H.F. _____ 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. “Location” means any physical location in this state, or 10 any website, call center site, or similar location directed to 11 residents of this state. 12 5. “Portable electronics” means electronic devices that are 13 portable in nature, and the accessories and services related to 14 the use of such devices. 15 6. a. “Portable electronics insurance” means insurance 16 providing coverage for the repair or replacement of portable 17 electronics which may include coverage against any one or more 18 of the following causes of loss: 19 (1) Property loss. 20 (2) Theft. 21 (3) Inoperability due to mechanical failure. 22 (4) Malfunction. 23 (5) Damage. 24 (6) Other similar causes of loss. 25 b. “Portable electronics insurance” does not include any of 26 the following: 27 (1) A service contract or extended warranty providing 28 coverage limited to the repair, replacement, or maintenance 29 of property for the operational or structural failure of the 30 property due to a defect in materials, workmanship, accidental 31 damage from handling power surges, or normal wear and tear. 32 (2) A policy of insurance coverage of a seller’s or 33 manufacturer’s obligations under a warranty. 34 (3) A homeowner’s, renter’s, private passenger automobile, 35 -1- LSB 6008YC (2) 84 av/nh 1/ 12

H.F. _____ commercial multiperil, or similar insurance policy. 1 7. “Portable electronics transaction” means any of the 2 following: 3 a. The sale or lease of portable electronics by a vendor to 4 a customer. 5 b. The sale of a service related to the use of portable 6 electronics by a vendor to a customer. 7 8. “Supervising entity” means a business entity that is 8 a licensed insurer or an insurance producer licensed under 9 chapter 522B, that is appointed by an insurer to supervise the 10 administration of a portable electronics insurance program. 11 9. “Vendor” means a person in the business of engaging in 12 portable electronics transactions, directly or indirectly. 13 Sec. 2. NEW SECTION . 522D.2 Licensure of vendors. 14 1. A vendor shall obtain a portable electronics limited 15 lines insurance license as required under this chapter to 16 sell or offer for sale coverage under a policy of portable 17 electronics insurance. 18 2. A portable electronics limited lines insurance license 19 issued to a vendor pursuant to this chapter authorizes any 20 employee or authorized representative of the vendor to sell or 21 offer coverage under a policy of portable electronics insurance 22 to a customer at each location at which the vendor engages in 23 portable electronics transactions. 24 3. A supervising entity shall maintain a registry of vendor 25 locations that are authorized to sell or solicit portable 26 electronics insurance in this state. Upon request by the 27 commissioner and with ten days’ notice to the supervising 28 entity, the registry shall be open to inspection and 29 examination by the commissioner during regular business hours 30 of the supervising entity. 31 4. Notwithstanding any other provision of law to the 32 contrary, a portable electronics limited lines insurance 33 license issued pursuant to this chapter authorizes the licensee 34 and its employees or authorized representatives to engage in 35 -2- LSB 6008YC (2) 84 av/nh 2/ 12

H.F. _____ those activities that are permitted in this chapter. 1 Sec. 3. NEW SECTION . 522D.3 Requirements for sale of 2 portable electronics insurance. 3 1. At every location where portable electronics insurance 4 is offered to customers, brochures or other written materials 5 that do all of the following shall be made available to 6 prospective customers: 7 a. Disclose that portable electronics insurance may provide 8 a duplication of coverage already provided by the customer’s 9 homeowner’s insurance policy, renter’s insurance policy, or 10 other source of insurance coverage. 11 b. State that enrollment by the customer in a portable 12 electronics insurance program is not required in order to 13 purchase or lease portable electronics. 14 c. Summarize the material terms of the portable electronics 15 insurance coverage including all of the following: 16 (1) The identity of the insurer. 17 (2) The identity of the supervising entity. 18 (3) The amount of any applicable deductible and how it is 19 to be paid. 20 (4) Benefits of the coverage. 21 (5) Key terms and conditions of coverage such as whether 22 portable electronics may be repaired or replaced with similar 23 make and model reconditioned or nonoriginal manufacturer parts 24 or equipment. 25 d. Summarize the process for filing a claim, including 26 a description of how to return portable electronics and the 27 maximum fee applicable in the event the customer fails to 28 comply with any equipment return requirements. 29 e. State that an enrolled customer may cancel enrollment for 30 coverage under a portable electronics insurance policy at any 31 time and the person paying the premium shall receive a refund 32 or credit of any applicable unearned premium. 33 2. Portable electronics insurance may be offered on a 34 month-to-month or other periodic basis as a group or master 35 -3- LSB 6008YC (2) 84 av/nh 3/ 12

