CHAPTER 634

634.011 Definitions. As used in this part, the term: (1) “Acquisition cost” means all costs specifically associated with acquiring new business, including, but not limited to, underwriting costs, commissions, contingent fees, and cost of sales material. (2) “Additive product” means any fuel supplement, oil supplement, or any other supplement product added to a motor vehicle for the purpose of increasing or enhancing the performance or improving the longevity of such motor vehicle. The term “additive product” does not include a product applied to the exterior or interior surface of a motor vehicle to protect the appearance of the motor vehicle. (3) “Affiliate” means any entity which exercises control over or is controlled by the motor vehicle service agreement company or insurer, directly or indirectly, through: (a) Equity ownership of voting securities; (b) Common managerial control; or (c) Collusive participation by the management of the motor vehicle service agreement company or insurer and affiliate in the management of the motor vehicle service agreement company or insurer or the affiliate. (4) “Gross premium written” means the total amount of premiums paid by the agreement holder, inclusive of commissions, for those agreements which are in force. (5) “Insurer” means any property or casualty insurer duly authorized to transact such business in this state. (6) “Motor vehicle” means: (a) A self-propelled device operated solely or primarily upon roadways to transport people or property, or the component part of such a self-propelled device, except such term does not include any self-propelled vehicle, or component part of such vehicle, which: 1. Has a gross vehicle weight rating of 10,000 pounds or more, and is not a recreational vehicle as defined by s. 320.01(1)(b); 2. Is designed to transport more than 10 passengers, including the driver; or 3. Is used in the transportation of materials found to be hazardous for the purposes of the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss. 1801 et seq.; or (b) A self-propelled device operated solely or primarily upon water for noncommercial, personal use, the engine of such a vehicle, or a trailer or other device used to transport such vehicle or device. (7) “Motor vehicle manufacturer” means an entity that: (a) Manufactures or produces motor vehicles and sells motor vehicles under its own name or label; (b) Is a subsidiary of an entity that manufactures or produces motor vehicles; or (c) Is a corporation that owns 100 percent of an entity that manufactures or produces motor vehicles. For purposes of this subsection, an entity qualifies as a subsidiary if 25 percent or more of its voting securities are directly or indirectly owned by an entity that manufactures or produces motor vehicles and sells motor vehicles under its own name or label. (8) “Motor vehicle service agreement” or “service agreement” means any contract or agreement indemnifying the service agreement holder for the motor vehicle listed on the service agreement and arising out of the ownership, operation, and use of the motor vehicle against loss caused by failure of any mechanical or other component part, or any mechanical or other component part that does not function as it was originally intended; however, nothing in this part shall prohibit or affect the giving, free of charge, of the usual performance guarantees by manufacturers or dealers in connection with the sale of motor vehicles. Transactions exempt under s. 624.125 are expressly excluded from this definition and are exempt from the provisions of this part. The term “motor vehicle service agreement” includes any contract or agreement that provides: (a) For the coverage or protection defined in this subsection and which is issued or provided in conjunction with an additive product applied to the motor vehicle that is the subject of such contract or agreement; (b) For payment of vehicle protection expenses. 1.a. “Vehicle protection expenses” means a preestablished flat amount payable for the loss of or damage to a vehicle or expenses incurred by the service agreement holder for loss or damage to a covered vehicle, including, but not limited to, applicable deductibles under a motor vehicle insurance policy; temporary vehicle rental expenses; expenses for a replacement vehicle that is at least the same year, make, and model of the stolen motor vehicle; sales taxes or registration fees for a replacement vehicle that is at least the same year, make, and model of the stolen vehicle; or other incidental expenses specified in the agreement. b. “Vehicle protection product” means a product or system installed or applied to a motor vehicle or designed to prevent the theft of the motor vehicle or assist in the recovery of the stolen motor vehicle. 2. Vehicle protection expenses shall be payable in the event of loss or damage to the vehicle as a result of the failure of the vehicle protection product to prevent the theft of the motor vehicle or to assist in the recovery of the stolen motor vehicle. Vehicle protection expenses covered under the agreement shall be clearly stated in the service agreement form, unless the agreement provides for the payment of a preestablished flat amount, in which case the service agreement form shall clearly identify such amount. 3. Motor vehicle service agreements providing for the payment of vehicle protection expenses shall either: a. Reimburse a service agreement holder for the following expenses, at a minimum: deductibles applicable to comprehensive coverage under the service agreement holder’s motor vehicle insurance policy; temporary vehicle rental expenses; sales taxes and registration fees on a replacement vehicle that is at least the same year, make, and model of the stolen motor vehicle; and the difference between the benefits paid to the service agreement holder for the stolen vehicle under the service agreement holder’s comprehensive coverage and the actual cost of a replacement vehicle that is at least the same year, make, and model of the stolen motor vehicle; or b. Pay a preestablished flat amount to the service agreement holder. Payments shall not duplicate any benefits or expenses paid to the service agreement holder by the insurer providing comprehensive coverage under a motor vehicle insurance policy covering the stolen motor vehicle; however, the payment of vehicle protection expenses at a preestablished flat amount of $5,000 or less does not duplicate any benefits or expenses payable under any comprehensive motor vehicle insurance policy; (c) For repair or replacement of tires or wheels on a motor vehicle damaged as a result of encountering a road hazard; (d) For removal of dents, dings, or creases on a motor vehicle that may be repaired using the process of paintless dent removal without affecting the existing paint finish and without using replacement body panels, or sanding, bonding, or painting; or (e) For replacement of a motor vehicle key or key fob if the key or key fob is inoperable, lost, or stolen. (9) “Motor vehicle service agreement company” or “service agreement company” means any corporation, sole proprietorship, or partnership (other than an authorized insurer) issuing motor vehicle service agreements. (10) “Net assets” means the amount by which the total statutory assets exceed total