SECTIONS 12760-12764 - California Statutes

INSURANCE CODE

SECTION 12760-12764

12760. No home protection company shall pay a commission to any
person as an inducement or compensation for the issuance, purchase or
acquisition of a home protection contract, nor shall a home
protection company or any other insurer either directly or
indirectly, as a part of any real property transaction in which a
home protection contract will be issued, purchased or acquired,
require that a home protection contract be issued, purchased or
acquired in conjunction with or as a condition precedent to the
issuance, purchase or acquisition, by any person, of any other policy
of insurance. The provisions of this section shall not prohibit
payment of an override commission or marketing fee to an employee or
commission sales agent who is the marketing representative of the
home protection company or its parent, subsidiary, or affiliate on
the sale or marketing of a home protection contract, provided such
person is not a real estate licensee sharing in or entitled to share
in, or affiliated with a real estate brokerage firm which is entitled
to share in the real estate commission generated by the underlying
real property transaction.

12761. (a) The furnishing of a home protection contract without
charge to any person shall constitute a violation of this part. No
home protection contract providing coverage prior to the time an
interest in the home to which it attaches is sold shall be issued or
delivered unless it provides for consideration. Such consideration
may consist of a bona fide promise to pay the protection contract fee
at the time of and only upon transfer of title.
(b) A home protection company may require an onsite inspection as
a prequalification for the issuance of a home protection contract,
and in such event offer a report on the inspection in connection with
a bona fide application for the issuance of such contract even
though the issuance of a contract on the property which is the
subject of the inspection does not occur.

12761.1. (a) A home protection company which was licensed as such
on December 31, 1988, and as of that date was a franchisor of
entities authorized by Section 771.1 to solicit, negotiate, or effect
home protection contracts, or a parent, subsidiary, or affiliate of
such a franchisor, and continues to be such a franchisor or parent,
subsidiary, or affiliate of such a franchisor, may provide coverage
for a listing period.
(b) For the purposes of this section, a "listing period" means a
period prior to the time an interest in the home to which the home
protection coverage attaches is sold, during which there is in effect
an exclusive right to sell listing as that term is defined in
Section 1086 of the Civil Code, between the seller of that home and a
franchisee of that franchisor.
(c) Home protection contracts providing listing period coverage
issued pursuant to this section shall be exempt from the provisions
of both of the following:
(1) Subdivision (c) of Section 12740, which requires a separately
stated pro rata portion of the annual fee for the period of coverage
which exceeds one year.
(2) Subdivision (a) of Section 12753, which requires reserves for
unearned premiums applicable to the listing period coverage provided
under those home protection contracts.

12762. (a) A home protection contract shall specify, in clear and
conspicuous terms, the following information:
(1) Each of the appliances, systems and components covered by the
contract.
(2) All exclusions and limitations respecting the extent of
coverage.
(3) The period during which the contract will remain in effect,
the protection contract fee and the renewal terms, if any.
(4) With respect to the performance of services by the home
protection company, all of the following:
(A) The services to be performed by the company and the terms and
conditions of such performance.
(B) The service fee or fees, if any, to be charged for such
services.
(C) All limitations respecting the performance of services,
including any restrictions as to the time period when or geographical
area within which services may be requested or will be performed.
(D) A statement that services will be performed upon telephonic
request therefor to the company, without any requirement that claim
forms or applications be filed prior to the rendition of service.
(E) A representation that services will be initiated by or under
the direction of the company within 48 hours after request is made
for such services by any person entitled to make such request under
the contract, or the agent of such person.
(b) The commissioner may adopt, pursuant to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, such reasonable regulations as may be necessary
to make more specific the provisions of this section. Those
regulations may also establish such other contract form standards and
requirements as the commissioner may deem necessary and appropriate
in the public interest. However, this section does not authorize the
commissioner to specify those appliances, systems, or components
which must be covered by a home protection contract except to the
extent necessary to guarantee the equity of the exclusions from
coverage offered or provided under a contract, or to the extent
necessary to avoid illusory coverage due to the nature or extent of
exclusions from the contract.

12763. No home protection contract shall be issued or delivered
until a copy of the form thereof is filed with the commissioner. The
commissioner may charge a fee for the filing, which fee shall be
established by regulation adopted pursuant to Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code.

12764. (a) Any home protection contract shall be noncancellable
during the initial term for which it was issued, except for:
(1) Nonpayment of protection contract fees;
(2) Fraud or misrepresentation of facts material to the issuance
of such contract; or
(3) Contracts providing coverage prior to the time that an
interest in the residential property to which it attaches is sold,
upon the contingency that such sale does not occur.
(b) Nothing in this section establishes a right of the contract
holder to renewal of any contract.