SECTIONS 12740-12745 - California Statutes

INSURANCE CODE

SECTION 12740-12745

12740. The definitions used in this section govern the construction
and terms used in this part but shall not affect any other
provisions of this code:
(a) "Home protection contract" means a contract or agreement
whereby a person, other than a builder, seller, or lessor of the home
which is the subject of the contract, undertakes for a specified
period of time, for a predetermined fee, to repair or replace all or
any part of any component, system or appliance of a home necessitated
by wear and tear, deterioration or inherent defect, arising during
the effective period of the contract, and, in the event of an
inspection conducted pursuant to subdivision (b) of Section 12761, by
the failure of that inspection to detect the likelihood of any such
loss.
Such contract shall provide for a system of service for
effectuating such repair or replacement and shall not include
protection against consequential damage from the failure of any
component, system or appliance.
(b) "Home protection company" means any person licensed pursuant
to this part which issues home protection contracts.
(c) "Protection contract fee" means the consideration received, or
to be received, by a home protection company for the issuance of any
home protection contract.
A home protection contract fee shall be the fee established by a
home protection company for coverage extending one year from the
effective date of the contract. Where initial coverage is provided
for a period in excess of one year, the home protection contract fee
shall be the annual fee, plus a separately stated pro rata portion of
the annual fee for the period of coverage which exceeds one year.
(d) "Home" or "residential property" as used in this part means
any single or multiple unit or units, including mobilehomes, (as
defined in Health and Safety Code Section 18211) used primarily for
residential purposes.

12741. This part shall not apply to:
(a) Performance guarantees or service contracts given by either
the builder of a home or the manufacturer or seller of an appliance
or other system or component, whether or not an identifiable charge
is made for such guarantee or service contract.
(b) Any service contract, guarantee, or warranty intending to
guarantee or warrant the repairs or service of a home appliance,
system or component, provided such service contract, guarantee, or
warranty is issued by a person who has sold, serviced, repaired or
provided replacement of that appliance, system or component at the
time of, or prior to issuance of the contract, guarantee, or
warranty; and, provided, further, that the person issuing the service
contract, guarantee, or warranty does not engage in the business of
a home protection company.
(c) The provider of any pest control service agreement pursuant to
Section 8516 of the Business and Professions Code.
(d) This section shall become operative January 1, 2004.

12742. Home protection contracts and home protection companies, and
all matters incident to or concerned with such contracts and
companies, shall be exclusively subject to and regulated by the
provisions of this part and, except as provided in Section 12743,
shall not be governed by any other provision of this code.

12743. The following provisions of this code shall be applicable to
home protection contracts and home protection companies:
(a) Sections 1 to 46, inclusive.
(b) Chapter 3 (commencing with Section 330) of Part 1, Division 1.
(c) Chapter 12 (commencing with Section 679.70) of Part 1,
Division 1.
(d) These provisions of Chapter 1, Part 2, Division 1:
(1) Article 1 (commencing with Section 680).
(2) Article 1.5 (commencing with Section 685).
(3) Article 2 (commencing with Section 690).
(4) Section 699, 699.5, 700, 701, 704, 704.5, 704.7, 705, 705.1,
707, 708, 709, 710, 713, 714, 715, 716, 717, 718, 720, and 725 of
Article 3 (commencing with Section 699).
(5) Section 750.
(6) Article 5.5 (commencing with Section 770).
(7) Article 6.5 (commencing with Section 790).
(8) Article 8 (commencing with Section 820).
(9) Article 9 (commencing with Section 880).
(10) Article 11 (commencing with Section 939).
(11) Article 13 (commencing with Section 980).
(12) Article 14 (commencing with Section 1010).
(13) Article 14.5 (commencing with Section 1065.1).
(14) Article 15 (commencing with Section 1070).
(15) Article 16 (commencing with Section 1080).
(16) Article 17 (commencing with Section 1100).
(e) These provisions of Chapter 2, Part 2, Division 1:
(1) Article 1 (commencing with Section 1140).
(2) Article 2 (commencing with Section 1150).
(3) Article 3 (commencing with Section 1170).
(4) Article 4 (commencing with Section 1190).
(5) Article 4.7 (commencing with Section 1215).
(6) Article 7 (commencing with Section 1250).
(7) Article 8 (commencing with Section 1260).
(f) Article 4 (commencing with Section 1610) of Chapter 4 of Part
2 of Division 1.
(g) Article 3 (commencing with Section 1631) of Chapter 5 of Part
2 of Division 1.
(h) Sections 1850, 1850.5, 1852, 1853.5, 1853.7, 1853.8, 1857,
1857.2, 1857.3, 1857.4, 1857.5, 1858, 1858.05, 1858.1, 1858.15,
1858.2, 1858.3, 1858.4, 1858.5, 1858.6, 1858.7, 1859, 1859.1, 1860,
1860.1, 1860.2 of Chapter 9, Part 2, Division 1.
(i) Division 3 (commencing with Section 12900).
(j) In any references in the provisions made applicable to this
part by subdivisions (a) to (i) inclusive of this section:
(1) "Insurer" shall mean home protection company.
(2) "Insured" shall mean a home protection contract holder.
(3) "Premium" shall mean protection contract fee.
(4) "Policy" or "insurance" shall mean home protection contract.
(k) When any provision of this code, other than this part, is
applied to home protection companies, such provision shall be
construed in accordance with the nature of home protection companies
and the home protection business. In the event of any conflict
between such other provision and this part, this part shall prevail.

12744. (a) No person shall issue or offer to issue home protection
contracts in this state unless such person holds a home protection
company license issued by the department, except as provided in
subdivision (b) of this section.
(b) An insurer admitted for the class of insurance defined in
Section 120 is authorized, in addition to the underwriting powers
granted by such class, to issue home protection contracts, but the
provisions of this part shall not be otherwise applicable to such
insurers or their contracts.
(c) No license shall be granted to a foreign applicant that has
not fulfilled the requirements of Sections 716 and 717. For purposes
of this part, the term "class of insurance" as used in said sections
shall mean the business of a home protection company. This section
shall not prohibit the admission of a foreign home protection company
which has actively transacted home protection business in its state
of domicile for three years or more.
(d) The commissioner shall by regulation prescribe forms for
applications for home protection company licenses consistent with the
provisions of this part. Any reference to certificate of authority
in Article 3 (commencing with Section 699) of Chapter 1 of Part 2 of
Division 1, shall mean home protection company license.

12745. (a) Any insurance holding company subject to Article 4.7
(commencing with Section 1215) of Chapter 2 of Part 2 of Division 1,
one of whose affiliates is a home protection company as defined in
this part, may invest in or operate a corporation which provides home
service contractor or dispatch services or appliance service or
appliance repair services pursuant to a contract issued for that
purpose. The corporation shall not be subject to licensing or
regulation under this part except as set forth in this section,
provided, that the contract shall not be sold in conjunction with, or
otherwise attach to, the sale or any proposed sale of the real
property to which it relates.
(b) At the time of filing its registration statement under Section
1215.4, and annually thereafter, each affiliate owning or operating
such a corporation shall file as a supplement thereto, a statement of
the financial condition of the corporation prepared according to
generally accepted accounting principles, and a designated list of
the name and addresses of all agents, employees, and independent
contractors utilized to issue or sell those contracts. Each statement
of financial condition and designated list shall be certified as
correct by an officer of the corporation. The commissioner may
prescribe the form for the statement or list.