liability, except that assets pledged to secure debts not reflected on the books of the service agreement company shall not be included in net assets. (11) “Person” shall have the same meaning as defined in s. 624.04. (12) “Premium” means the total amount paid by the agreement holder. No “assessment” or any “membership fee,” “policy fee,” “survey fee,” “inspection fee,” “service fee,” “finance fee,” or similar fee shall be charged by the service agreement company. (13) “Rate” means the unit charge by which the measure of exposure in a service agreement is multiplied to determine the premium. (14) “Road hazard” means a danger that is encountered while operating a motor vehicle. The term includes, but is not limited to, potholes, rocks, debris, metal parts, glass, plastic, curbs, and composite scraps. The term does not include any damage caused by collision with another vehicle, vandalism, or other causes usually covered under the comprehensive or collision coverages provided by an automobile physical damage policy. (15) “Salesperson” means any dealership, corporation, partnership, or sole proprietorship employed or otherwise retained by an insurer or motor vehicle service agreement company for the purpose of selling or issuing motor vehicle service agreements or for the purpose of soliciting or retaining other salespersons. (16) “Unearned premium” means that portion of the gross written premium which has not been earned on a straight pro rata basis. (17) “Unearned premium reserve” means unencumbered assets equal to 50 percent of the unearned premium. (18) “Unearned gross written premium” means that portion of the gross written premium which has not been amortized or earned on a pro rata basis. History. — s. 1, ch. 59-110; ss. 13, 35, ch. 69-106; s. 268, ch. 71-377; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 1, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 1, 32, 33, ch. 82-234; s. 5, ch. 85-321; s. 1, ch. 88-46; s. 1, ch. 89-125; ss. 9, 68, ch. 91-106; ss. 1, 20, ch. 93-195; s. 1, ch. 94-280; s. 1, ch. 97-74; s. 452, ch. 97-102; s. 1, ch. 2001-281; s. 1, ch. 2002-86; s. 1, ch. 2003-150; s. 1415, ch. 2003-261; s. 1, ch. 2005-258; s. 2, ch. 2008-178; s. 10, ch. 2010-175; s. 1, ch. 2012-77; s. 1, ch. 2016-60. 634.021 Powers of department, commission, and office; rules. The office shall administer this act and the commission may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of this act related to motor vehicle service agreement companies and motor vehicle service agreements. The department shall administer this act and may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of this act related to sales representatives. History. — s. 2, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 2, 32, 33, ch. 82-234; s. 68, ch. 91-106; s. 20, ch. 93-195; s. 209, ch. 98-200; s. 1416, ch. 2003-261; s. 95, ch. 2006-1. 634.023 Part exclusive; applicability of other laws. (1) Except as provided in this part, motor vehicle service agreement companies shall be governed by the provisions of this part and shall be exempt from all other provisions of the Florida Insurance Code. (2) The provisions of chapter 85-321, Laws of Florida, which amended provisions of this part shall be construed as clarifying legislative intent as to the status of persons regulated by the part as insurers. History. — ss. 6, 51, ch. 85-321; s. 18, ch. 88-206; s. 68, ch. 91-106; s. 20, ch. 93-195. 634.031 License required. (1) A person may not transact, administer, or market, attempt to transact, administer, or market, or in any manner hold itself out as transacting, administering, or marketing the service agreement business, on behalf of herself or himself or itself, in this state or from this state unless it is authorized to do so under a subsisting license issued to it by the office. The company shall pay to the office an annual nonrefundable license fee for the license. (2) No person shall, from offices or by personnel or facilities in this state, solicit applications or otherwise transact service agreement sales in another state or country unless it holds a subsisting license issued to it by the office authorizing it to transact the same kind or kinds of service agreement business in this state. (3) No person shall transact, administer, or market service agreements unless it holds a subsisting license issued by the office authorizing it to transact the same kind or kinds of service agreement business in this state. (4) The office may, pursuant to s. 120.569, in its discretion and without advance notice or hearing issue an immediate final order to cease and desist to any person or entity which violates this section. The Legislature finds that a violation of this section constitutes an imminent and immediate threat to the public health, safety, and welfare of the residents of this state. (5) Any person that is an affiliate of a domestic insurer as defined in chapter 624 is exempt from application of this part if the person does not issue, or market or cause to be marketed, motor vehicle service agreements to residents of this state and does not administer motor vehicle service agreements that were originally issued to residents of this state. The domestic insurer or its wholly owned Florida licensed insurer must be the direct obligor of all motor vehicle service agreements issued by such affiliate or must issue a contractual liability insurance policy to such affiliate that meets the conditions described in s. 634.041(8)(b). If the Office of Insurance Regulation determines, after notice and opportunity for a hearing, that a person’s intentional business practices do not comply with any of the exemption requirements of this subsection, the person shall be subject to this part. (6) Any person that is an affiliate of a licensed motor vehicle service agreement company which is domiciled in this state and which uses contractual liability insurance to qualify with the requirements of s. 634.041 is exempt from application of this part if the person does not issue, market, or cause to be marketed motor vehicle service agreements to residents of this state and does not administer motor vehicle service agreements that were originally issued to residents of this state. Any affiliated person operating from this state under this subsection must use a licensed motor vehicle service agreement company to administer all service agreements issued by such person in other states. If the office determines, after notice and opportunity for hearing in accordance with s. 120.569, that a person’s intentional business practices do not comply with any part of the exemption requirements of this subsection, the person shall be subject to this part. The motor vehicle service agreement company shall be liable for all acts of and responsible for all violations of this part by an affiliated person operating from this state. (7) Any person who violates this section commits, in addition to any other violation, a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083. History. — s. 3, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 2, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 3, 32, 33, ch. 82-234; ss. 10, 68, ch. 91-106; ss. 2, 20, ch. 93-195; s. 1, ch. 95-245; s. 277, ch. 96-410; s. 1746, ch. 97-102; s. 1, ch. 2003-168; s. 1417, ch. 2003-261; s. 1, ch. 2006-272; s. 11, ch. 2010-175. 