H.F. 2417 Section 1. NEW SECTION . 522D.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Commissioner” means the commissioner of insurance. 4 2. “Customer” means a person who purchases portable 5 electronics. 6 3. “Enrolled customer” means a customer who elects coverage 7 under a portable electronics insurance policy issued to a 8 vendor of portable electronics. 9 4. “Free trial offer” means an offer to a customer under 10 which portable electronics insurance is provided free of charge 11 for a limited time period subsequent to which a charge is 12 made to the customer for the insurance without notice to the 13 customer of such charge prior to the expiration of the free 14 trial period. 15 5. “Location” means any physical location in this state, or 16 any website, call center site, or similar location directed to 17 residents of this state. 18 6. “Portable electronics” means electronic devices that 19 are personal, self-contained, easily carried by an individual, 20 battery operated, and used for communication, viewing, 21 listening, recording, gaming, computing, or global positioning, 22 including cell or satellite phones, pagers, personal global 23 positioning satellite units, portable computers, portable 24 audio listening, video viewing, or recording devices, digital 25 cameras, video camcorders, portable gaming systems, docking 26 stations, automatic answering devices, and other similar 27 devices, and the accessories and services related to the use of 28 such devices. 29 7. a. “Portable electronics insurance” means insurance 30 providing coverage for the repair or replacement of portable 31 electronics which may include coverage against any one or more 32 of the following causes of loss: 33 (1) Property loss. 34 (2) Theft. 35 -1- LSB 6008HV (3) 84 av/nh 1/ 13

H.F. 2417 (3) Inoperability due to mechanical failure. 1 (4) Malfunction. 2 (5) Damage. 3 (6) Other similar causes of loss. 4 b. “Portable electronics insurance” does not include any of 5 the following: 6 (1) A service contract or extended warranty providing 7 coverage limited to the repair, replacement, or maintenance 8 of property for the operational or structural failure of the 9 property due to a defect in materials, workmanship, accidental 10 damage from handling power surges, or normal wear and tear. 11 (2) A policy of insurance coverage of a seller’s or 12 manufacturer’s obligations under a warranty. 13 (3) A homeowner’s, renter’s, private passenger automobile, 14 commercial multiperil, or similar insurance policy. 15 8. “Portable electronics transaction” means any of the 16 following: 17 a. The sale or lease of portable electronics by a vendor to 18 a customer. 19 b. The sale of a service related to the use of portable 20 electronics by a vendor to a customer. 21 9. “Supervising entity” means a business entity that is 22 a licensed insurer or an insurance producer licensed under 23 chapter 522B, that is appointed by an insurer to supervise the 24 administration of a portable electronics insurance program. 25 10. “Vendor” means a person in the business of engaging in 26 portable electronics transactions, directly or indirectly. 27 Sec. 2. NEW SECTION . 522D.2 Licensure of vendors. 28 1. A vendor shall obtain a portable electronics limited 29 lines insurance license as required under this chapter to 30 sell or offer for sale coverage under a policy of portable 31 electronics insurance. 32 2. A portable electronics limited lines insurance license 33 issued to a vendor pursuant to this chapter authorizes any 34 employee or authorized representative of the vendor to sell or 35 -2- LSB 6008HV (3) 84 av/nh 2/ 13

H.F. 2417 offer coverage under a policy of portable electronics insurance 1 to a customer at each location at which the vendor engages in 2 portable electronics transactions. 3 3. A supervising entity shall maintain a registry of vendor 4 locations that are authorized to sell or solicit portable 5 electronics insurance in this state. Upon request by the 6 commissioner and with ten days’ notice to the supervising 7 entity, the registry shall be open to inspection and 8 examination by the commissioner during regular business hours 9 of the supervising entity. 10 4. Notwithstanding any other provision of law to the 11 contrary, a portable electronics limited lines insurance 12 license issued pursuant to this chapter authorizes the licensee 13 and its employees or authorized representatives to engage in 14 those activities that are permitted in this chapter. 15 Sec. 3. NEW SECTION . 522D.3 Requirements for sale of 16 portable electronics insurance. 17 1. At every location where portable electronics insurance 18 is offered to customers, brochures or other written materials 19 that do all of the following shall be made available to 20 prospective customers: 21 a. Disclose that portable electronics insurance may provide 22 a duplication of coverage already provided by the customer’s 23 homeowner’s insurance policy, renter’s insurance policy, or 24 other source of insurance coverage. 25 b. State that enrollment by the customer in a portable 26 electronics insurance program is not required in order to 27 purchase or lease portable electronics. 28 c. Summarize the material terms of the portable electronics 29 insurance coverage including all of the following: 30 (1) The identity of the insurer. 31 (2) The identity of the supervising entity. 32 (3) The amount of any applicable deductible and how it is 33 to be paid. 34 (4) Benefits of the coverage. 35 -3- LSB 6008HV (3) 84 av/nh 3/ 13

