THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY QUINN, BOYD, V. BROWN, CALTAGIRONE, CREIGHTON, DeLUCA, EVANKOVICH, GROVE, HARKINS, HORNAMAN, MILLARD, MOUL, MURT AND YOUNGBLOOD, JANUARY 20, 2012

AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF REPRESENTATIVES, AS AMENDED, MAY 23, 2012   

AN ACT

Providing for licensure of vendors, for requirements for sale of

portable electronics insurance, for authority of vendors of

portable electronics, for termination of portable electronics

insurance, for licensing, for renewal of license, for

injunctions and for appeals.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Portable

Electronics Insurance Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Applicant."  A person as defined in section 601-A of the act

of May 17, 1921 (P.L.789, No.285), known as The Insurance

Department Act of 1921.

"Application."  A form as defined in section 601-A of the act

of May 17, 1921 (P.L.789, No.285), known as The Insurance

Department Act of 1921.

"Appointment."  A written agreement between an insurer and

insurance producer as defined in section 601-A of the act of May

17, 1921 (P.L.789, No.285), known as The Insurance Department

Act of 1921.

"Business entity."  A person which is not an individual.

"Commissioner."  The Insurance Commissioner of the

Commonwealth.

"Customer."  A person who purchases portable electronics or

services.

"Department."  The Pennsylvania Insurance Department of the

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Commonwealth.

"Designated licensee."  A licensed insurance producer as

defined in section 601-A of the act of May 17, 1921 (P.L.789,

No.285), known as The Insurance Department Act of 1921.

"Enrolled customer."  A customer who elects coverage under a

portable electronics insurance policy issued to a vendor of

portable electronics.

"Insurance producer."  A person licensed to sell, solicit or

negotiate contracts of insurance.

"Insurer."  As defined in section 601-A of the act of May 17,

1921 (P.L.789, No.285), known as The Insurance Department Act of

1921.

"Location."  A physical location in this Commonwealth or an

Internet website, call center site or similar location provided

to residents of this Commonwealth.

"Portable electronics."  Electronic devices that are portable

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in nature with accessories and services related to the use of

the device. Personal, self-contained, battery-operated

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electronic communication, viewing, listening, recording, gaming,

computing or global positioning devices that are easily carried

by an individual, including cellular or satellite telephones,

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 and any

other similar devices and any accessories related to the use of

the devices.

"Portable electronics insurance."  Insurance providing

coverage for the repair or replacement of portable electronics

which may provide coverage for portable electronics against one

or more of the following causes of loss: loss, theft,

inoperability due to mechanical failure, malfunction, damage or

other similar causes of loss. The term does not include:

(1)  a service contract as defined in section 358(b) of

the act of May 17, 1921 (P.L.682, No.284), known as The

Insurance Company Law of 1921;

(2)  a policy of insurance covering a seller's or a

manufacturer's obligations under a warranty; or

(3)  a homeowner's, renter's, private passenger

automobile, commercial multiperil or similar policy.

"Portable electronics transaction."  Either of the following:

(1)  the sale or lease of portable electronics by a

vendor to a customer; or

(2)  the sale of a service related to the use of portable

electronics by a vendor to a customer.

"Vendor."  A person in the business of engaging in portable

electronics transactions that is licensed as a business entity.

Section 3.  Licensure of vendors.

(a)  Requirement.--A vendor is required to hold a limited

lines insurance producer license to sell, solicit or negotiate

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coverage under a policy of portable electronics insurance.

(b)  Limited lines license.--A limited lines license issued

under this act shall authorize an employee or authorized

representative of the vendor to sell, solicit or negotiate

coverage under a policy of portable electronics insurance to a

customer at each location where the vendor engages in portable

electronics transactions and to receive compensation from the

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vendor for those activities.

(c)  List of locations.--The vendor shall maintain a list of

the locations in this Commonwealth where it offers coverage and

provide the list upon request to the department.

(d)  License.--Notwithstanding any other provision of law, a

license issued under this section shall authorize the licensee

and its employees or authorized representatives to engage in

those activities that are permitted in this section.

Section 4.  Requirements for sale of portable electronics

insurance.

(a)  Written materials.--At every location where portable

electronics insurance is offered to customers, brochures or

other written materials shall be made available to a prospective

customer that:

(1)  Disclose that portable electronics insurance may

provide a duplication of coverage already provided by a

customer's homeowner's insurance policy, renter's insurance

policy or other source of coverage.

(2)  State that the enrollment by the customer in a

portable electronics insurance program is not required in

order to purchase or lease portable electronics or services.

(3)  Summarize the material terms of the insurance

coverage, including:

(i)  The identity of the insurer.

(ii)  The identity of the business entity.

(iii)  The amount of any applicable deductible and

how it is to be paid.

(iv)  Benefits of the coverage.

(v)  Key terms and conditions of coverage, such as

whether portable electronics may be repaired or replaced

with similar make and model reconditioned or nonoriginal

manufacturer parts or equipment.

(4)  Summarize the process for filing a claim, including

a description of how to return portable electronics and the

maximum fee applicable in the event the customer fails to

comply with any equipment return requirements.

(5)  State that the enrolled customer may cancel

enrollment for coverage under a portable electronics

insurance policy at any time and the person paying the

premium shall receive a refund of an applicable unearned

premium.

