CS/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
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
amending s. 634.414, F.S.; requiring service warranty 10
contracts that include coverage for certain accidental 11
damage to be covered by contractual liability 12
policies; providing exceptions; providing an effective 13
date. 14
15
Be It Enacted by the Legislature of the State of Florida: 16
17
Section 1. Subsection (3) of section 634.3077, Florida 18
Statutes, is amended to read: 19
634.3077 Financial requirements. — 20
(3) An association may not be required to set up an 21
unearned premium reserve if it has purchased contractual 22
liability insurance which demonstrates to the satisfaction of 23
the office that 100 percent of its claim exposure is covered by 24
such insurance. Such contractual liability insurance shall be 25
CS/HB 367 2025
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obtained from an insurer or insurers that hold a certificate of 26
authority to do business within the state or from an insurer or 27
insurers approved by the office as financially capable of 28
meeting the obligations incurred pursuant to the policy or 29
policies. For purposes of this subsection, the contractual 30
liability policy or policies shall contain the following 31
provisions: 32
(a) In the event that the home warranty association is 33
unable to fulfill its obligation under its contracts issued in 34
this state for any reason, including insolvency, bankruptcy, or 35
dissolution, the contra ctual liability insurer or insurers will 36
pay losses and unearned premiums under such plans directly to 37
persons making claims under such contracts. 38
(b) The insurer or insurers issuing the policy or policies 39
shall assume full responsibility for the adminis tration of 40
claims in the event of the inability of the association to do 41
so. 42
(c) The policy or policies may not be canceled or not 43
renewed by the insurer or insurers or the association unless 60 44
days' written notice thereof has been given to the office b y the 45
insurer or insurers before the date of such cancellation or 46
nonrenewal. 47
(d) The contractual liability insurance policy or policies 48
shall insure all home warranty contracts that were issued while 49
the policy or policies were was in effect whether or not the 50
CS/HB 367 2025
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premium has been remitted to the insurer or insurers. 51
Section 2. Subsections (3) and (4), paragraphs (b) and (c) 52
of subsection (6), and paragraph (a) of subsection (7) of 53
section 634.406, Florida Statutes, are amended to read: 54
634.406 Financial requirements.— 55
(3) An association will not be required to establish an 56
unearned premium reserve if it has purchased contractual 57
liability insurance which demonstrates to the satisfaction of 58
the office that 100 percent of its claim exposure is covered by 59
such policy or policies. The contractual liability insurance 60
shall be obtained from an insurer or insurers that hold holds a 61
certificate of authority to do business within the state. For 62
the purposes of this subsection, the contractual liability 63
policy or policies shall contain the following provisions: 64
(a) In the event that the service warranty association 65
does not fulfill its obligation under contracts issued in this 66
state for any reason, including insolvency, bankruptcy, or 67
dissolution, the contract ual liability insurer or insurers will 68
pay losses and unearned premium refunds under such plans 69
directly to the person making a claim under the contract. 70
(b) The insurer or insurers issuing the contractual 71
liability policy or policies shall assume full responsibility 72
for the administration of claims in the event of the inability 73
of the association to do so. 74
(c) The policy or policies may not be canceled or not 75
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renewed by either the insurer or insurers or the association 76
unless 60 days' written notice th ereof has been given to the 77
office by the insurer or insurers before the date of such 78
cancellation or nonrenewal. 79
(d) The contractual liability insurance policy or policies 80
shall insure all service warranty contracts which were issued 81
while the policy or policies were was in effect whether or not 82
the premium has been remitted to the insurer or insurers. 83
(e) In the event the issuer or issuers of the contractual 84
liability policy or policies are is fulfilling the service 85
warranty covered by policy or policies and in the event the 86
service warranty holder cancels the service warranty, it is the 87
responsibility of the contractual liability policy issuer or 88
issuers to effectuate a full refund of unearned premium to the 89
consumer. This refund shall be subject to t he cancellation fee 90
provisions of s. 634.414. The salesperson or agent shall refund 91
to the contractual liability policy issuer or issuers the 92
unearned pro rata commission. 93
(f) An association may not utilize both the unearned 94
premium reserve and contractu al liability insurance 95
simultaneously. However, an association shall be allowed to have 96