H.F. 2417 (5) Key terms and conditions of coverage such as whether 1 portable electronics may be repaired or replaced with similar 2 make and model reconditioned or nonoriginal manufacturer parts 3 or equipment. 4 d. Summarize the process for filing a claim, including 5 a description of how to return portable electronics and the 6 maximum fee applicable in the event the customer fails to 7 comply with any equipment return requirements. 8 e. State that an enrolled customer may cancel enrollment for 9 coverage under a portable electronics insurance policy at any 10 time and the person paying the premium shall receive a refund 11 or credit of any applicable unearned premium. 12 2. The disclosures required pursuant to subsection 1 or the 13 full terms and conditions of portable electronics insurance 14 coverage shall be provided to customers enrolling in such 15 coverage by hand delivery, ordinary mail, or electronic mail, 16 or by directing the customer to an internet site containing 17 such information. 18 3. Portable electronics insurance may be offered on a 19 month-to-month or other periodic basis as a group or master 20 commercial inland marine policy issued to a vendor for its 21 enrolled customers. 22 4. Portable electronics insurance shall not be sold through 23 a free trial offer. 24 5. The commissioner of insurance shall establish 25 eligibility and underwriting standards for customers electing 26 to enroll in coverage for each portable electronics insurance 27 program. 28 Sec. 4. NEW SECTION . 522D.4 Authority of vendors. 29 1. The employees and authorized representatives of a vendor 30 may sell or offer portable electronics insurance to customers 31 and shall not be subject to licensure under this chapter or as 32 an insurance producer under chapter 522B provided that all of 33 the following requirements are met: 34 a. The vendor obtains a portable electronics limited lines 35 -4- LSB 6008HV (3) 84 av/nh 4/ 13

H.F. 2417 insurance license that authorizes the vendor’s employees 1 or authorized representatives to sell or offer portable 2 electronics insurance pursuant to this chapter. 3 b. The insurer issuing the portable electronics insurance 4 either directly supervises the administration of the portable 5 electronics insurance program or appoints a supervising entity 6 to supervise the administration of the program, including 7 development of a training program for employees and authorized 8 representatives of the vendor. The training required by this 9 paragraph shall comply with all of the following requirements: 10 (1) The training shall be delivered to employees and 11 authorized representatives of a vendor who are directly engaged 12 in the activity of selling or offering for sale portable 13 electronics insurance. 14 (2) The training may be offered in electronic form. 15 However, if the training is conducted in electronic form, the 16 supervising entity shall implement a supplemental education 17 program for employees and authorized representatives of 18 the vendor regarding the portable electronics insurance 19 product that is conducted and overseen by an employee of the 20 supervising entity who is an insurance producer licensed under 21 chapter 522B. 22 (3) Each employee and authorized representative of a vendor 23 shall receive basic instruction about the portable electronics 24 insurance offered to customers and the disclosures required 25 under section 522D.3. 26 c. A vendor or an authorized representative shall maintain 27 a list of all employees or authorized representatives of each 28 vendor who are authorized to sell or offer portable electronics 29 insurance to customers under this section. Upon request by 30 the commissioner, and with ten days’ notice to the vendor 31 or supervising entity, the list maintained shall be open to 32 inspection and examination by the commissioner during normal 33 business hours of the vendor or supervising entity. 34 d. An employee or authorized representative of a vendor 35 -5- LSB 6008HV (3) 84 av/nh 5/ 13

