HB 367 2025
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hb367-00
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
A bill to be entitled 1
An act relating to home and service warranty 2
association financial requirements; amending s. 3
634.3077, F.S.; making technical changes; amending s. 4
634.406, F.S.; revising the circumstances under which 5
certain service warranty associations are not required 6
to establish unearned premium reserves or to maintain 7
contractual liability insurance and are authorized to 8
allow their premiums to exceed specified ratios; 9
providing an effective date. 10
11
Be It Enacted by the Legislature of the State of Florida: 12
13
Section 1. Subsection (3) of section 634.3077, Florida 14
Statutes, is amended to read: 15
634.3077 Financial requirements. — 16
(3) An association may not be required t o set up an 17
unearned premium reserve if it has purchased contractual 18
liability insurance which demonstrates to the satisfaction of 19
the office that 100 percent of its claim exposure is covered by 20
such insurance. Such contractual liability insurance shall be 21
obtained from an insurer or insurers that hold a certificate of 22
authority to do business within the state or from an insurer or 23
insurers approved by the office as financially capable of 24
meeting the obligations incurred pursuant to the policy or 25
HB 367 2025
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
policies. For purposes of this subsection, the contractual 26
liability policy or policies shall contain the following 27
provisions: 28
(a) In the event that the home warranty association is 29
unable to fulfill its obligation under its contracts issued in 30
this state for any reason, including insolvency, bankruptcy, or 31
dissolution, the contractual liability insurer or insurers will 32
pay losses and unearned premiums under such plans directly to 33
persons making claims under such contracts. 34
(b) The insurer or insurers issuing the policy or policies 35
shall assume full responsibility for the administration of 36
claims in the event of the inability of the association to do 37
so. 38
(c) The policy or policies may not be canceled or not 39
renewed by the insurer or insurers or the association unless 60 40
days' written notice thereof has been given to the office by the 41
insurer or insurers before the date of such cancellation or 42
nonrenewal. 43
(d) The contractual liability insurance policy or policies 44
shall insure all home warranty contracts that we re issued while 45
the policy or policies were was in effect whether or not the 46
premium has been remitted to the insurer or insurers. 47
Section 2. Subsections (3) and (4), paragraphs (b) and (c) 48
of subsection (6), and paragraph (a) of subsection (7) of 49
section 634.406, Florida Statutes, are amended to read: 50
HB 367 2025
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
634.406 Financial requirements. — 51
(3) An association will not be required to establish an 52
unearned premium reserve if it has purchased contractual 53
liability insurance which demonstrates to the satisfac tion of 54
the office that 100 percent of its claim exposure is covered by 55
such policy or policies. The contractual liability insurance 56
shall be obtained from an insurer or insurers that hold holds a 57
certificate of authority to do business within the state. F or 58
the purposes of this subsection, the contractual liability 59
policy or policies shall contain the following provisions: 60
(a) In the event that the service warranty association 61
does not fulfill its obligation under contracts issued in this 62
state for any reason, including insolvency, bankruptcy, or 63
dissolution, the contractual liability insurer or insurers will 64
pay losses and unearned premium refunds under such plans 65
directly to the person making a claim under the contract. 66
(b) The insurer or insurers issuing the contractual 67
liability policy or policies shall assume full responsibility 68
for the administration of claims in the event of the inability 69
of the association to do so. 70
(c) The policy or policies may not be canceled or not 71
renewed by either the insurer or insurers or the association 72
unless 60 days' written notice thereof has been given to the 73
office by the insurer or insurers before the date of such 74
cancellation or nonrenewal. 75
HB 367 2025
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
(d) The contractual liability insurance policy or policies 76
shall insure all service warranty contracts which were issued 77
while the policy or policies were was in effect whether or not 78
the premium has been remitted to the insurer or insurers. 79
(e) In the event the issuer or issuers of the contractual 80
liability policy or policies are is fulfilling the service 81
warranty covered by policy or policies and in the event the 82
service warranty holder cancels the service warranty, it is the 83
responsibility of the contractual liability p olicy issuer or 84
issuers to effectuate a full refund of unearned premium to the 85
consumer. This refund shall be subject to the cancellation fee 86
