Insurance: home protection companies.

AB 1931

California Bills

20250AB__193196AMD INTRODUCED 2026-02-13 AMENDED_ASSEMBLY 2026-04-15 AMENDED_ASSEMBLY 2026-04-16 AMENDED_SENATE 2026-06-18 2025 AB AMD Introduced by Assembly Member Papan LEAD_AUTHOR ASSEMBLY Papan

An act to add

Chapter 4 (commencing with

Section 12766) to Part of Division of the Insurance Code, relating to insurance. insurance Insurance: home protection companies. Existing law regulates home protection companies, which issue contracts for the repair or replacement of a component, system, or appliance of a home. Existing law prohibits a person from issuing home protection contracts in this state unless they hold a home protection company license issued by the Department of Insurance, except as specified.

Existing law requires a home protection contract, as defined, to specify certain information in clear and conspicuous terms, including, but not limited to, every appliance, system, or component covered by the contract and all exclusions and limitations respecting the extent of the contract. This bill would, beginning on July 1, 2027, establish a license for a home protection contract limited lines agent, as defined, for a person authorized to transact home protection contracts on behalf of a home protection company and in connection with a home protection contract vendor, as defined.

The bill would additionally authorize a utility to solicit home protection contracts and collect home protection contract fees if it is a vendor acting on behalf of specified entities, including a licensed home protection contract limited lines agent. The bill would require an applicant for a license to submit specified items to the commissioner, including an application and a certificate stating the named applicant is trustworthy.

The bill would authorize an agent to authorize a home protection contract vendor, as defined, to solicit contracts and collect home protection contract fees on its behalf subject to specified conditions, and would authorize a purchaser to return the contract within days of purchase if no claim has been made.

The bill would allow a vendor to collect fees on behalf of an agent through the utility bill if the bill makes it clear that the home protection contract is issued by a third party and not the utility, lists the home protection contract fees separately from the utility charges, and the bill includes a telephone number for customers to inquire about their contract. The bill would also require the contract to include specified disclosures.

The bill would prohibit an unlicensed employee of a vendor from engaging in any activity relating to the transaction of home protection contracts other than clerical and other specified services. The bill would authorize the commissioner to implement specified penalties if a vendor violates these provisions. The bill would also require a home protection company to maintain an insurance policy covering 100% of the company’s contractual obligation associated with the home protection contracts, among other specified requirements.

The bill would prohibit a property and casualty insurance agent from acting as an agent of a home protection company in connection with a utility unless the company has filed a notice of appointment with the commissioner. The bill would require the notice of appointment to continue until specified documents are filed.

This bill would, until December 31, 2027, authorize a utility to collect home protection fees on behalf of an agent if it was already collecting those fees prior to January 1, 2025. </xhtml:p>"?> MAJORITY NO YES NO NO NO NO NO NO NO NO The people of the State of California do enact as follows: <caml:Num>SECTION 1.</caml:Num><caml:ActionLine action="IS_AMENDED" xlink:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'12740.'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section of the <caml:DocName>Insurance Code</caml:DocName> is amended to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_B319D089-C6EE-4A68-9B14-F9B9048C38FD"><caml:Num>12740.</caml:Num><caml:LawSectionVersion id="id_F401D6B1-034A-4E8B-890C-27D448489EA5"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>The

definitions used in this

section govern the construction and terms used in this part but shall not affect any other provisions of this code:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>“Home protection contract” means a contract or agreement whereby a person, other than a builder, seller, or lessor of the home which is the subject of the contract, undertakes for a specified period of time, for a predetermined fee, to repair or replace all or any part of any component, system or appliance of a home necessitated by wear and tear, deterioration or inherent defect, arising during the effective period of the contract, and, in the event of an inspection conducted pursuant to subdivision (

b) of

Section 12761, by the failure of that inspection to detect the likelihood of any such loss.</xhtml:p><xhtml:p>Such contract shall provide for a system of service for effectuating such repair or replacement and shall not include protection against consequential damage from the failure of any component, system or appliance.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>“Home protection company” means any person licensed pursuant to this part which issues home protection contracts.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>“Protection contract fee” means the consideration received, or to be received, by a home protection company for the issuance of any home protection contract.</xhtml:p><xhtml:p>A home protection contract fee shall be the fee established by a home protection company for coverage extending one year from the effective date of the contract.