H.F. 2417 shall not advertise, represent, or otherwise hold the employee 1 or authorized representative out as being a licensed insurance 2 producer under chapter 522B. 3 2. a. Charges for portable electronics insurance coverage 4 may be billed and collected by the vendor. Any charge to an 5 enrolled customer for coverage that is not included in the cost 6 associated with the purchase or lease of portable electronics 7 shall be separately itemized on the enrolled customer’s bill. 8 If the portable electronics insurance is included with the 9 purchase or lease of portable electronics, the vendor shall 10 clearly and conspicuously disclose to the enrolled customer 11 that the portable electronics insurance is included with the 12 portable electronics. 13 b. A vendor that bills and collects charges for portable 14 electronics insurance shall not be required to maintain such 15 funds in a segregated account provided that the vendor is 16 authorized by the insurer to hold such funds in an alternative 17 manner and remits such amounts to the supervising entity within 18 sixty days of receipt. 19 c. All funds received by a vendor from an enrolled customer 20 for the purchase of portable electronics insurance shall be 21 considered funds held in trust by the vendor in a fiduciary 22 capacity for the benefit of the insurer. A vendor may receive 23 compensation for billing and collection services. 24 Sec. 5. NEW SECTION . 522D.5 Penalties —— suspension or 25 revocation of license. 26 If a vendor or the vendor’s employee or authorized 27 representative violates any provision of this chapter, the 28 commissioner may do any of the following: 29 1. After notice and hearing, impose penalties not to exceed 30 five hundred dollars per violation or five thousand dollars in 31 the aggregate for such violations. 32 2. After notice and hearing, take other affirmative action 33 that the commissioner deems necessary and reasonable to carry 34 out the purposes of this chapter, including the following: 35 -6- LSB 6008HV (3) 84 av/nh 6/ 13

H.F. 2417 a. Suspend the privilege of selling or offering for sale 1 portable electronics insurance pursuant to this chapter at 2 specific business locations where violations of this chapter 3 have occurred. 4 b. Suspend or revoke the ability of an individual employee 5 or authorized representative to sell or offer for sale portable 6 electronics insurance pursuant to the portable electronics 7 limited lines insurance license of a vendor. 8 Sec. 6. NEW SECTION . 522D.6 Termination of portable 9 electronics insurance. 10 Notwithstanding any other provision of law to the contrary: 11 1. An insurer may terminate or otherwise change the terms 12 and conditions of a policy of portable electronics insurance 13 only upon providing the vendor and enrolled customers with at 14 least thirty days’ notice of such termination or change. 15 2. If the insurer changes the terms and conditions of a 16 policy of portable electronics insurance, the insurer shall 17 provide the vendor with a revised policy or endorsement and 18 each enrolled customer with a revised certificate, endorsement, 19 updated brochure, or other evidence indicating that a change in 20 the terms and conditions of the policy has occurred along with 21 a summary of material changes. 22 3. Notwithstanding subsection 1, an insurer may terminate 23 an enrolled customer’s enrollment under a portable electronics 24 insurance policy with fifteen days’ notice upon discovery of 25 fraud or material misrepresentation in obtaining coverage or in 26 the presentation of a claim under that coverage. 27 4. Notwithstanding subsection 1, an insurer may immediately 28 terminate an enrolled customer’s enrollment under a portable 29 electronics insurance policy for any of the following reasons: 30 a. Nonpayment of premium. 31 b. If the enrolled customer ceases to have active service 32 with the vendor. 33 c. If the enrolled customer exhausts the aggregate limit of 34 liability, if any, under the terms of the portable electronics 35 -7- LSB 6008HV (3) 84 av/nh 7/ 13

H.F. 2417 insurance policy and the insurer sends notice of termination to 1 the enrolled customer within thirty days after exhaustion of 2 the limit. However, if notice is not timely sent, enrollment 3 shall continue notwithstanding the aggregate limit of liability 4 until the insurer sends notice of termination to the enrolled 5 customer. 6 5. If a portable electronics insurance policy is terminated 7 by a vendor, the vendor shall mail or deliver written notice 8 to each enrolled customer advising the enrolled customer 9 of the termination of the policy and the effective date of 10 termination. The written notice shall be mailed or delivered 11 to the enrolled customer at least thirty days prior to the 12 termination. 13 6. a. Whenever notice or correspondence with respect to a 14 policy of portable electronics insurance is required pursuant 15 to this section or is otherwise required by law, the notice 16 or correspondence shall be in writing and sent within the 17 notice period, if any, specified in the statute or regulation 18 requiring the notice or correspondence. 19 b. Notwithstanding any other provision of law to the 20 contrary, notices and correspondence may be sent by mail or by 21 electronic means as set forth in this paragraph “b” . 22 (1) If the notice or correspondence is sent by mail, it 23 shall be sent to the vendor at the vendor’s mailing address 24 specified for such purpose and to the affected enrolled 25 customers at their last known mailing addresses on file with 26 the insurer. The insurer or vendor, as the case may be, shall 27 maintain proof of mailing in a form authorized or accepted 28 by the United States postal service or other commercial mail 29 delivery service. 30 (2) If the notice or correspondence is sent by electronic 31 means, it shall be sent to the vendor at the vendor’s 32 electronic mail address specified for such purpose and to the 33 affected enrolled customers at their last known electronic mail 34 address as provided by each enrolled customer to the insurer or 35 -8- LSB 6008HV (3) 84 av/nh 8/ 13