provisions of s. 634.414. The salesperson or agent shall refund 87
to the contractual liability policy issuer or issuers the 88
unearned pro rata commission. 89
(f) An association may not utilize both the unearned 90
premium reserve and contractual liability insurance 91
simultaneously. However, an association shall be allowed to have 92
contractual liability coverage on service warr anties previously 93
sold and sell new service warranties covered by the unearned 94
premium reserve, and the converse of this shall also be allowed. 95
An association must be able to distinguish how each individual 96
service warranty is covered. 97
(4) No warrantor may allow its gross written premiums in 98
force to exceed a 7-to-1 ratio to net assets; however, a company 99
may exceed this requirement if : 100
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
(a) The company: 101
1.(a) Holds licenses issued pursuant to the provisions of 102
part I and this part ;, and 103
2.(b) Maintains net assets of at least $2.5 million ;, and 104
3.(c) Utilizes contractual liability insurance which 105
reimburses the service warranty association for 100 percent of 106
its paid claims;, and 107
(b)(d) The insurer or insurers issuing the contractual 108
liability insurance policy or policies maintain maintains a 109
policyholder surplus of at least $100 million and are is rated 110
"A" or higher by A.M. Best Company. 111
(6) An association that holds a license under this part 112
may allow its premiums for service warrantie s written under this 113
part to exceed the ratio to net assets limitations of this 114
section if the association meets all of the following: 115
(b) Uses a contractual liability insurance policy or 116
policies approved by the office that: 117
1. Reimburse Reimburses the service warranty association 118
for 100 percent of their its claims liability and are is issued 119
by an insurer or insurers that maintain maintains a policyholder 120
surplus of at least $100 million; or 121
2. Comply Complies with subsection (3) and are is issued 122
by an insurer or insurers that maintain maintains a policyholder 123
surplus of at least $200 million. 124
(c) The insurer or insurers issuing the contractual 125
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
liability insurance policy or policies: 126
1. Are Is rated "A" or higher by A.M. Best Company or an 127
equivalent rating by another national rating service acceptable 128
to the office. 129
2. In conjunction with the warranty association's filing 130
of the quarterly and annual reports, provide provides, on a form 131
prescribed by the commission, a statement certifying the gross 132
written premiums in force reported by the warranty association 133
and a statement that all of the warranty association's gross 134
written premium in force is covered under the contractual 135
liability policy or policies, regardless of whether it has been 136
reported. 137
(7) Notwithstanding s. 634.401(13)(c), an association 138
licensed under this part and holding no other license under part 139
I or part II of this chapter is not required to establish an 140
unearned premium reserve or maintain contractual liability 141
insurance and may allow its premiums to exceed the ratio to net 142
assets limitation of this section if the association complies 143
with one of the following: 144
(a) The association or, if the association is a direct or 145
indirect wholly owned subsidiary of a parent corpora tion, its 146
parent corporation has, and maintains at all times, a minimum 147
net worth of at least $100 million and provides the office with 148
one of the following: 149
1. A copy of the association's annual audited financial 150
HB 367 2025
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
statements or the audited consolidated f inancial statements of 151
the association's parent corporation, prepared by an independent 152
certified public accountant in accordance with generally 153
accepted accounting principles, which clearly demonstrate the 154
net worth of the association or its parent corpor ation to be 155
$100 million and a quarterly written certification to the office 156
that such entity continues to maintain the net worth required 157
under this paragraph. 158
2. The association's, or its parent corporation's, Form 159
10-K, Form 10-Q, or Form 20-F as filed with the United States 160
Securities and Exchange Commission or such other documents 161
required to be filed with a recognized stock exchange, which 162
shall be provided on a quarterly and annual basis within 10 days 163
after the last date each such report must be f iled with the 164
Securities and Exchange Commission, the National Association of 165
Security Dealers Automated Quotation system, or other recognized 166
stock exchange. 167
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Failure to timely file the documents required under this 169
paragraph may, at the discretion of the office, subject the 170
association to suspension or revocation of its license under 171
this part. 172
Section 3. This act shall take effect July 1, 2025. 173