Where initial coverage is provided for a period in excess of one year, the home protection contract fee shall be the annual fee, plus a separately stated pro rata portion of the annual fee for the period of coverage which exceeds one year.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>“Home” or “residential property” as used in this part means any single or multiple unit or units, including mobilehomes, as defined in

Section of the Health and Safety Code, used primarily for residential purposes.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>This

definitions used in this

section govern the construction and terms used in this part, but shall not affect any other provisions of this code:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>“Home protection contract” means a contract or agreement whereby a person, other than a builder, seller, or lessor of the home that is the subject of the contract, undertakes for a specified period of time, for a predetermined fee, to repair or replace all or any part of any component, system, or appliance of a home necessitated by wear and tear, deterioration, or inherent defect, arising during the effective period of the contract, and, in the event of an inspection conducted pursuant to subdivision (

b) of

Section 12761, by the failure of that inspection to detect the likelihood of any such loss.</xhtml:p><xhtml:p>The contract shall provide for a system of service for effectuating repair or replacement and shall not include protection against consequential damage from the failure of any component, system, or appliance.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>“Home protection company” means a person licensed pursuant to this part that issues home protection contracts.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>“Protection contract fee” means the consideration received, or to be received, by a home protection company for the issuance of any home protection contract.</xhtml:p><xhtml:p>A home protection contract fee shall be the fee established by a home protection company for coverage extending one year from the effective date of the contract.

When initial coverage is provided for a period in excess of one year, the home protection contract fee shall be the annual fee, plus a separately stated pro rata portion of the annual fee for the period of coverage that exceeds one year.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>“Home” or “residential property” as used in this part means a single or multiple unit or units, including mobilehomes, as defined in

Section of the Health and Safety Code, used primarily for residential purposes.</xhtml:p><xhtml:p>(5)<xhtml:span class="EnSpace"/>“Home protection contract limited lines agent” means an organization, other than a home protection company, licensed as a home protection contract limited lines agent pursuant to this part and authorized to transact home protection contracts on behalf of a home protection company.</xhtml:p><xhtml:p>(6)<xhtml:span class="EnSpace"/>“Utility services” means the provision of electricity, gas, water, sewer services, or services regulated by the Public Utilities Commission.</xhtml:p><xhtml:p>(7)<xhtml:span class="EnSpace"/>“Utility” means any of the following, or its affiliate, offering utility services to homes or residential properties located in the state:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>A private business organization.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>A municipal owned or operated entity.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>A cooperative.</xhtml:p><xhtml:p>(8)<xhtml:span class="EnSpace"/>“Home protection contract vendor” means a utility, as defined in this

section registered pursuant to

Section 12766, as well as its employees, complying with the requirements of

Chapter 5 (commencing with

Section 12766) of Part of Division 2.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>This

section shall become operative on July 1, 2027.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection><caml:BillSection id="id_A9BBEDDA-D86C-4F7E-B00B-0E9C47183447"><caml:Num>SEC. 3.</caml:Num><caml:ActionLine action="IS_AMENDED" xlink:type="locator" xlink:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'12762.'%5D)" xlink:label="fractionType: LAW_SECTION">Section of the <caml:DocName>Insurance Code</caml:DocName> is amended to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_088A45C3-DB42-4D79-9E8F-27CCFC4D5F5F"><caml:Num>12762.</caml:Num><caml:LawSectionVersion id="id_893CBD44-1345-4AB0-81EC-074AB45026A5"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>A home protection contract shall specify, in clear and conspicuous terms, the following information:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>Each of the appliances, systems, and components covered by the contract.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>All exclusions and limitations respecting the extent of coverage.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>The period during which the contract will remain in effect, the protection contract fee, and the renewal terms, if any.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>With respect to the performance of services by the home protection company, all of the following:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>The services to be performed by the company and the terms and conditions of such performance.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>The service fee or fees, if any, to be charged for such services.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>All limitations respecting the performance of services, including any restrictions as to the time period when or geographical area within which services may be requested or will be performed.</xhtml:p><xhtml:p>(D)<xhtml:span class="EnSpace"/>A statement that services will be performed upon telephonic request therefor to the company, without any requirement that claim forms or applications be filed prior to the rendition of service.</xhtml:p><xhtml:p>(E)<xhtml:span class="EnSpace"/>A representation that services will be initiated by or under the direction of the company within hours after a request is made for such services by any person entitled to make such request under the contract, or the agent of such person.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>The commissioner may adopt, pursuant to