634.041 Qualifications for license. To qualify for and hold a license to issue service agreements in this state, a service agreement company must be in compliance with this part, with applicable rules of the commission, with related sections of the Florida Insurance Code, and with its charter powers and must comply with the following: (1) Any service agreement company applying for a license must be a solvent corporation formed under the laws of this state or of another state or district of the United States and must meet minimum requirements under this section. (2) The service agreement company must furnish the office with evidence satisfactory to the office that the management of the company is competent and trustworthy and can successfully and lawfully manage its affairs. (3) The service agreement company must make the deposit required under s. 634.052. (4) A service agreement company may not be licensed to transact service agreement business in this state unless it maintains the required reserves and the required ratio of liquid assets to the required reserves. (5) A service agreement company may not be licensed to transact service agreement business in this state if, during the 3 years immediately preceding its application for a license, it has violated any requirement of this part or a rule adopted thereunder. (6) In order to obtain or maintain a license, a service agreement company must have and maintain minimum net assets of $500,000. However, a service agreement company that maintains a gross written premium of less than $750,000 at all times, that has been licensed in Florida for more than 5 years, and that has never had an administrative complaint filed by the office against its operations under this part may reach this net asset requirement in equal increments over a 5-year period beginning on October 1, 1991. (7) All assets used to maintain the minimum net asset requirement must be maintained in the United States. (8)(a) A service agreement company must establish and maintain an unearned premium reserve in accordance with the following: 1. It must consist of unencumbered assets equal to a minimum of 50 percent of the unearned gross written premium on each service agreement and must amortize this reserve pro rata over the duration of the service agreement. Such assets must be held in the form of cash or invested in securities for investment under ss. 625.301-625.340. 2. In addition to the net asset requirements set forth in subsection (6), a company utilizing the 50-percent reserve must not allow its ratio of gross written premium in force to net assets to exceed 10 to 1. For companies that have utilized both contractual liability insurance and the 50-percent reserve, this ratio must be calculated based only on that portion of gross written premium in force which is covered by the 50-percent reserve. 3. A company that uses an unearned premium reserve must deposit with the department securities of the type eligible for deposit by insurers under s. 625.52 equal to 15 percent of the unearned premium reserve. This reserve deposit may be included as an asset for calculating the requirement of subparagraph 1. A request for release of the reserve deposit may be made quarterly only after the office has approved the company’s current quarterly or annual financial statement and a statement sworn to by two officers of the company, verifying that the release will not reduce the reserve deposit to less than 15 percent of the unearned premium reserve. (b) A service agreement company does not have to establish and maintain an unearned premium reserve if it secures and maintains contractual liability insurance in accordance with the following: 1. Coverage of 100 percent of the claim exposure is obtained from an insurer or insurers approved by the office, which hold a certificate of authority under s. 624.401 to do business within this state, or secured through risk retention groups, which are authorized to do business within this state under s. 627.943 or s. 627.944. Such insurers or risk retention groups must maintain a surplus as regards policyholders of at least $15 million. 2. If the service agreement company does not meet its contractual obligations, the contractual liability insurance policy binds its issuer to pay or cause to be paid to the service agreement holder all legitimate claims and cancellation refunds for all service agreements issued by the service agreement company while the policy was in effect. This requirement also applies to those service agreements for which no premium has been remitted to the insurer. 3. If the issuer of the contractual liability policy is fulfilling the service agreements covered by the contractual liability policy and the service agreement holder cancels the service agreement, the issuer must make a full refund of unearned premium to the consumer, subject to the cancellation fee provisions of s. 634.121(3). The sales representative and agent must refund to the contractual liability policy issuer their unearned pro rata commission. 4. The policy may not be canceled, terminated, or nonrenewed by the insurer or the service agreement company unless a 90-day written notice thereof has been given to the office by the insurer before the date of the cancellation, termination, or nonrenewal. 5. The service agreement company must provide the office with the claims statistics. 6. A policy issued in compliance with this paragraph may either pay 100 percent of claims as they are incurred, or pay 100 percent of claims due in the event of the failure of the service agreement company to pay such claims when due. All funds or premiums remitted to an insurer by a motor vehicle service agreement company under this part shall remain in the care, custody, and control of the insurer and shall be counted as an asset of the insurer; provided, however, this requirement does not apply when the insurer and the motor vehicle service agreement company are affiliated companies and members of an insurance holding company system. If the motor vehicle service agreement company chooses to comply with this paragraph but also maintains a reserve to pay claims, such reserve shall only be considered an asset of the covered motor vehicle service agreement company and may not be simultaneously counted as an asset of any other entity. (9)(a) In meeting the requirements of this part, except as provided in paragraph (b), a service agreement company may not utilize both the 50-percent reserve and contractual liability insurance simultaneously. However, a company may have contractual liability coverage on service agreements previously sold and sell new service agreements covered by the 50-percent reserve, and the converse of this is also allowed. A service agreement company must be able to distinguish how each individual service agreement is covered. (b) A service agreement company that maintains net assets of at least $10 million and that annually files with the office a financial statement audited in accordance with generally accepted accounting principles may use either the 50-percent reserve or the contractual liability coverage for specific blocks of new service agreements. For purposes of this subsection, the term “specific blocks of new service agreements” means the service agreements sold by a single designated licensed