contractual liability coverage on service warranties previously 97
sold and sell new service warranties covered by the unearned 98
premium reserve, and the converse of this s hall also be allowed. 99
An association must be able to distinguish how each individual 100
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service warranty is covered. 101
(4) No warrantor may allow its gross written premiums in 102
force to exceed a 7-to-1 ratio to net assets; however, a company 103
may exceed this requirement if: 104
(a) The company: 105
1.(a) Holds licenses issued pursuant to the provisions of 106
part I and this part ;, and 107
2.(b) Maintains net assets of at least $2.5 million ;, and 108
3.(c) Utilizes contractual liability insurance which 109
reimburses the service warranty association for 100 percent of 110
its paid claims;, and 111
(b)(d) The insurer or insurers issuing the contractual 112
liability insurance policy or policies maintain maintains a 113
policyholder surplus of at least $100 million and are is rated 114
"A" or higher by A.M. Best Company. 115
(6) An association that holds a license under this part 116
may allow its premiums for service warranties written under this 117
part to exceed the ratio to net assets limitations of this 118
section if the association meets all of the following: 119
(b) Uses a contractual liability insurance policy or 120
policies approved by the office that: 121
1. Reimburse Reimburses the service warranty association 122
for 100 percent of their its claims liability and are is issued 123
by an insurer or insurers that maintain maintains a policyholder 124
surplus of at least $100 million; or 125
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2. Comply Complies with subsection (3) and are is issued 126
by an insurer or insurers that maintain maintains a policyholder 127
surplus of at least $200 million. 128
(c) The insurer or insurers issuing the contractual 129
liability insurance policy or policies: 130
1. Are Is rated "A" or higher by A.M. Best Company or an 131
equivalent rating by another national rating service acceptable 132
to the office. 133
2. In conjunction with the warranty association's filing 134
of the quarterly and annual reports, provide provides, on a form 135
prescribed by the commission, a statement certifying the gross 136
written premiums in force reported by the warranty ass ociation 137
and a statement that all of the warranty association's gross 138
written premium in force is covered under the contractual 139
liability policy or policies, regardless of whether it has been 140
reported. 141
(7) An association licensed under this part and hold ing no 142
other license under part I or part II of this chapter is not 143
required to establish an unearned premium reserve or maintain 144
contractual liability insurance and may allow its premiums to 145
exceed the ratio to net assets limitation of this section if the 146
association complies with the following: 147
(a) The association or, if the association is a direct or 148
indirect wholly owned subsidiary of a parent corporation, its 149
parent corporation has, and maintains at all times, a minimum 150
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net worth of at least $100 mil lion and provides the office with 151
one of the following: 152
1. A copy of the association's annual audited financial 153
statements or the audited consolidated financial statements of 154
the association's parent corporation, prepared by an independent 155
certified public accountant in accordance with generally 156
accepted accounting principles, which clearly demonstrate the 157
net worth of the association or its parent corporation to be 158
$100 million and a quarterly written certification to the office 159
that such entity continue s to maintain the net worth required 160
under this paragraph. 161
2. The association's, or its parent corporation's, Form 162
10-K, Form 10-Q, or Form 20-F as filed with the United States 163
Securities and Exchange Commission or such other documents 164
required to be filed with a recognized stock exchange, which 165
shall be provided on a quarterly and annual basis within 10 days 166
after the last date each such report must be filed with the 167
Securities and Exchange Commission, the National Association of 168
Security Dealers Automat ed Quotation system, or other recognized 169
stock exchange. 170
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Failure to timely file the documents required under this 172
paragraph may, at the discretion of the office, subject the 173
association to suspension or revocation of its license under 174
this part. 175
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Section 3. Subsection (5) is added to section 634.414, 176
Florida Statutes, to read: 177
634.414 Forms; required provisions. — 178
(5) Each service warranty contract that includes coverage 179
for accidental damage from handling must be covered by the 180
contractual liability policy referred to in s. 634.406(3), 181
unless issued by an association not required to establish an 182
unearned premium reserve or maintain contractual liability 183
insurance under s. 634.406(7). 184
Section 4. This act shall take effect July 1, 2025. 185