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HF 2638

2nd Engrossment - 87th Legislature (2011 - 2012) Posted on 05/23/2012 12:51pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/05/2012
1st Engrossment Posted on 03/15/2012
2nd Engrossment Posted on 03/27/2012

Current Version - 2nd Engrossment

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A bill for an act
relating to insurance; regulating sale of portable electronics insurance; amending
Minnesota Statutes 2010, section 60K.381.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 60K.381, is amended to read:


60K.381 SALE OF PORTABLE ELECTRONICS INSURANCE.

Subdivision 1.

Definitions.

For purposes of this section, the following terms have
the following meanings:

(a) "Customer" means a person who purchases portable electronics or services.

(b) "Covered customer" means a customer who elects coverage under a portable
electronics insurance policy issued to a vendor of portable electronics.

(c) "Portable electronics" means electronic devices that are portable in nature, their
accessories, and services related to the use of the device.

(d)(1) "Portable electronics insurance" means insurance providing coverage for
the repair or replacement of portable electronics, which may cover portable electronics
against any one or more of the following causes of loss: loss, theft, mechanical failure,
malfunction, damage, or other applicable perils.

(2) "Portable electronics insurance" does not include:

(i) a service contract governed by chapter 59B;

(ii) a policy of insurance covering a seller's or a manufacturer's obligations under
a warranty; or

(iii) a homeowner's, renter's, private passenger automobile, commercial multiperil,
or similar policy that covers loss or theft of portable electronics.

(e) "Portable electronics transaction" means:

(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.

(f) "Supervising deleted text beginagencydeleted text endnew text begin entitynew text end" means a business entity that is a licensed new text begininsurer
or
new text endinsurance producernew text begin that is appointed by an insurer to supervise the administration of a
portable electronics insurance program
new text end.

(g) "Vendor" means a business entity in the business of engaging in portable
electronics transactions, directly or indirectly.

Subd. 2.

Licensure of vendors.

(a) A vendor is required to hold a limited lines
license issued under this section to sell or offer coverage under a policy of portable
electronics insurance in connection with, and incidental to, a portable electronics
transaction with a customer.

(b) A limited lines license issued under this section 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 in connection with, and incidental to, a portable
electronics transaction at each location at which the vendor engages in portable electronics
transactions. The application for such a limited lines license shall deleted text beginset forth each location at
which the vendor offers coverage under a policy of portable electronics insurance. The
vendor shall notify the commissioner within 30 days of adding or eliminating such a
location.
deleted text endnew text begin:
new text end

new text begin (1) provide the name, residence address, and other information required by the
commissioner 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
chapter. However, if the vendor derives more than 50 percent of its revenue from the sale
of portable electronics insurance, the information noted above must be provided for all
officers, directors, and shareholders of record having beneficial ownership of ten percent or
more of any class of securities of the vendor registered under the federal securities law; and
new text end

new text begin (2) contain a statement by the applicant indicating whether it intends to offer
portable electronics from more than ten locations in this state. For purposes of this section,
a vendor offering coverage to customers through a Web site is deemed to be offering
portable electronics insurance coverage from more than ten locations.
new text end

(c) new text begin A vendor, or the supervising entity that is appointed to oversee the vendor's
portable electronics insurance program, shall maintain a registry of locations which are
authorized to sell or solicit portable electronics insurance coverage in this state. Upon
request by the commissioner and within ten days' notice to the vendor or supervising
entity, the registry must be made available for inspection by the commissioner.
new text end

new text begin (d) new text endNotwithstanding any other provision of law, a license issued pursuant to this
section shall authorize the licensee and its employees or authorized representatives to
engage only in those activities that are expressly permitted in this section.

Subd. 3.

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 which:

(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 supervising deleted text beginagencydeleted text endnew text begin entitynew text end;

(iii) the amount of any applicable deductible and how it is to be paid;

(iv) benefits of the coverage;

(v) the terms for terminating or modifying coverage as set forth in the policy of
portable electronics insurance; and

(vi) any material exclusions, conditions, or other limitations of coverage including
whether portable electronics may be repaired or replaced with similar make and model
reconditioned or nonoriginal manufacturer parts or equipment;

(4) describe the process for filing a claim, including a description of any
requirements:

(i) to return portable electronics and the maximum fee applicable in the event the
customer fails to comply with any equipment return requirements; and

(ii) any proof of loss requirements; and

(5) state that the customer may cancel enrollment for coverage under a portable
electronics insurance policy at any time and any unearned premium will be refunded new text beginor
credited
new text endon a pro rata basisnew text begin to the customer paying the premiumnew text end.

(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 under which individual customers may elect to enroll for coverage.

(c) Notwithstanding any other provision of Minnesota law regarding the termination
or modification of coverage under a policy of insurance, the terms for the termination
or modification of coverage under a policy of portable electronics insurance issued in
compliance with this chapter shall be as set forth in the policy.

(d) Eligibility and underwriting standards for customers electing to enroll in
coverage shall be established for each portable electronics insurance program.

Subd. 4.

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 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 pursuant to this section;

(2) the insurer issuing the portable electronics insurance new text begineither directly supervises
or
new text endappoints a supervising deleted text beginagencydeleted text endnew text begin entitynew text end 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 subdivision shall comply with the following:

(i) the training shall be delivered to all employees and authorized representatives of
the vendors who sell or offer portable electronics insurance;

(ii) the training may be provided in electronic form. However, if conducted in an
electronic form, the supervising deleted text beginagencydeleted text endnew text begin entitynew text end shall implement a new text beginsupplemental education
new text endprogram deleted text beginof in-person trainingdeleted text endnew text begin regarding the portable electronics insurance product that isnew text end
conducted by licensed employees of the supervising deleted text beginagency to supplement the electronic
training
deleted text endnew text begin entitynew text end; and

(iii) each employee and authorized representative shall receive basic instruction
about the portable electronics insurance offered to customers and the disclosures required
under subdivision 3; and

(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 new text beginportable electronics new text endinsurance coverage may be billed and
collected by the vendor of portable electronics. deleted text beginIf billed and collected by the vendor, the
charges
deleted text endnew text begin Any charge to the covered customer for coverage that is not included in the cost
associated with the purchase or lease of portable electronics or services
new text end shall be separately
itemized from the charges for the purchase or lease of portable electronics or services.
Vendors billing and collecting such charges shall not be required to maintain such funds
in a segregated account provided that the vendor is authorized by the insurer to hold
such funds in an alternative manner and remits such amounts to the supervising deleted text beginagencydeleted text endnew text begin
entity
new text end within 60 days of receipt. All funds received by a vendor from a customer for the
sale of portable electronics insurance shall be considered funds held by the vendor in a
fiduciary capacity for the benefit of the insurer. Vendors may receive compensation for
billing and collection services.

new text begin (c)(1) Whenever notice or correspondence with respect to a policy of portable
electronics insurance is required pursuant to the policy or is otherwise required by law,
the notice or correspondence may be sent either by mail or by electronic means in
accordance with chapter 325L. If the notice or correspondence is mailed, it must be sent
to the vendor at the vendor's mailing address specified for this purpose and to affected
covered customers at their last known mailing addresses on file with the insurer. If the
notice or correspondence is sent by electronic means, it must be sent to the vendor at
the vendor's electronic mail address specified for such purpose and to affected covered
customers at their last known electronic mail addresses as provided to the insurer or
vendor, as the case may be.
new text end

new text begin (2) Notice or correspondence required by a policy of portable electronics insurance
or otherwise required by law may be sent on behalf of an insurer or vendor, as the case
may be, by the supervising entity appointed by the insurer.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2013.
new text end