Public Act 097-0366
 
HB1284 EnrolledLRB097 06019 RPM 46090 b

    AN ACT concerning insurance.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 1. Short title. This Act may be cited as the
Portable Electronics Insurance Act.
 
    Section 5. Definitions. For purposes of this Act, the
following terms have the following meanings:
    "Customer" means a person who purchases portable
electronics or services.
    "Department" means the Department of Insurance.
    "Director" means the Director of Insurance.
    "Enrolled customer" means a customer who elects coverage
under a portable electronics insurance policy issued to a
vendor of portable electronics.
    "Location" means any physical location in this State or any
website, call center site, or similar location directed to
residents of this State.
    "Portable electronics" means electronic devices that are
portable in nature, including their accessories and services
related to the use of the device.
    "Portable electronics insurance" means insurance providing
coverage for the repair or replacement of portable electronics,
which may provide coverage for portable electronics against any
one or more of the following causes of loss: loss, theft,
inoperability due to mechanical failure, malfunction, damage,
or other similar causes of loss. "Portable electronics
insurance" does not include a service contract pursuant to the
Service Contract Act, a policy of insurance covering a seller's
or a manufacturer's obligations under a warranty, or a
homeowner's, renter's, private passenger automobile,
commercial multi-peril, or similar policy.
    "Portable electronics transaction" means the sale or lease
of portable electronics by a vendor to a customer or the sale
of a service related to the use of portable electronics by a
vendor to a customer.
    "Supervising entity" means a business entity that is a
licensed insurance producer or insurer.
    "Vendor" means a person in the business of engaging in
portable electronics transactions directly or indirectly.
 
    Section 10. Licensure of vendors.
    (a) In order to sell or offer coverage under a policy of
portable electronics insurance, a vendor is required to hold a
limited-lines license.
    (b) A limited-lines license issued under this Act shall
authorize any employee or authorized representative of the
vendor to sell or offer coverage under a policy of portable
electronics insurance to a customer at each location at which
the vendor engages in portable electronics transactions.
    (c) In connection with a vendor's application for licensure
and quarterly thereafter, the vendor shall provide a list to
the Director of all locations in this State at which it offers
coverage.
    (d) Notwithstanding any other provision of law, a license
issued pursuant to this Act shall authorize the licensee and
its employees or authorized representatives to engage only in
those activities that are permitted in this Act.
 
    Section 15. Requirements for sale of portable electronics
insurance.
    (a) At every location where portable electronics insurance
is offered to customers, brochures or other written materials
must be made available to a prospective customer. The brochures
or other written materials shall do all of the following:
        (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:
            (A) the identity of the insurer;
            (B) the identity of the supervising entity;
            (C) the amount of any applicable deductible and how
        it is to be paid;
            (D) benefits of the coverage; and
            (E) 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 enrolled customer
    fails to comply with any equipment return requirements; and
        (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 any applicable unearned
    premium within 15 days after receipt of the refund by the
    vendor.
    (b) 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 for customers
electing to enroll in coverage shall be established for each
portable electronics insurance program.
 
    Section 20. Authority of vendors of portable electronics.
    (a) 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 the Illinois Insurance Code provided that:
        (1) the vendor obtains a limited-lines license to
    authorize its employees or authorized representatives to
    sell or offer portable electronics insurance pursuant to
    this Act;
        (2) the insurer issuing the portable electronics
    insurance either directly supervises or appoints a
    supervising entity 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 subsection (a) shall comply
    with the following:
            (A) the training shall be delivered to employees
        and authorized representatives of a vendor who is
        directly engaged in the activity of selling or offering
        portable electronics insurance;
            (B) the training may be provided in electronic
        form; if conducted in electronic form, then the
        supervising entity shall implement a supplemental
        education program regarding portable electronics
        insurance that is conducted and overseen by licensed
        employees of the supervising entity; and
            (C) each employee and authorized representative
        shall receive basic instruction about the portable
        electronics insurance offered to customers and the
        disclosures required under Section 15 of this Act;
        (3) no employee or authorized representative of a
    vendor of portable electronics shall advertise, represent,
    or otherwise hold himself or herself out as a
    nonlimited-lines licensed insurance producer.
    (b) The charges for portable electronics insurance
coverage may be billed and collected by the vendor of portable
electronics. If the portable electronics insurance coverage is
included in the purchase or lease of portable electronics or
related services, then the vendor shall clearly and
conspicuously disclose to the customer that the portable
electronics insurance coverage is included with the portable
electronics or related services. If the charge for coverage is
included in the cost associated with the purchase or lease of
portable electronics or related services, then the vendor shall
clearly and conspicuously disclose to the enrolled customer
that the charge for the portable electronics or related
services includes the charge for coverage. Vendors billing and
collecting such charges shall not be required to maintain the
funds in a segregated account, provided that the vendor is
authorized by the insurer to hold such funds in an alternative
manner and remits the amounts to the supervising entity within
60 days after receipt. All 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 for billing and collection services.
 
