics, their
accessories, or related services.
   (b) Advertise, represent, or otherwise portray itself or its
endorsees as licensed insurers or property and casualty
broker-agents.
   (c) Pay any 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 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.
  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 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 for any renewal that is filed after the expiration date of
the license.
  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.