salesperson. A service agreement company must be able to distinguish how each individual service agreement is covered. A service agreement company using the 50-percent premium reserve, as permitted under this subsection, must obtain contractual liability insurance coverage for any future deficits in the premium reserve account directly attributable to the specific blocks of new agreements written. Such a contractual liability insurance policy must be filed with the office. Such policies or endorsements to an existing policy must contain language evidencing that the contractual liability insurance policy shall pay claims arising out of such specific blocks of agreements if the service agreement company cannot or will not pay such claims. All contractual liability insurance policies issued to a service agreement company under this part must cover all agreements issued during the term of the policy and, for purposes of this section, the company must obtain and file with the office endorsements to that policy identifying the specific blocks of agreements not covered thereunder. (10) In addition to information called for and furnished with its annual statement, a service agreement company must furnish to the office, as soon as reasonably possible, any information as to its transactions or affairs that the office requests in writing. All information furnished pursuant to the request of the office must be verified by the oath of two executive officers of the service agreement company. (11)(a) A service agreement company offering service agreements providing vehicle protection expenses may meet the requirements for this part only by maintaining contractual liability insurance covering 100 percent of its vehicle protection claim exposure in accordance with paragraph (8)(b). Service agreements providing vehicle protection expenses may be sold only to a service agreement holder that has in-force comprehensive motor vehicle insurance coverage for the vehicle to be covered by the service agreement. (b) Notwithstanding any other requirement of this part, a service agreement company maintaining an unearned premium reserve on all service agreements in accordance with paragraph (8)(a) may offer service agreements providing vehicle protection expenses if it maintains contractual liability insurance only on all service agreements providing vehicle protection expenses and continues to maintain the 50-percent reserve for all service agreements not providing vehicle protection expenses. A service agreement company maintaining contractual liability insurance for all service agreements providing vehicle protection expenses and the 50-percent reserve for all other service agreements must, in the service agreement register as required under s. 634.136(2), distinguish between insured service agreements providing vehicle protection expenses and service agreements not providing vehicle protection expenses. (12) A motor vehicle manufacturer complying with the provisions of this part must be an entity formed under the laws of this state or of another state or district of the United States and need comply only with subsections (2) and (10). A motor vehicle manufacturer need not submit fingerprints, background information, or biographical statements for any individual except those serving as officers or directors of the applicant entity. A motor vehicle manufacturer need not comply with s. 634.081(5). Motor vehicle manufacturers are subject to all other applicable provisions of this part. History. — s. 4, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 3, ch. 78-231; ss. 2, 3, ch. 80-149; ss. 2, 3, ch. 81-318; ss. 4, 32, 33, ch. 82-234; s. 131, ch. 83-216; s. 2, ch. 89-125; s. 1, ch. 90-153; ss. 11, 68, ch. 91-106; ss. 3, 20, ch. 93-195; s. 1, ch. 99-293; s. 2, ch. 2002-86; s. 2, ch. 2003-150; s. 1418, ch. 2003-261; s. 2, ch. 2005-258; s. 3, ch. 2008-178; s. 12, ch. 2010-175; s. 1, ch. 2017-99; s. 16, ch. 2023-130; s. 11, ch. 2023-217; s. 29, ch. 2024-140. 634.042 Prohibited investments and loans. A motor vehicle service agreement company shall not directly or indirectly invest in or lend its funds upon the security of any note or other evidence of indebtedness of any director, officer, or controlling stockholder of the motor vehicle service agreement company. This prohibition applies only to investments and loans initially reported on motor vehicle service agreement financial statements after the third quarterly statement for 2006. History. — s. 2, ch. 2006-272. 634.044 Assets and liabilities. (1) ASSETS. — In any determination of the financial condition of a service agreement company, there shall be allowed as assets only those assets that are owned by the service agreement company and which assets consist of: (a) Cash in the possession of the service agreement company, or in transit under its control, including the true balance of any deposit in a solvent bank, savings and loan association, or trust company which is domiciled in the United States. (b) Investments, securities, properties, and loans acquired or held in accordance with this part, and in connection therewith the following items: 1. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest. 2. Declared and unpaid dividends on stock and shares, unless the amount of the dividends has otherwise been allowed as an asset. 3. Interest due or accrued upon a collateral loan which is not in default in an amount not to exceed 1 year’s interest thereon. 4. Interest due or accrued on deposits or certificates of deposit in solvent banks, savings and loan associations, and trust companies domiciled in the United States, and interest due or accrued on other assets, if such interest is in the judgment of the office a collectible asset. 5. Interest due or accrued on current mortgage loans, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 90 days be allowed as an asset. 6. Rent due or accrued on real property if such rent is not in arrears for more than 3 months. However, in no event shall rent accrued for a period in excess of 90 days be allowed as an asset. 7. The unaccrued portion of taxes paid prior to the due date on real property. (c) Furniture, fixtures, furnishings, vehicles, and equipment, if the original cost of each item is at least $200, which cost shall be amortized in full over a period not to exceed 5 calendar years, unless otherwise approved by the office. (d) Part inventories maintained for the purpose of servicing products warranted. Part inventories must be listed at cost. Service agreement companies are required to maintain records to support valuation of part inventories. (e) The liquidation value of prepaid expenses. (f) Other assets or receivables, not inconsistent with the provisions of this section, deemed by the office to be available for the payment of losses and claims, at values to be determined by the office. The office, upon determining that a service agreement company’s asset has not been evaluated according to applicable law or that it does not qualify as an asset, shall require the service agreement company to properly reevaluate the asset or replace the asset with an asset suitable to the office within 30 days of written notification by the office of this determination, if the removal of the asset from the organization’s assets would impair the company’s solvency. (2) ASSETS NOT ALLOWED. — In addition to assets impliedly excluded by the provisions of subsection (1), the following assets expressly shall not be allowed as assets in any determination of the financial condition of a service agreement company: (a) Goodwill, agreement holder lists, patents, trade names, agreements not to compete, and other like intangible assets. (b) Any note or account receivable from or advances to officers, directors, or controlling stockholders, whether secured or not, and advances to employees, agents, or other persons on personal security only. (c) Stock of the service agreement company owned by it directly or owned by it through any entity in which the organization owns or controls, directly or indirectly, more than 25 percent of the ownership interest. (d) Leasehold improvements, stationery, and literature, except that leasehold improvements made prior to October 1, 1991, shall be allowed as an asset and shall be amortized over the shortest of the following periods: 1. The life of the lease. 