Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 480


Introduced by Assembly Member Ian Calderon

February 19, 2013


An act to amend Section 9855 of the Business and Professions Code, relating to service contracts.

LEGISLATIVE COUNSEL’S DIGEST

AB 480, as amended, 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.begin insert The bill would also define optical products for purposes of these provisions as prescription and nonprescription eyewear and not contact lenses of any kind.end insert

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:

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SECTION 1.  

Section 9855 of the Business and Professions
2Code
is amended to read:

3

9855.  

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, optical products, 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
P3    1contract administrator is obligated to perform are insured under a
2service contract reimbursement insurance policy.

3(c) (1) “Service contract seller” or “seller” means a person who
4sells or offers to sell a service contract to a service contractholder,
5including a person who is the obligor under a service contract sold
6by the seller, manufacturer, or repairer of the product covered by
7the service contract.

8(2) “Service contract seller” or “seller” also means a third party,
9including an obligor, who is not the seller, manufacturer, or repairer
10of the product. However, a third party shall not be an obligor on
11a service contract unless the obligor obtains a service contract
12reimbursement insurance policy for all service contracts under
13which the third party is obligated under the terms of a service
14contract.

15(3) “Service contract seller” or “seller” shall not include the
16following:

17(A) A bank or bank holding company, or the subsidiary or
18affiliate of either, or a financial institution, licensed under state or
19federal law, selling or offering to sell a service contract unless that
20entity is financially and legally obligated under the terms of a
21service contract.

22(B) An electrical device manufacturer or electrical contractor
23who constructs, installs, or services electrical devices, which
24include any unit of an electrical system intended to carry electrical
25energy as part of a building’s electrical system, including raceways,
26conductors, invertors, conduit, wires, switches, or other similar
27devices.

28(d) “Service contractholder” means a person who purchases or
29receives a service contract from a service contract seller.

30(e) “Service contractor” means a service contract administrator
31or a service contract seller.

32(f) “Service contract reimbursement insurance policy” means
33a policy of insurance issued by an insurer admitted to do business
34in this state providing coverage for all obligations and liabilities
35incurred by a service contract seller under the terms of the service
36contracts sold in this state by the service contract seller to a service
37contractholder. The service contract reimbursement insurance
38policy shall either cover all service contracts sold or specifically
39cover those contracts sold to residents of the State of California.

P4    1(g) “Obligor” is the entity financially and legally obligated under
2the terms of a service contract.

begin insert

3(h) “Optical products” means prescription and nonprescription
4eyewear. “Optical products” shall not include contact lenses of
5any kind.

end insert
begin delete

6(h)

end delete

7begin insert(i)end insert The terms “consumer goods,” “manufacturer,” “retail seller,”
8“retailer,” and “sale” shall have the same meanings ascribed to
9them in Section 1791 of the Civil Code.

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SEC. 2.  

No reimbursement is required by this act pursuant to
11Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California
18Constitution.



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