H.F. _____ commercial inland marine policy issued to a vendor for its 1 enrolled customers. 2 3. The commissioner of insurance shall establish 3 eligibility and underwriting standards for customers electing 4 to enroll in coverage for each portable electronics insurance 5 program. 6 Sec. 4. NEW SECTION . 522D.4 Authority of vendors. 7 1. The employees and authorized representatives of a vendor 8 may sell or offer portable electronics insurance to customers 9 and shall not be subject to licensure under this chapter or as 10 an insurance producer under chapter 522B provided that all of 11 the following requirements are met: 12 a. The vendor obtains a portable electronics limited lines 13 insurance license that authorizes the vendor’s employees 14 or authorized representatives to sell or offer portable 15 electronics insurance pursuant to this chapter. 16 b. The insurer issuing the portable electronics insurance 17 either directly supervises the administration of the portable 18 electronics insurance program or appoints a supervising entity 19 to supervise the administration of the program, including 20 development of a training program for employees and authorized 21 representatives of the vendor. The training required by this 22 paragraph shall comply with all of the following requirements: 23 (1) The training shall be delivered to employees and 24 authorized representatives of a vendor who are directly engaged 25 in the activity of selling or offering for sale portable 26 electronics insurance. 27 (2) The training may be offered in electronic form. 28 However, if the training is conducted in electronic form, the 29 supervising entity shall implement a supplemental education 30 program for employees and authorized representatives of 31 the vendor regarding the portable electronics insurance 32 product that is conducted and overseen by an employee of the 33 supervising entity who is an insurance producer licensed under 34 chapter 522B. 35 -4- LSB 6008YC (2) 84 av/nh 4/ 12

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

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

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

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

H.F. _____ beneficial ownership in the vendor of ten percent or more of 1 any class of securities registered under federal securities 2 law. 3 b. Provide the location of the vendor’s home office. 4 3. Any vendor engaging in the sale of or offering for sale 5 portable electronics insurance on or before July 1, 2012, 6 shall apply for licensure under this chapter within ninety 7 days of the application form being made available by the 8 commissioner. Any vendor commencing operations in this state 9 after July 1, 2012, shall obtain a portable electronics limited 10 lines insurance license prior to selling or offering for sale 11 portable electronics insurance. 12 4. Initial portable electronics limited lines insurance 13 licenses issued pursuant to this chapter shall be valid for a 14 period of twenty-four months and shall expire on March of the 15 renewal year assigned by the commissioner. 16 5. Each vendor licensed under this chapter shall pay to the 17 commissioner a fee as prescribed by the commissioner by rule, 18 but in no event shall the fee exceed one thousand dollars for 19 an initial portable electronics limited lines insurance license 20 or five hundred dollars for each renewal of the license. 21 However, for a vendor that engages in portable electronics 22 transactions at ten or fewer locations in the state, the fee 23 shall not exceed one hundred dollars for an initial license and 24 one hundred dollars for each renewal of the license. 25 Sec. 8. NEW SECTION . 522D.8 Rules. 26 The commissioner shall adopt rules pursuant to chapter 17A 27 as necessary to implement and administer the provisions of this 28 chapter. 29 EXPLANATION 30 This bill regulates the sale of portable electronics 31 insurance by requiring licensure, and providing for fees and 32 penalties. “Portable electronics” are electronic devices 33 that are portable in nature, and the accessories and services 34 related to the use of such devices. 35 -9- LSB 6008YC (2) 84 av/nh 9/ 12

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

H.F. _____ requirements are met by the insurer and the supervising entity 1 appointed by the insurer. 2 A vendor may bill and collect charges for portable 3 electronics insurance and be paid for doing so but is 4 considered to hold any funds collected in trust for the 5 insurer. 6 The commissioner of insurance may subject a vendor or the 7 vendor’s employees or authorized representatives to penalties 8 for violations of the Code chapter not to exceed $500 per 9 violation or $5,000 in the aggregate. The commissioner may 10 also suspend the vendor’s privilege of selling the insurance 11 at specific locations of the vendor or suspend or revoke 12 the selling privileges of a specific employee or authorized 13 representative of a vendor. 14 An insurer cannot terminate or otherwise change the terms of 15 a portable electronics insurance policy without giving notice 16 to the vendor and enrolled customers as provided in the bill. 17 Notice may be sent in writing by mail or by electronic means. 18 A vendor who is selling or offering to sell or will sell 19 or offer to sell portable electronics insurance in this state 20 must submit a sworn application for a portable electronics 21 limited lines insurance license to the commissioner. A vendor 22 who is engaging in the sale of such insurance on or before the 23 effective date of the bill must apply for a license within 24 90 days of the date the application form is made available 25 by the commissioner of insurance. Any vendor that commences 26 operations in the state after the effective date of the bill 27 must obtain a license prior to selling or offering for sale 28 portable electronics insurance. 29 Portable electronics limited lines insurance licenses shall 30 be valid for 24 months and shall not exceed $1,000 for an 31 initial license or $500 for a renewal of the license, except 32 that if a vendor has 10 or fewer locations in the state, the 33 license cost shall not exceed $100 for an initial license and 34 for each renewal of the license. 35 -11- LSB 6008YC (2) 84 av/nh 11/ 12