2. The useful life of the improvements. 3. The 3-year period following October 1, 1991. (e) Furniture, fixtures, furnishings, vehicles, and equipment, other than those items authorized under paragraph (1)(c). (f) Notes or other evidences of indebtedness which are secured by mortgages or deeds of trust which are in default and beyond the express period specified in the instrument for curing the default. (g) Bonds in default for more than 60 days. (h) Deferred costs other than the liquidation value of prepaid expenses except for those companies that reserve 100 percent of gross written premium. (i) Any note, account receivable, advance, or other evidence of indebtedness, or investment in: 1. The parent of the service agreement company; 2. Any entity directly or indirectly controlled by the service agreement company parent; 3. An affiliate of the parent or the service agreement company; however, receivables from the parent or affiliated companies shall be considered an admitted asset of the company when the office is satisfied that the repayment of receivables, loans, and advances from the parent or the affiliated company are guaranteed by an organization in accordance with s. 634.045; or 4. Officers, directors, shareholders, employees, or salespersons of the service agreement company; however, premium receivables under 45 days old may be considered an admitted asset. The office may, however, allow all or a portion of such asset, at values to be determined by the office, if deemed by the office to be available for the payment of losses and claims. (3) LIABILITIES. — In any determination of the financial condition of a service agreement company, liabilities to be charged against its assets shall include, but not be limited to: (a) The amount, in conformity with generally accepted accounting principles, necessary to pay all of its unpaid losses and claims incurred for or on behalf of an agreement holder, on or prior to the end of the reporting period, whether reported or unreported. (b) Taxes, expenses, and other obligations due or accrued at the date of the statement. (c) Reserve for unearned premiums. The office, upon determining that the service agreement company has failed to report liabilities that should have been reported, shall require a correct report which reflects the proper liabilities to be submitted by the service agreement company to the office within 10 working days of receipt of written notification. History. — ss. 12, 68, ch. 91-106; s. 20, ch. 93-195; s. 453, ch. 97-102; s. 2, ch. 2001-281; s. 1419, ch. 2003-261. 634.045 Guarantee agreements. In order to include receivables from affiliated companies as assets under s. 634.041, the motor vehicle service agreement company shall provide a written guarantee to assure repayment of all receivables, loans, and advances from affiliated companies, provided that the written guarantee is made by a guaranteeing organization which: (1) Has been in continuous operation for 10 years or more and has net assets of the greater of $5 million or 2 times the minimum net asset requirements of the motor vehicle service agreement company. In any determination of the financial condition of the guaranteeing organization, the definitions of assets and liabilities, set forth in this part shall apply, except that investments in or loans to any organizations guaranteed by the guaranteeing organization shall be excluded from net assets. If the guaranteeing organization is sponsoring more than one organization, the net asset requirement shall be increased by a multiple equal to the number of such organizations. (2) Submits a guarantee that is approved by the office as meeting the requirements of this part, provided that the written guarantee contains a provision which requires that the guarantee be irrevocable unless the guaranteeing organization can demonstrate to the office that the cancellation of the guarantee will not result in the net assets of the motor vehicle service agreement company falling below its minimum net asset requirement and the office approves cancellation of the guarantee. (3) Initially submits its audited financial statements, certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles, covering its two most current annual accounting periods. (4) Submits annually, within 3 months after the end of its fiscal year, an audited financial statement certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles. The office may, as it deems necessary, require quarterly financial statements from the guaranteeing organization. (5) The filings made by a guarantee organization pursuant to this section are confidential and exempt from the provisions of s. 119.07(1). (6) Nothing in this section shall be construed to prevent the use of such filings in judicial or administrative proceedings when ordered to be produced by appropriate subpoena or by order of the court or an administrative law judge. History. — s. 2, ch. 90-153; s. 68, ch. 91-106; s. 19, ch. 91-201; s. 115, ch. 92-318; s. 1, ch. 93-117; s. 20, ch. 93-195; s. 393, ch. 96-406; s. 278, ch. 96-410; s. 1420, ch. 2003-261. 634.052 Required deposit. (1) To assure the faithful performance of its obligations to its members or subscribers, each motor vehicle service agreement company shall, prior to issuance of its license by the office, deposit with the department securities of the type eligible for deposit by insurers under s. 625.52 and having at all times a market value of not less than $200,000; however, service agreement companies maintaining an unearned gross written premium of less than $750,000 shall have on deposit with the department $100,000. After 1 year from the date of initial licensure, a service agreement company may file a request for the release of a portion of the deposit and thereafter requests may be made quarterly. A request may be granted only after the office has received and approved the company’s current quarterly or annual financial statement. However, at no time shall the deposit be less than $100,000. (2) In addition to the deposits otherwise required pursuant to this section, the office may, after notice and hearing, require any company for good cause shown to deposit and maintain deposited in trust for the protection of the contract holders and creditors of the company, for such time as the office