(b)  Offerings.--Portable electronics insurance may be

offered on a month-to-month or other periodic basis as a group

or master commercial inland marine policy issued to a vendor of

portable electronics for its enrolled customers.

(c)  Eligibility and underwriting standards.--Eligibility and

underwriting standards for customers electing to enroll in

coverage shall be established for each portable electronics

insurance program.

Section 5.  Authority of vendors of portable electronics.

(a)  Authority and licensure.--The employees and authorized

representatives of vendors may sell or offer portable

electronics insurance to customers and shall not be subject to

licensure as an insurance producer under this chapter provided

that:

(1)  The vendor obtains a limited lines license to

authorize its employees or authorized representatives to sell

or offer portable electronics insurance under this section.

(2)  The insurer issuing the portable electronics

insurance either directly supervises or authorizes a

designated licensee to supervise the administration of the

program, including development of a training program for

employees and authorized representatives of the vendors. The

training required by this paragraph shall comply with the

following:

(i)  The training shall be delivered to employees and

authorized representatives of a vendor who is are 

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directly engaged in the activity of selling, soliciting

or negotiating portable electronics insurance.

(ii)  The training may be provided in electronic

form. If conducted in an electronic form, the vendor

shall implement a supplemental education program

regarding portable electronics insurance that is

conducted and overseen by the designated licensee.

(iii)  Each employee and authorized representative

shall receive basic instruction about the portable

electronics insurance offered to customers and the

disclosures required under section 4.

(3)  No employee or authorized representative of a vendor

of portable electronics shall advertise, represent or

otherwise hold himself out as a licensed insurance producer.

(b)  Charges.--The charges for portable electronics insurance

coverage may be billed and collected by the vendor of portable

electronics. A charge to the enrolled customer for coverage that

is not included in the cost associated with the purchase or

lease of portable electronics or related services shall be

separately itemized on the enrolled customer's bill. If the

portable electronics insurance coverage is included with the

purchase or lease of portable electronics or related services

the vendor shall clearly and conspicuously disclose to the

enrolled customer that the portable electronics insurance

coverage is included with the portable electronics or related

services. Vendors billing and collecting the charges shall not

be required to maintain the funds in a segregated account

provided that the vendor is authorized by the insurer to hold

the funds in an alternative manner and remits the amounts to the

supervising entity within 60 days of receipt. The funds received

by a vendor from an enrolled 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. Vendors may receive compensation from the insurer for

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billing and collection services from the insurer.

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Section 6.  Termination of portable electronics insurance.

Notwithstanding any other provision of law:

(1)  An insurer may terminate an enrolled customer's

enrollment under a portable electronics insurance policy upon

15 days' notice for discovery of fraud or material

misrepresentation in obtaining coverage or in the

presentation of a fraudulent claim.

(2)  An insurer may immediately terminate an enrolled

customer's enrollment under a portable electronics insurance

policy:

(i)  if the enrolled customer ceases to have an

active service with the vendor of portable electronics;

or

(ii)  if an enrolled customer exhausts the aggregate

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annual annual aggregate limit of liability under the

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terms of the portable electronics insurance policy and

the insurer sends notice of termination to the enrolled

customer within 30 calendar days after exhaustion of the

limit. If notice is not timely sent, however, enrollment

shall continue notwithstanding the annual aggregate limit

of liability until the insurer sends notice of

termination to the enrolled customer.

(3)  Where a portable electronics insurance policy is

terminated by a policyholder, the policyholder shall mail or

deliver written notice to each enrolled customer advising the

enrolled customer of the termination of the policy and the

effective date of termination. The written notice shall be

mailed or delivered to the enrolled customer at least 30 days

prior to the termination.

(4)  Whenever notice is required under this section, it

shall be in writing and may be mailed or delivered to the

vendor of portable electronics at the vendor's mailing

address and to its affected enrolled customers' last known

mailing addresses on file with the insurer. If notice is

mailed, the insurer or vendor of portable electronics shall

maintain proof of mailing in a form authorized or accepted by

the United States Postal Service or other commercial mail

delivery service. Alternatively, an insurer or vendor

policyholder may comply with a notice required by this

section by providing electronic notice to a vendor or its

affected enrolled customers by electronic means. If notice is

accomplished through electronic means the insurer or vendor

of portable electronics, as the case may be, shall maintain

proof that the notice was sent.

Section 7.  Licensing.

Applications for license licensure under this act shall be in

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accordance with section 606-A of the act of May 17, 1921

(P.L.789, No.285), known as The Insurance Department Act of

1921.

Section 8.  Renewal of license.

A license may be renewed in accordance with section 608-A of

the act of May 17, 1921 (P.L.789, No.285), known as The

Insurance Department Act of 1921.

Section 9.  Injunctions.

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The commissioner may maintain an action for an injunction or

other process against a person to restrain and prevent the

person from engaging in an activity violating this act or

regulations promulgated under this act.

Section 10.  Appeals.

The person aggrieved by a decision of the commissioner that

has a direct interest in the decision may appeal the decision of

the commissioner in accordance with 2 Pa.C.S. Ch. 7 Subch. A

(relating to judicial review of Commonwealth agency action).

Section 19 9.  Repeals.

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Section 5(a)(9) of the act of July 22, 1974 (P.L.589,

No.205), known as the Unfair Insurance Practices Act, is

repealed insofar as it is inconsistent with this act.

Section 20 10.  Effective date.

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This act shall take effect in 120 days.