H.F. 2417 vendor, as the case may be. For purposes of this subparagraph, 1 an enrolled customer’s provision of an electronic mail address 2 to an insurer or vendor shall be deemed consent to receive 3 notices and correspondence by electronic means. The insurer or 4 vendor, as the case may be, shall maintain proof that a notice 5 or correspondence was sent by electronic means to an enrolled 6 customer. 7 7. Notice or correspondence required by this section or 8 otherwise required by law may be sent on behalf of an insurer 9 or vendor, as the case may be, by the supervising entity 10 appointed by the insurer. 11 Sec. 7. NEW SECTION . 522D.7 Application for license —— 12 fees. 13 1. If a vendor is selling or offering to sell or will 14 sell or offer to sell portable electronics insurance in this 15 state, the vendor shall submit a sworn application for a 16 portable electronics limited lines insurance license to the 17 commissioner on an application form prescribed and furnished by 18 the commissioner. 19 2. The application form shall include the following 20 information: 21 a. The name, residence address, and other information 22 required by the commissioner for an employee or officer of 23 the vendor that is designated by the vendor as the person 24 responsible for or who will be responsible for the vendor’s 25 compliance with the requirements of this chapter. However, if 26 the vendor derives more than fifty percent of its revenue from 27 the sale of portable electronics insurance, the information 28 required in this paragraph shall be provided for all officers, 29 directors, and shareholders of record of the vendor that have 30 beneficial ownership in the vendor of ten percent or more of 31 any class of securities registered under federal securities 32 law. 33 b. Provide the location of the vendor’s home office. 34 3. Any vendor engaging in the sale of or offering for sale 35 -9- LSB 6008HV (3) 84 av/nh 9/ 13

H.F. 2417 portable electronics insurance on or before July 1, 2012, 1 shall apply for licensure under this chapter within ninety 2 days of the application form being made available by the 3 commissioner. Any vendor commencing operations in this state 4 after July 1, 2012, shall obtain a portable electronics limited 5 lines insurance license prior to selling or offering for sale 6 portable electronics insurance. 7 4. Initial portable electronics limited lines insurance 8 licenses issued pursuant to this chapter shall be valid for a 9 period of twenty-four months and shall expire on March of the 10 renewal year assigned by the commissioner. 11 5. Each vendor licensed under this chapter shall pay to the 12 commissioner a fee as prescribed by the commissioner by rule, 13 but in no event shall the fee exceed one thousand dollars for 14 an initial portable electronics limited lines insurance license 15 or five hundred dollars for each renewal of the license. 16 However, for a vendor that engages in portable electronics 17 transactions at ten or fewer locations in the state, the fee 18 shall not exceed one hundred dollars for an initial license and 19 one hundred dollars for each renewal of the license. 20 Sec. 8. NEW SECTION . 522D.8 Rules. 21 The commissioner shall adopt rules pursuant to chapter 17A 22 as necessary to implement and administer the provisions of this 23 chapter. 24 EXPLANATION 25 This bill regulates the sale of portable electronics 26 insurance by requiring licensure, and providing for fees and 27 penalties. “Portable electronics” are electronic devices that 28 are personal, self-contained, easily carried by an individual, 29 battery operated, and used for communication, viewing, 30 listening, recording, gaming, computing, or global positioning, 31 including cell or satellite phones, pagers, personal global 32 positioning satellite units, portable computers, portable 33 audio listening, video viewing, or recording devices, digital 34 cameras, video camcorders, portable gaming systems, docking 35 -10- LSB 6008HV (3) 84 av/nh 10/ 13