Chapter 3.5 (commencing with

Section 11340) of Part of Division of Title of the Government Code, such reasonable regulations as may be necessary to make more specific the provisions of this section. Those regulations may also establish such other contract form standards and requirements as the commissioner may deem necessary and appropriate in the public interest. However, this

section does not authorize the commissioner to specify those appliances, systems, or components which must be covered by a home protection contract except to the extent necessary to guarantee the equity of the exclusions from coverage offered or provided under a contract, or to the extent necessary to avoid illusory coverage due to the nature or extent of exclusions from the contract.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>This

section shall become inoperative on July 1, 2027, and,as of January 1, 2028, is repealed.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection><caml:BillSection id="id_5471C16D-4D9D-400A-9BEC-DEB52267BDCB"><caml:Num>SEC. 4.</caml:Num><caml:ActionLine action="IS_ADDED" xlink:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'12762.'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section is added to the <caml:DocName>Insurance Code</caml:DocName>, to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_0370D70C-BB07-43C4-8197-B72C597BED6C"><caml:Num>12762.</caml:Num><caml:LawSectionVersion id="id_7B11A3F8-A15D-4D89-BDEA-DE13391CFBDF"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>A home protection contract shall specify, in clear and conspicuous terms, the following information:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>Each of the appliances, systems, and components covered by the contract.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>All exclusions and limitations respecting the extent of coverage.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>The period during which the contract will remain in effect, the protection contract fee, and the renewal terms, if any.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>With respect to the performance of services by the home protection company, all of the following:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>The services to be performed by the company and the terms and conditions of such performance.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>The service fee or fees, if any, to be charged for such services.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>All limitations respecting the performance of services, including any restrictions as to the time period when or geographical area within which services may be requested or will be performed.</xhtml:p><xhtml:p>(D)<xhtml:span class="EnSpace"/>A statement that services will be performed upon telephonic request therefor to the company, without any requirement that claim forms or applications be filed prior to the rendition of service.</xhtml:p><xhtml:p>(E)<xhtml:span class="EnSpace"/>A representation that services will be initiated by or under the direction of the company within hours after a request is made for such services by any person entitled to make such request under the contract, or the agent of such person.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>A home protection contract transacted by a home protection contract limited lines agent or home protection contract vendor shall include all of the following:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>A prominent and readily noticeable statement listing the procedure for making a claim, including a toll-free telephone number for claim service.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>A disclosure in substantially the following form:</xhtml:p><xhtml:br/><xhtml:p>“Performance to you under this contract is guaranteed by a California approved insurance company.

You may file a claim with this insurance company if any obligation in the contract has not been honored within days after your request.

The name and address of the insurance company is:</xhtml:p><xhtml:p> (insert name, address, and contact information).</xhtml:p><xhtml:p> If you are not satisfied with the insurance company’s response, you may contact the California Department of Insurance at 1-800-927-4357 or access the department’s internet website (www.insurance.ca.gov).”</xhtml:p><xhtml:br/><xhtml:p>(3)<xhtml:span class="EnSpace"/>A provision permitting the purchaser to return a home protection contract within days of purchase if no claims have been made.

If returned within the 30-day window, the home protection contract shall be deemed void and the full purchase price of the home protection contract shall be refunded to the purchaser.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>The commissioner may adopt, pursuant to

Chapter 3.5 (commencing with

section shall become operative on July 1, 2027.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection>"?>

SECTION 1. Chapter 4 (commencing with

Section 12766) is added to Part of Division of the Insurance Code , to read: 4. Home Protection Contract Limited Lines Agent <caml:Num>12766.</caml:Num><caml:LawSectionVersion id="id_60E55039-895E-40AF-9833-A253C6AB6F77"><caml:Content><xhtml:p>A person may transact, as defined in

Section 35, home protection contracts through, or in connection with, a utility, as an agent of the home protection company if they are either of the following:</xhtml:p><xhtml:p>(a)<xhtml:span class="EnSpace"/>Licensed by the commissioner as a property and casualty insurance agent complying with

Section 12771.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>Licensed as, or operating on behalf of, a home protection contract limited lines agent. </xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection>"?> 12766. (

a) A utility may solicit home protection contracts and collect home protection contract fees if it is a home protection contract vendor acting on behalf of, or in connection with, either of the following:

(1) A home protection contract limited lines agent.

