SB-0859, As Passed Senate, June 6, 2012

SUBSTITUTE FOR

SENATE BILL NO. 859

A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending section 1201a (MCL 500.1201a), as added by 2001 PA 228,

and by adding chapter 29A.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1201a. (1) A person shall not sell, solicit, or negotiate

insurance in this state for any line of insurance unless the person

is licensed for that qualification in accordance with this chapter.

(2) This chapter does not apply to excess and surplus lines

agents and brokers licensed under chapter 19 except as provided in

sections 1204e and 1206a.

(3) This chapter does not apply to the sale, solicitation, or

negotiation of portable electronics insurance under chapter 29A.

CHAPTER 29A

PORTABLE ELECTRONICS INSURANCE

Sec. 2960. As used in this chapter:

(a) "Customer" means a person that purchases portable

electronics or services.

(b) "Enrolled customer" means a customer that elects coverage

under a portable electronics insurance policy issued to a vendor.

any website, call center site, or similar location directed to

residents of this state.

(d) "Office" means the office of financial and insurance

regulation.

(e) "Portable electronic device" means an electronic device

that is portable in nature and any accessories or services related

to the use of that device.

(f) "Portable electronics insurance" means insurance that

provides coverage for the repair or replacement of a portable

electronic device, including, but not limited to, insurance that

provides coverage for a portable electronic device against loss,

theft, inoperability because of mechanical failure, malfunction,

damage, or other similar causes of loss. Portable electronics

insurance does not include any of the following:

(i) A service contract or extended warranty that provides

coverage that is limited to the repair, replacement, or maintenance

of a portable electronic device if there is an operational or

structural failure of the device caused by a defect in materials or

workmanship, accidental damage from handling, a power surge, or

normal wear and tear.

(ii) A policy of insurance covering a seller's or

manufacturer's obligations under a warranty.

(iii) A homeowner's, renter's, private passenger automobile,

commercial multi-peril, or similar insurance policy.

(g) "Portable electronics transaction" means any of the

following:

(i) A sale or lease of a portable electronic device by a vendor

to a customer.

(ii) A sale of a service related to the use of a portable

electronic device by a vendor to a customer.

(h) "Supervising entity" means a business entity that is an

insurance producer or insurer licensed under this act.

(i) "Vendor" means a person in the business of directly or

indirectly engaging in portable electronic device transactions.

Sec. 2961. (1) A person shall not sell or offer for sale

portable electronics insurance in this state unless the insurance

is sold or offered for sale in compliance with this chapter. A

vendor or an employee or authorized representative of a vendor who

acts in compliance with this chapter may sell or offer for sale

portable electronics insurance at each location where the vendor

engages in portable electronics transactions.

(2) A vendor shall maintain a registry of locations that are

authorized to sell or offer for sale portable electronics insurance

in this state. Upon the commissioner's request and with 10 days'

notice to the vendor, the registry shall be open to inspection and

examination by the commissioner during the vendor's regular

business hours.

Sec. 2962. (1) At every location where a vendor offers for

sale portable electronics insurance to customers, the vendor shall

make brochures or other written materials available to a

prospective customer. The brochures or other written materials

shall do all of the following:

(a) Disclose that portable electronics insurance may provide a

duplication of coverage already provided by the customer's

homeowner's insurance policy, renter's insurance policy, or other

insurance coverage.

(b) State that the enrollment by the customer in a portable

electronics insurance program is not required to purchase or lease

a portable electronic device or services for the device.

insurance coverage, including at least all of the following:

(i) The identity of the insurer.

(ii) The identity of any supervising entity.

(iii) The amount of any applicable deductible and how it is to

be paid.

(iv) Benefits of the coverage.

(v) Key terms and conditions of the coverage, such as whether

portable electronics may be repaired or replaced with similar make

and model reconditioned or nonoriginal manufacturer parts or

equipment.

(d) Summarize the process for filing a claim, including a

description of how to return a portable electronic device and the

maximum fee applicable if the customer fails to comply with any

equipment return requirements.