H.F. 2417 stations, automatic answering devices, and other similar 1 devices, and the accessories and services related to the use of 2 such devices. 3 “Portable electronics insurance” is insurance that provides 4 coverage for the repair or replacement of portable electronics 5 including various causes of loss. “Portable electronics 6 insurance” does not include a service contract or extended 7 warranty, a seller’s or manufacturer’s warranty obligations, 8 or other insurance such as homeowner’s, renter’s, automobile, 9 or commercial multiperil insurance. Vendors of portable 10 electronics sell or offer for sale such insurance pursuant 11 to a policy issued to the vendor by an insurer that offers 12 such coverage. The bill applies to vendors that have physical 13 locations in the state, as well as any website, call center 14 site, or similar location directed to residents of this state. 15 Vendors are required to obtain a portable electronics 16 limited lines insurance license as required under new Code 17 chapter 522D to sell or offer for sale coverage under a 18 portable electronics insurance policy. Such a license 19 issued to a vendor authorizes any employee or authorized 20 representative of the vendor to sell or offer the insurance 21 coverage at each location in the state where the vendor 22 sells portable electronics. A “supervising entity” that is 23 a licensed insurer or licensed insurance producer under Code 24 chapter 522B must maintain a registry of vendor locations at 25 which portable electronics insurance is sold or solicited that 26 is available for inspection by the commissioner of insurance. 27 Vendors that sell portable electronics insurance are 28 required to offer written materials to customers that disclose 29 certain specified information about the insurance that is being 30 offered. Such insurance may be offered on a month-to-month 31 or other periodic basis. The disclosures contained in the 32 written materials must be offered to persons enrolling in 33 portable electronics coverage by hand delivery, ordinary 34 mail, or electronic mail, or by directing the customer to an 35 -11- LSB 6008HV (3) 84 av/nh 11/ 13

H.F. 2417 internet site containing the information. Portable electronics 1 insurance cannot be sold through a free trial offer. A 2 “free trial offer” is an offer to provide such insurance to a 3 customer free of charge for a limited time period subsequent 4 to which a charge is made to the customer without notice prior 5 to expiration of the free trial period. Eligibility and 6 underwriting standards must be established for each portable 7 electronics insurance program by the commissioner of insurance. 8 Employees and authorized representatives of a vendor may 9 sell or offer portable electronics insurance to customers 10 and are not subject to licensure under new Code chapter 11 522D or Code chapter 522B if certain training and oversight 12 requirements are met by the insurer and the supervising 13 entity appointed by the insurer. A vendor or an authorized 14 representative is required to maintain a list of all employees 15 or authorized representatives of the vendor who are authorized 16 to sell or offer portable electronics insurance to customers. 17 The list must be available for inspection and examination 18 during the vendor’s normal business hours by the commissioner 19 of insurance upon 10 days’ notice. 20 A vendor may bill and collect charges for portable 21 electronics insurance and be paid for doing so but is 22 considered to hold any funds collected in trust for the 23 insurer. 24 The commissioner of insurance may subject a vendor or the 25 vendor’s employees or authorized representatives to penalties 26 for violations of the Code chapter not to exceed $500 per 27 violation or $5,000 in the aggregate. The commissioner may 28 also suspend the vendor’s privilege of selling the insurance 29 at specific locations of the vendor or suspend or revoke 30 the selling privileges of a specific employee or authorized 31 representative of a vendor. 32 An insurer cannot terminate or otherwise change the terms of 33 a portable electronics insurance policy without giving notice 34 to the vendor and enrolled customers as provided in the bill. 35 -12- LSB 6008HV (3) 84 av/nh 12/ 13

H.F. 2417 Notice may be sent in writing by mail or by electronic means. 1 A vendor who is selling or offering to sell or will sell 2 or offer to sell portable electronics insurance in this state 3 must submit a sworn application for a portable electronics 4 limited lines insurance license to the commissioner. A vendor 5 who is engaging in the sale of such insurance on or before the 6 effective date of the bill must apply for a license within 7 90 days of the date the application form is made available 8 by the commissioner of insurance. Any vendor that commences 9 operations in the state after the effective date of the bill 10 must obtain a license prior to selling or offering for sale 11 portable electronics insurance. 12 Portable electronics limited lines insurance licenses shall 13 be valid for 24 months and shall not exceed $1,000 for an 14 initial license or $500 for a renewal of the license, except 15 that if a vendor has 10 or fewer locations in the state, the 16 license cost shall not exceed $100 for an initial license and 17 for each renewal of the license. 18 The commissioner of insurance is required to adopt rules 19 pursuant to Code chapter 17A to implement and administer the 20 provisions of the bill. 21 -13- LSB 6008HV (3) 84 av/nh 13/ 13