    Section 25. Suspension or revocation of license and other
penalties. If a vendor of portable electronics or its employee
or authorized representative violates any provision of this
Act, then the Director may do any of the following:
        (1) take any action in accordance with Section 500-70
    of the Illinois Insurance Code;
        (2) impose other penalties that the Director deems
    necessary and reasonable to carry out the purpose of this
    Act, including, but not limited to:
            (A) suspending the privilege of transacting
        portable electronics insurance pursuant to this
        Section at specific business locations where
        violations have occurred; and
            (B) suspending or revoking the ability of
        individual employees or authorized representatives to
        act under the license.
    A supervising entity that violates any provision of this
Act shall be subject to all appropriate regulatory action as
set forth in the Illinois Insurance Code.
 
    Section 30. Termination of portable electronics insurance.
Notwithstanding any other provision of law:
        (1) An insurer may terminate or otherwise change the
    terms and conditions of a policy of portable electronics
    insurance only upon providing the policyholder and
    enrolled customers with at least 60 days notice.
        (2) If the insurer changes the terms and conditions,
    then the insurer shall provide the vendor policyholder with
    a revised policy or endorsement and each enrolled customer
    with a revised certificate, endorsement, updated brochure,
    or other evidence indicating that a change in the terms and
    conditions has occurred and a summary of the material
    changes.
        (3) Notwithstanding item (2) of this Section, 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 claim thereunder.
        (4) Notwithstanding item (2) of this Section, an
    insurer may immediately terminate an enrolled customer's
    enrollment under a portable electronics insurance policy:
            (A) for nonpayment of premium;
            (B) if the enrolled customer ceases to have an
        active service with the vendor of portable
        electronics; or
            (C) if an enrolled customer exhausts the aggregate
        limit of liability, if any, under the 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;
        however, if notice is not timely sent, enrollment shall
        continue, notwithstanding the aggregate limit of
        liability, until the insurer sends notice of
        termination to the enrolled customer.
        (5) When 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.
        (6) Whenever notice is required pursuant to 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, then the insurer or vendor of
    portable electronics, as the case may be, 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 any notice required by this
    Section by providing electronic notice to a vendor or its
    affected enrolled customers, as the case may be, by
    electronic means. If notice is accomplished through
    electronic means, then the insurer or vendor of portable
    electronics shall maintain proof that the notice was sent.
 
    Section 35. Application for license and fees.
    (a) A sworn application for a license under this Act shall
be made to and filed with the Department on forms prescribed
and furnished by the Director.
    (b) In addition to other information required by the
Director, the application shall provide the following:
        (1) the name, residential address, and other
    information required by the Director for an employee or
    officer of the vendor that is designated by the applicant
    as the person responsible for the vendor's compliance with
    the requirements of this Act; however, if the vendor
    derives more than 50% of its revenue from the sale of
    portable electronics insurance, then the information
    required pursuant to this paragraph (1) shall be provided
    for all officers, directors, and shareholder of record
    having beneficial ownership of 10% or more of any class of
    securities registered under the federal securities laws;
    and
        (2) the location of the applicant's home office.
    (c) Any vendor engaging in portable electronics insurance
transactions on or before the effective date of this Act must
apply for licensure within 90 days after the effective date of
this Act. Any applicant commencing operations after the
effective date of this Act must obtain a license prior to
offering portable electronics insurance.
    (d) Initial licenses issued pursuant to this Act shall be
valid for a period of 24 months and expire on May 31 of the
renewal year assigned by the Director.
    (e) Each vendor of portable electronics licensed under this
Act shall pay to the Department a fee of $500 for an initial
and renewal portable electronics limited-lines license.
 
    Section 99. Effective date. This Act takes effect January
1, 2012.