deems necessary, securities eligible for such deposit under s. 625.52 having a value of not less than the amount which the office determines is necessary, which amount shall be neither less than $100,000, nor more than $500,000, depending on the obligation of the company in this state. (3) The state shall be responsible for the safekeeping of all securities deposited with the department under this act. Such securities shall not, on account of being in this state, be subject to taxation, but shall be held exclusively and solely to guarantee the faithful performance by the company of its obligations to its members or subscribers. (4) The depositing company shall, during its solvency, have the right to exchange or substitute other securities of like quality and value for securities so on deposit, to receive the interest and other income accruing on such securities, and to inspect the deposit at all reasonable times. (5) Such deposit shall be maintained unimpaired as long as the company continues in business or from offices in this state. Whenever the company ceases to do business in or from offices in this state and furnishes to the office proof satisfactory to it that it has discharged or otherwise adequately provided for all its obligations to its members or subscribers in this state, the office and department shall release the deposited securities to the parties entitled thereto, on presentation of the receipts of the department for such securities. History. — s. 5, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 4, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 5, 32, 33, ch. 82-234; s. 132, ch. 83-216; ss. 13, 68, ch. 91-106; s. 184, ch. 91-108; s. 20, ch. 93-195; s. 1421, ch. 2003-261. 634.053 Levy upon deposit limited. A judgment creditor or other claimant of a motor vehicle service agreement company does not have the right to levy upon any of the assets or securities held in this state as a deposit under s. 634.052. However, to pay any unpaid obligation to this state, the office may levy upon any of the assets of a motor vehicle service agreement company found to be insolvent or found to be bankrupt by any court. History. — ss. 36, 51, ch. 85-321; s. 68, ch. 91-106; ss. 4, 20, ch. 93-195; s. 1422, ch. 2003-261. 634.061 Application for and issuance of license. (1) A sworn application for a license as a motor vehicle service agreement company shall be made to and filed with the office on forms as prescribed by the commission and furnished by the office. (2) In addition to information relative to its qualifications as called for under s. 634.041, the application shall show: (a) The location of the applicant’s home office. (b) The name and residence address of each director, officer, and 10-percent or greater stockholder of the applicant. (c) Other pertinent information as required by the commission or office. (3) The application when filed shall be accompanied by: (a) If a corporation or partnership, a copy of the applicant’s articles of incorporation or partnership document, if any, certified by the public official having custody of the original and a copy of its bylaws certified by its secretary. (b) A copy of the most recent financial statement of the applicant, verified under the oath of at least two of its principal officers. (c) The license fee as required under s. 634.071. (4) Upon completion of the application for license, the office shall examine the same and make such further investigation of the applicant as it deems advisable. If it finds that the applicant is qualified therefor under this part, it shall issue to the applicant a license as a motor vehicle service agreement company. If the office does not so find, it shall refuse to issue the license. History. — s. 6, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 6, 32, 33, ch. 82-234; ss. 14, 68, ch. 91-106; ss. 5, 20, ch. 93-195; s. 1423, ch. 2003-261; s. 152, ch. 2020-2. 634.071 License continuance. A license issued under this part shall continue in force as long as the motor vehicle service agreement company is entitled thereto under this part and until suspended, revoked, or terminated. Annually, in conjunction with the March 1 filing of the annual report, each motor vehicle service agreement company shall file a $100 license fee. History. — s. 7, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 7, 32, 33, ch. 82-234; ss. 15, 68, ch. 91-106; s. 20, ch. 93-195. 634.081 Suspension or revocation of license; grounds. (1) The office may, in its discretion, suspend or revoke the license of any motor vehicle service agreement company if it finds that the company has violated any lawful order of the office or any provision of this part. (2) The office shall suspend or revoke the license of a motor vehicle service agreement company if it finds that the company: (a) Is impaired or insolvent as defined in s. 631.011 or in unsound condition, or in a condition, or using methods and practices in the conduct of its business, as to render its further transaction of service agreements in this state hazardous or injurious to its service agreement holders or to the public. (b) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers have refused to give information with respect to its affairs or to perform any other legal obligation as to the examination, when required by the office. (c) Has failed to pay any fees, taxes, or other assessments within 90 days after their due date. (d) Has failed to pay any final judgment rendered against it in this state within 90 days after the judgment became final. (e) With a frequency as to indicate its general business practice in this state, has without just cause refused to pay proper claims arising under its service agreements, or without just cause compels service agreement holders to accept less than the amount due them or to employ attorneys or to bring suit against the service agreement company to secure full payment or settlement of proper claims. (f) Is affiliated with, or under the same general management or interlocking directorate or ownership of, another motor vehicle service agreement company or person who transacts service agreements in or from this state without a subsisting license. (g) Fails to affirm or deny coverage of a claim upon written request of the agreement holder within a reasonable time after notification of the claim. (h) Fails to promptly provide a reasonable explanation in writing if requested by the agreement holder of the basis in the service agreement in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement. (3) The office may, in its discretion, suspend the license of any motor vehicle service agreement company as to which a proceeding for receivership, conservatorship, or rehabilitation or other delinquency proceeding has been commenced against it or its affiliate in any state. (4) A violation of this act by an insurer is grounds for suspension or revocation of the insurer’s certificate of authority in this state. (5) The office shall suspend or revoke the license of a company if it finds that the ratio of gross written premiums written to net assets exceeds 10 to 1 unless the company has in excess of $750,000 in net assets and is utilizing contractual liability insurance which cedes 100 percent of the service agreement company’s claims liabilities to the contractual liability insurers or is utilizing contractual liability insurance which reimburses the service agreement company for 100 percent of its paid claims. However, if a service agreement company has been licensed by the office in excess of 10 years, is in compliance with all applicable provisions of this part, and has net assets at all times in excess of $3 million that comply with the provisions of part II of chapter 625, such company may not exceed a ratio of gross written premiums written to net assets of 15 to 1. History. — s. 8, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; s. 7, ch. 78-231; ss. 2, 3, ch. 81-318; ss. 8, 32, 33, ch. 82-234; s. 133, ch. 83-216; s. 3, ch. 89-125; ss. 16, 68, ch. 91-106; ss. 6, 20, ch. 93-195; s. 2, ch. 95-245; s. 1424, ch. 2003-261; s. 30, ch. 2024-140. 