AB 480, as introduced, Ian Calderon. Service contracts.
Existing law, the Electronic and Appliance Repair Dealer Registration Law, regulates service contracts, as defined, relating to maintenance or repair of, among other things, specified sets and appliances, and makes it unlawful for any person to act as a service contract administrator or a service contract seller without first registering with the Bureau of Electronic and Appliance Repair, Home Furnishings, and Thermal Insulation. A violation of these provisions is deemed to be unlawfully transacting the business of insurance, and therefore subject to specified criminal penalties.
This bill would include in the definition of service contract a written contract for the performance of services relating to the maintenance, replacement, or repair of optical products, thereby making administrators and sellers of those contracts subject to registration with the bureau and other requirements of the act. By expanding the definition of service contract, the bill would expand the scope of a crime and, thus, would impose a state-mandated local program.
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 9855 of the Business and Professions
2Code is amended to read:
The definitions used in this section shall govern the
4construction and terms as used in this chapter:
5(a) “Service contract” means a contract in writing to perform,
6over a fixed period of time or for a specified duration, services
7relating to the maintenance, replacement, or repair of an electronic
8set or appliance, as defined by this chapter, and their accessories
9or of furniture, jewelry, lawn and garden equipment, power tools,
10fitness equipment, telephone equipment, small kitchen appliances
11and tools,begin insert optical products,end insert or home health care products, and may
12include provisions for incidental payment of indemnity under
13limited circumstances, including, but not limited to, power
surges,
14food spoilage, or accidental damage from handling. “Service
15contract” does not include a contract in writing to maintain
16structural wiring associated with the delivery of cable, telephone,
17or other broadband communications services.
18(b) “Service contract administrator” or “administrator” means
19a person who performs or arranges the collection, maintenance,
20or disbursement of moneys to compensate any party for claims or
21repairs pursuant to a service contract, and who also performs or
22arranges any of the following activities on behalf of service contract
23sellers:
24(1) Providing service contract sellers with service contract forms.
25(2) Participating in the adjustment of claims arising from service
26contracts.
27(3) Arranging on behalf of service
contract sellers the insurance
28required by Section 9855.2.
29A service contract administrator shall not be an obligor on a
30service contract unless all service contracts under which the service
31contract administrator is obligated to perform are insured under a
32service contract reimbursement insurance policy.
P3 1(c) (1) “Service contract seller” or “seller” means a person who
2sells or offers to sell a service contract to a service contractholder,
3including a person who is the obligor under a service contract sold
4by the seller, manufacturer, or repairer of the product covered by
5the service contract.
6(2) “Service contract seller” or “seller” also means a third party,
7including an obligor, who is not the seller, manufacturer, or repairer
8of the product. However, a third party shall not be an obligor on
9a service contract
unless the obligor obtains a service contract
10reimbursement insurance policy for all service contracts under
11which the third party is obligated under the terms of a service
12contract.
13(3) “Service contract seller” or “seller” shall not include the
14following:
15(A) A bank or bank holding company, or the subsidiary or
16affiliate of either, or a financial institution, licensed under state or
17federal law, selling or offering to sell a service contract unless that
18entity is financially and legally obligated under the terms of a
19service contract.
20(B) An electrical device manufacturer or electrical contractor
21who constructs, installs, or services electrical devices, which
22include any unit of an electrical system intended to carry electrical
23energy as part of a building’s electrical system, including raceways,
24conductors,
invertors, conduit, wires, switches, or other similar
25devices.
26(d) “Service contractholder” means a person who purchases or
27receives a service contract from a service contract seller.
28(e) “Service contractor” means a service contract administrator
29or a service contract seller.
30(f) “Service contract reimbursement insurance policy” means
31a policy of insurance issued by an insurer admitted to do business
32in this state providing coverage for all obligations and liabilities
33incurred by a service contract seller under the terms of the service
34contracts sold in this state by the service contract seller to a service
35contractholder. The service contract reimbursement insurance
36policy shall either cover all service contracts sold or specifically
37cover those contracts sold to residents of the State of California.
38(g) “Obligor” is the entity financially and legally obligated under
39the terms of a service contract.
P4 1(h) The terms “consumer goods,” “manufacturer,” “retail seller,”
2“retailer,” and “sale” shall have the same meanings ascribed to
3them in Section 1791 of the Civil Code.
No reimbursement is required by this act pursuant to
5Section 6 of Article XIII B of the California Constitution because
6the only costs that may be incurred by a local agency or school
7district will be incurred because this act creates a new crime or
8infraction, eliminates a crime or infraction, or changes the penalty
9for a crime or infraction, within the meaning of Section 17556 of
10the Government Code, or changes the definition of a crime within
11the meaning of Section 6 of Article XIII B of the California
12Constitution.
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