(2) A property and casualty insurance agent that has been appointed by a home protection company pursuant to

Section 12772. (

b) A utility shall not enroll customers in a home protection contract. The utility shall direct customers to a home protection company, home protection contract limited lines agent, or property and casualty insurance agent for enrollment. (

c) For purposes of this chapter, the following

definitions apply: (1) “Home protection contract limited lines agent” means an entity licensed pursuant to this chapter, authorized to transact home protection contracts on behalf of a home protection company and in connection with a home protection contract vendor. (2) “Home protection contract vendor” means a utility complying with the requirements of this

chapter and either of the following: (

A) Registered pursuant to

Section 12768. (

B) Acting in connection with a property and casualty insurance agent. (3) “Utility” means an entity, or an affiliate of an entity, regulated by the Public Utilities Commission. 12767. (

a) An applicant for a home protection contract limited lines agent license under this

section shall submit all of the following to the commissioner:

(1) An electronic or written application for licensure, signed by an officer of the applicant, in a form prescribed by the commissioner.

(2) A certificate issued by the home protection company that is to be named in the home protection contract limited lines agent license, stating that the home protection company has satisfied itself that the named applicant is trustworthy and competent to act as its home protection contract limited lines agent and that the home protection company will appoint the applicant to act as its agent if the home protection contract limited lines agent license is issued by the commissioner.

The certification shall be signed by an officer of the home protection company on a form prescribed by the commissioner. (3)<xhtml:span class="EnSpace"/>All training materials described in subdivision (

f) of

Section 12768.</xhtml:p><xhtml:p>(4)</xhtml:p>"?>

(3) An application fee of ten thousand dollars ($10,000) and, for each license period thereafter, a renewal fee of five thousand dollars ($5,000). (

b) Costs associated with an enforcement action shall be assessed against the organization licensed pursuant to this chapter. 12768.

A home protection contract limited lines agent may authorize a home protection contract vendor to solicit home protection contracts and collect home protection contract fees on its behalf and under its authority, under the following conditions: (a)<xhtml:span class="EnSpace"/>The home protection contract limited lines agent is clearly and conspicuously identified on home protection contract marketing materials distributed by the home protection contract vendor to customers, which shall include the agent’s name, business address, email address or other comparable electronic communication method, telephone number, and license number.</xhtml:p>"?> (

a) The home protection contract limited lines agent certifies that the home protection contract vendor has not been convicted of violating

Section of Title of the United States Code. (

b) Home protection contract marketing materials distributed by the home protection contract vendor include the disclosures listed in subdivision (

b) of

Section 12769. (b)</xhtml:p>"?> (c)

(1) The home protection contract limited lines agent maintains a register in a form prescribed by, or acceptable to, the commissioner listing the home protection contract vendors permitted to solicit home protection contracts and collect home protection contract fees on its behalf. The register shall include both of the following: (

A) The name and contact information for both of the following: (

i) The home protection contract vendor. (ii) An officer or person who directs or controls the home protection contract vendor’s home protection contract-related operations. (

B) The identification number provided by the Public Utilities Commission to the utility, or the affiliate, when the affiliate holds the identification number. (

d) The home protection contract limited lines agent submits the register to the commissioner annually or upon request. (c)</xhtml:p>"?> (

e) The home protection contract limited lines agent designates an individual licensee in the state to transact property and casualty insurance to be responsible for its compliance with home protection contract laws, rules, and regulations of the state. (d)</xhtml:p>"?> (

f) The individual designated under subdivision (

e) and any of the organization’s partners, members, controlling persons, officers, directors, and managers complies with the background check requirements as required by the commissioner. (e)<xhtml:span class="EnSpace"/>The home protection contract limited lines agent has paid all applicable licensing fees required under California law.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>The home protection contract limited lines agent uses all reasonable means at its disposal to ensure compliance with all obligations under this

chapter by the home protection contract vendor and its employees, including requiring every employee of the home protection contract vendor whose duties include transacting home protection contracts to receive training.</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>The training shall be provided whenever there is a material change that requires a modification to the home protection contract limited lines agent’s training materials, but no less frequently than every year.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Training materials used by, or on behalf of, the home protection contract limited lines agent to train the employees of a home protection contract vendor shall be submitted to the department at the time the home protection contract limited lines agent applies for a license under this chapter, and whenever modified thereafter.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>At a minimum, the training materials shall contain instruction on the types of utility home protection contracts offered, ethical sales practices, and disclosures to prospective customers.