(e) State that the customer may cancel enrollment for coverage

under a portable electronics insurance policy at any time and that

the person paying the premium will receive a refund of or credit

for any applicable unearned premium.

(2) A vendor may offer for sale portable electronics insurance

on a month-to-month or other periodic basis as a group or master

commercial inland marine policy issued to the vendor for its

enrolled customers.

(3) An insurer issuing a policy of portable electronics

insurance shall establish eligibility and underwriting standards

for customers electing to enroll in coverage for each portable

electronics insurance program.

Sec. 2963. (1) An insurer that issues a portable electronics

insurance policy shall either directly supervise or appoint a

supervising entity to supervise the administration of the portable

electronics insurance program.

(2) A vendor or an employee or authorized representative of a

vendor shall not advertise, represent, or otherwise hold himself or

herself out as a limited lines licensed insurance producer unless

the vendor, employee, or representative is so licensed under this

act.

(3) A vendor may bill and collect the charges for portable

electronics insurance coverage. A vendor shall separately itemize

on the enrolled customer's bill any charge for coverage that is not

included in the cost associated with the purchase or lease of a

portable electronic device or related services. If the portable

electronics insurance coverage is included with the purchase or

lease of a portable electronic device or related services, the

vendor shall clearly and conspicuously disclose to the enrolled

customer that the portable electronics insurance coverage is

included with the portable electronic device or related services.

Vendors billing and collecting charges described in this subsection

are not required to maintain the proceeds in a segregated account

if the vendor is authorized by the insurer to hold the proceeds in

an alternative manner and remits those proceeds to the supervising

entity within 60 days after receiving them. All money received by a

vendor from an enrolled customer from the purchase of portable

electronics insurance is considered money held in trust by the

vendor in a fiduciary capacity for the benefit of the insurer. A

vendor may receive compensation for billing and collection services

described in this subsection.

Sec. 2964. If a vendor or an employee or authorized

representative of a vendor violates this chapter, the commissioner

may do any of the following:

(a) After notice and hearing, impose an administrative fine of

not more than $500.00 for each violation. However, the commissioner

shall not assess administrative fines under this chapter against

any person that in the aggregate are more than $5,000.00 for

multiple violations that involve the same conduct, action, or

practice.

(b) After notice and hearing, impose other penalties that the

commissioner considers necessary and reasonable to carry out the

purpose of this chapter, including, but not limited to, any of the

following:

(i) Suspending the privilege of transacting portable

electronics insurance under this chapter at specific locations

where violations have occurred.

(ii) Suspending or revoking the ability of the vendor or

individual employees or authorized representatives of the vendor to

sell or offer for sale portable electronics insurance.

Sec. 2965. (1) Notwithstanding any other provision of law to

the contrary, a policy of portable electronics insurance may be

terminated or modified as stated in the policy.

(2) A notice or correspondence with respect to a policy of

portable electronics insurance that is required under the policy or

otherwise required by law shall be in writing and sent within the

notice period, if any, specified in the policy, statute, or rule

requiring the notice or correspondence. A notice or correspondence

may be sent either by mail or by electronic means as follows:

(a) If the notice or correspondence is mailed, it shall be

sent to the vendor at the vendor's mailing address specified for

receiving mailed notices and correspondence and to the affected

customer's last known mailing address on file with the insurer. The

insurer or vendor shall maintain proof of mailing of a notice or

correspondence in a form authorized or accepted by the United

States postal service or other commercial mail delivery service.

(b) If the notice or correspondence is sent by electronic

means, it shall be sent to the vendor at the vendor's electronic

mail address specified for receiving notices and correspondence by

electronic means and to the affected customer's last known

electronic mail address as provided by the customer to the insurer

or vendor. For purposes of this subdivision, the provision of an

electronic mail address to the insurer or vendor by the customer is

considered to be consent to receive notices and correspondence by

electronic means. The insurer or vendor shall maintain proof that a

notice or correspondence was sent by electronic means.

(3) A notice or correspondence required by this section or

otherwise required by law may be sent on behalf of an insurer or

vendor by a supervising entity appointed by the insurer.