634.095 Prohibited acts. Any service agreement company or salesperson that engages in one or more of the following acts is, in addition to any applicable denial, suspension, revocation, or refusal to renew or continue any appointment or license, guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083: (1) No salesperson or agent who participates in or influences the processing, administration, or adjustment of claims shall enter into any agreement or understanding in which the effect is to make the amount of any salesperson’s or agent’s commission contingent upon savings effected in the adjustment, settlement, and payment of losses covered by the service agreement company’s or insurer’s service agreement. Any agreement or understanding now existing is declared unlawful and shall be terminated immediately. (2) Offering or attempting to offer the service agreement holder a return of all or a portion of the premium paid if the service agreement holder does not file any claims or files a limited number of claims or files claims the dollar amount of which does not exceed a set amount or percentage. (3) Issuing or causing to be issued any advertisement that: (a) Does not fully disclose in a written advertisement, in at least 12-point, boldfaced type, the name, address, and Florida Company Code of the service agreement company. (b) Does not fully disclose in a radio or television advertisement the full legal name of the licensed salesperson or the service agreement company. (c) Does not fully identify the soliciting licensed salesperson’s full legal name and license number when the salesperson begins, and the soliciting salesperson’s telephone number when the salesperson concludes, each outbound telephone solicitation. For the purposes of this paragraph, the actual telephone number of the salesperson may be the number on file with the department or the number at which the salesperson may be contacted. (d) In any respect is in violation of or does not comply with this part, applicable provisions of the Florida Insurance Code, or applicable rule of the commission. (e) Is ambiguous, misleading, or deceptive. (f) Is false, deceptive, or misleading with respect to: 1. The service agreement company’s affiliation with a motor vehicle manufacturer; 2. The service agreement company’s possession of information regarding a motor vehicle owner’s current motor vehicle manufacturer’s original equipment warranty; 3. The expiration of a motor vehicle owner’s current motor vehicle manufacturer’s original equipment warranty; or 4. Any requirement that the motor vehicle owner register for a new motor vehicle service agreement with the company in order to maintain coverage under the current motor vehicle service agreement or manufacturer’s original equipment warranty. (4) Denying claims for lack of service or maintenance on component parts that do not require servicing or routine maintenance or are unrelated to servicing. (5) Requiring that the purchaser or insured agree to purchase noninsurance services, commodities, or other insurance including automobile services as specified in s. 624.124 or exempt motor vehicle service agreements specified in s. 624.125. (6) The practice, known as sliding, by any person whereby the person: (a) Represents to the applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of a service agreement, when in fact the specific ancillary coverage or product is not required; (b) Represents to the applicant that a specific ancillary coverage or product is included in the service agreement applied for without an additional charge, when in fact an additional charge is applied; or (c) Charges an applicant for a specific ancillary coverage or product, over and above the cost of the service coverage applied for, without the informed consent of the applicant. (7) Remitting premiums received on motor vehicle service agreements sold to any person other than the licensed service agreement company that is obligated to perform under such agreement, if the agreement between such company and the salesperson requires that premiums be submitted directly to the service agreement company. History. — ss. 17, 68, ch. 91-106; s. 20, ch. 93-195; s. 454, ch. 97-102; s. 1425, ch. 2003-261; s. 13, ch. 2010-175; s. 5, ch. 2022-169. 634.101 Order, notice of suspension or revocation of license; effect; publication. (1) Suspension or revocation of the license of a company shall be by the order of the office mailed to the company by registered or certified mail. The office shall promptly also give notice of such suspension or revocation to the salespersons of the company in this state of record with the department. The company shall not solicit or write any new service agreements in this state during the period of any such suspension or revocation, nor after such revocation renew any business previously written. (2) In its discretion, the office may cause notice of any such revocation to be published in one or more newspapers of general circulation published in this state. (3) When the license is surrendered or revoked, the service agreement company shall proceed immediately, following the effective date of the surrender or order of revocation, to conclude its affairs transacted under this part. The service agreement company shall not solicit, negotiate, advertise, or effectuate new or renewal of service agreements. The office retains jurisdiction over the service agreement company as it may find to be in the best interest of the insured until all contracts have been fulfilled, canceled, or expired. History. — s. 10, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 9, 32, 33, ch. 82-234; ss. 18, 68, ch. 91-106; s. 20, ch. 93-195; s. 455, ch. 97-102; s. 1426, ch. 2003-261. 