SECTIONS 12750-12757 - California Statutes

INSURANCE CODE

SECTION 12750-12757

12750. (a) A home protection company which has issued or renewed an
aggregate number of 1,000 or less contracts in the preceding
calendar year shall maintain a minimum net worth of forty thousand
dollars ($40,000) and for each additional 500 contracts, or fraction
thereof, up to 10,000 contracts, an additional twenty thousand
dollars ($20,000).
(b) Net worth is defined as the excess of admitted assets over all
liabilities and required reserves. At least twenty thousand dollars
($20,000) of net worth shall consist of paid-in capital.

12751. Any home protection company which has issued and in force,
prior to January 1, 1979, any contracts for home protection exempt
from the provisions of this part pursuant to Section 12741, shall
carry a portion of the fee received for such contracts in the reserve
contemplated by Section 985, as though such fees were premiums
subject to the provisions of that section, and such sums shall be
deemed equivalent to premiums for purposes of that section but shall
not be considered premiums for the purposes of Section 12202 of the
Revenue and Taxation Code.

12752. (a) Each home protection company shall file statements
exhibiting its conditions and affairs in accordance with Sections
900, 900.5, 900.7, 900.8, 900.9, 902, 903, 903.5, 904, 922.1 to
922.8, inclusive, 923, 923.5, and 924. However, the required contents
of the statements may be varied from the requirements thereof,
pursuant to regulation adopted by the commissioner in accordance with
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code, so as to adapt the requirements to
the home protection business.
(b) The commissioner shall, prior to licensure and at other times
as appears necessary, examine the business and affairs of any home
protection company subject to this part. Every home protection
company so examined shall open its books and records for inspection
by the commissioner and shall otherwise facilitate and cooperate in
the examination. In making the examination, the commissioner shall
have the rights specified in Section 733, and the examinee shall be
subject to the obligations of Section 736.

12753. (a) A home protection company shall maintain a reserve for
unearned premiums in an amount not less than 40 percent of the
aggregate premiums charged on its contracts currently in force.
Amounts to be reserved shall be on a 12-month basis. Where the
contract is for a period of more than 12 months, the reserve for
unearned premiums for the period beyond 12 months shall be 100
percent of the pro rata portion of the contract fee attributable to
the period of coverage in excess of 12 months. The unearned premium
reserve for contracts exceeding 12 months shall be reduced to not
less than 40 percent of the pro rata portion of the contract fee
applicable to the next succeeding 12-month period, as of the first
day of the succeeding 12-month period, and each succeeding 12-month
period thereafter during which the contract is in effect.
Where the home protection contract provides coverage during the
selling or listing period of the real property to which the contract
applies, the home protection contract fee applicable to this period
of coverage shall be deemed fully earned upon the close of escrow,
and receipt of payment of the applicable contract fee.
(b) For purposes of this section, such reserve shall not include
protection contract fees on home protection contracts to the extent
provision is made for reinsurance of the outstanding risk on such
contracts.
(c) The commissioner may, by regulation, prescribe the format by
which the reserve shall be reported.

12755. A home protection company shall be deemed insolvent whenever
its net worth is reduced below 50 percent of the amount required by
Section 12750.

12756. A home protection company shall invest only in those assets
defined in Article 3 (commencing with Section 1170) and Article 4
(commencing with Section 1190) of Chapter 2 of Part 2 of Division 1,
except that an amount to be determined by the commissioner by
regulation of its admitted assets may be invested in tangible
personal property held by it for the purpose of repair or replacement
of home components, systems or appliances under its home protection
contracts.

12757. The provisions of Article 14.2 (commencing with Section
1063) of Chapter 1 of Part 2 of Division 1, shall not be applicable
to home protection companies.