86R14093 GRM-F
By: Lucio III H.B. No. 4120
A BILL TO BE ENTITLED
AN ACT
relating to the financial security requirement for providers
obligated under certain service contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1304.151, Occupations Code, is amended
by amending Subsection (b) and adding Subsection (b-1) to read as
follows:
(b) If the provider ensures its obligations under
Subsection (a)(2), the amount maintained in the reserve account may
not be less than an amount equal to 40 percent of the gross
consideration the provider received from consumers from the sale of
all service contracts issued and outstanding in this state, minus
any claims paid. The executive director may review and examine the
reserve account. Except as provided by Subsection (b-1), the [The]
amount of the security deposit may not be less than $250,000. The
provider must submit to the executive director on request a copy of
the provider's financial statements that must be prepared in
accordance with generally accepted accounting principles, be
without qualification as to the going concern status of the
provider, and be audited by an independent certified public
accountant. The commission by rule may require the provider to
submit additional financial reports.
(b-1) The amount of the security deposit required under
Subsection (b) may not be less than $25,000 if the provider:
(1) is a motor vehicle dealer licensed under Chapter
2301; and
(2) offers to sell service contracts only on motor
vehicles sold by the provider.
SECTION 2. This Act takes effect September 1, 2019.