634.111 Duration of suspension; obligations of company during suspension period; reinstatement. (1) The suspension of the license of a company shall be for such period not to exceed 1 year as is fixed by the office in the order of suspension, unless the office shortens or rescinds such suspension or the order upon which the suspension is based is modified, rescinded, or reversed. (2) During the period of suspension, the company shall file its annual statement and quarterly reports, pay fees, pay licenses, and pay taxes as required under this chapter as if the license had continued in full force. (3) Upon expiration of the suspension period, if within such period the license has not otherwise terminated, the license of the company shall be reinstated automatically unless the office finds that the causes of the suspension have not been removed or that the company is otherwise not in compliance with the requirements of this chapter. The office shall give the company notice of any such finding not less than 30 days in advance of the expiration of the suspension period. If not so automatically reinstated, the license shall be deemed to have expired as of the end of the suspension period or upon failure of the company to continue the license during the suspension period, whichever event first occurs. (4) Upon reinstatement of the license of a company or reinstatement of the certificate of authority of an insurer following suspension, the authority of its salespersons in this state to represent the company or insurer shall likewise be reinstated. The office shall promptly notify the company or insurer and its salespersons of record in this state of such reinstatement. History. — s. 11, ch. 59-110; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 10, 32, 33, ch. 82-234; s. 134, ch. 83-216; s. 68, ch. 91-106; ss. 7, 20, ch. 93-195; s. 456, ch. 97-102; s. 1427, ch. 2003-261. 634.121 Forms, required procedures, provisions; delivery and definitions. (1) Before the sale of any service agreement, written notice must be given to the prospective purchaser by the service agreement company or its agent or salesperson that purchase of the service agreement is not required in order to purchase or obtain financing for a motor vehicle. (2) All motor vehicle service agreements are assignable in a consumer transaction and must contain a statement in conspicuous, boldfaced type, informing the purchaser of the service agreement of her or his right to assign it to a subsequent retail purchaser of the motor vehicle covered by the service agreement and all conditions on such right of transfer. The assignment must occur within a period of time specified in the agreement, which period may not expire earlier than 15 days after the date of the sale or transfer of the motor vehicle. The service agreement company may charge an assignment fee not to exceed $40. (3)(a) Each service agreement must contain a cancellation provision. Any service agreement is cancelable by the purchaser within 60 days after purchase. The refund must be 100 percent of the gross premium paid, less any claims paid on the agreement. A reasonable administrative fee may be charged not to exceed 5 percent of the gross premium paid by the agreement holder. (b) After the service agreement has been in effect for 60 days, it may not be canceled by the insurer or service agreement company unless: 1. There has been a material misrepresentation or fraud at the time of sale of the service agreement; 2. The agreement holder has failed to maintain the motor vehicle as prescribed by the manufacturer; 3. The odometer has been tampered with or disabled and the agreement holder has failed to repair the odometer; or 4. For nonpayment of premium by the agreement holder, in which case the service agreement company shall provide the agreement holder notice of cancellation by certified mail. If the service agreement is canceled by the insurer or service agreement company, the return of premium must not be less than 100 percent of the paid unearned pro rata premium, less any claims paid on the agreement. If, after 60 days, the service agreement is canceled by the service agreement holder, lender, finance company, or creditor, the insurer or service agreement company shall return directly to the agreement holder not less than 90 percent of the unearned pro rata premium, less any claims paid on the agreement. Cancellations initiated by lenders, creditors, or finance companies are only valid if authorized by the terms of the service agreement. The service agreement company remains responsible for full refunds to the consumer on canceled service agreements. However, the salesperson and agent are responsible for the refund of the unearned pro rata commission. A service agreement company may effectuate refunds through the issuing salesperson or agent in accordance with paragraphs (c) and (d). (c) If the service agreement company effectuates refunds through the issuing salesperson or agent, the service agreement company must send the unearned pro rata premium refund due, less any unearned pro rata commission, to the salesperson or agent effectuating the refund. Upon receipt, the salesperson or agent must refund the unearned pro rata premium, including any unearned pro rata commission, and the sales tax refund owed to the service agreement holder. (d) The salesperson, agent, or service agreement company shall maintain a copy of one of the following documents, as applicable, demonstrating that the refund owed pursuant to paragraph (c) has been refunded: 1. A copy of the front and back of the canceled check for the applicable refund amount owed to the service agreement holder; 2. A copy of the front of the check for the applicable refund amount owed to the service agreement holder and a copy of the statement from the bank account on which the check was drawn showing that the check was cashed; 3. A copy of the front of the check issued by the service agreement company to the salesperson or agent in the amount of the service agreement company’s portion of the refund owed to the service agreement holder and a copy of the statement from the bank account on which the check was drawn showing that the check was cashed; 4. A copy of a completed buyer’s order demonstrating that the applicable refund amount owed to the service agreement holder was credited toward the purchase or lease of another vehicle; 5. Any document received from or sent to a lender, finance company, or creditor demonstrating that a loan or amount financed by the agreement holder was decreased by the amount of the applicable refund amount owed to the service agreement holder; or 6. Any other evidence approved by the office in a written communication to a person licensed pursuant to this part demonstrating that the applicable refund amount due to the service agreement holder was properly made. A salesperson or agent effectuating a refund shall maintain a copy of the documentation required by this paragraph and shall provide a copy to the service agreement company within 45 days after a request is made by the department or the office to either the service agreement company or the salesperson. (e) If the office finds that a salesperson or agent exhibits a pattern or practice of failing to properly effectuate refunds owed or to maintain and remit to the service agreement company the documentation required by paragraph (d), the office shall notify the department of its finding. (4) If the service agreement is canceled, pursuant to an order of liquidation, the salesperson or agent is responsible for refunding, and must refund, to the receiver the unearned pro rata commission. (5) If a service agreement company violates any lawful order of the office or fails to meet its contractual obligations under this part, upon notice from the office, the sales representative or agent must refund to the service agreement holder the unearned pro rata commission, unless the sales representative or agent has made other arrangements, satisfactory to the office, with the service agreement holder. (6)(a) Each service agreement, which includes a copy of the application form, must be mailed, deliver