Any changes to previously submitted training materials shall be submitted to the department, with the changes highlighted, at least days prior to their use by the home protection contract limited lines agent.

Training materials and changes to those materials submitted to the department pursuant to this subdivision shall be deemed approved for use by the home protection contract limited lines agent unless it is notified by the department to the contrary.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>Failure by a home protection contract limited lines agent to submit training materials or changes for departmental review or use of unapproved or disapproved training materials shall constitute grounds for denial of an application for a license, nonrenewal of a license, or suspension of a license, or other action as deemed appropriate by the commissioner.</xhtml:p>"?> (

g) The home protection contract limited lines agent has paid the applicable licensing fees required by

Section 12767. (

h) The conduct of the home protection contract vendor, while acting within the scope of its authority, is deemed the conduct of the home protection contract limited lines agent. 12769. (a) "?>The home protection contract vendor shall only distribute marketing materials that include the disclosures outlined in subdivision (

b) and comply with

Section 1725.5. The marketing materials shall be provided or approved by a home protection contract limited lines agent and the home protection company. (2)</xhtml:p>"?> (

b) All marketing materials distributed by the home protection contract vendor shall include a clear and conspicuous disclosure of all of the following:

(1) The home protection contract limited lines agent’s name, email address or other comparable electronic communication method, telephone number, and license number. (3)<xhtml:span class="EnSpace"/>If the marketing materials subject to paragraph (2) include an enrollment application form, the marketing materials shall list the procedure for making a claim under the home protection contract.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>In addition to the requirements outlined in

Section 12768, the home protection contract vendor and its employees shall do all of the following:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>Act in good faith and in a fair, honest, and ethical manner when offering a home protection contract.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Not make false, misleading, or deceptive statements regarding a home protection contract being offered.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>Not sell a home protection contract that the home protection contract vendor, or its employee, knows, or reasonably should know, is unnecessary for the consumer.</xhtml:p>"?>

(2) The purchase of a home protection contract is optional and not required in order to purchase or pay for any other product or service offered by the utility. (

c) Marketing or advertisements for home protection contracts shall not appear directly on the utility bill. (

d) An unlicensed employee of the home protection contract vendor shall not engage in any activity relating to the transaction of home protection contracts other than clerical services, billing services, or indirect marketing support. 12770. (

a) A home protection contract vendor may collect home protection contract fees through the utility bill on behalf of a home protection contract limited lines agent or a property and casualty insurance agent if the utility bill does all of the following:

(1) Includes a clear statement that the home protection contract is issued by a third party and not the utility. (1)</xhtml:p>"?>

(2) Lists the home protection contract fees separately from any utility charges or fees, with clear identification that the fees are charged by the home protection contract limited lines agent or property and casualty insurance agent. (2)</xhtml:p>"?>

(3) Includes a telephone number, and if space allows, a digital contact for customers to cont act the home protection contract limited lines agent or property and casualty insurance agent to inquire about their home protection contract. (

b) A home protection contract vendor that collects fees through a utility bill shall ensure that customer payments are applied first to charges due for utility services prior to applying payments for home protection contracts. (b)</xhtml:p>"?> (

c) A home protection contract vendor shall not be required to maintain home protection contract fees in a segregated account if the home protection company has provided in writing that the funds need not be segregated from funds received by a home protection contract vendor for utility services.

All home protection contract fees received by a home protection contract vendor from a customer shall be considered funds held in trust by the home protection contract vendor in a fiduciary capacity for the benefit of the home protection company. (c)<xhtml:span class="EnSpace"/>A home protection contract vendor or its employee shall provide a clear and conspicuous disclosure stating that “Purchasing a home protection contract is not required in order to purchase or pay for any other product or service offered by the utility” to the contract purchaser in one of the following ways:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>If the contract purchaser is transacting the home protection contract through the mail, in the accompanying marketing materials.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>If the contract purchaser is transacting the home protection contract in person, displayed on signs posted at every location where contracts are executed, including, but not limited to, the counter where the purchaser signs the home protection contract.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>If the contract purchaser is transacting the home protection contract online, posted in a conspicuous location on the home protection contract vendor’s public-facing internet website.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>If the contract purchaser is transacting the home protection contract over the phone, verbally to the contract purchaser on a recorded line.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>If the home protection contract vendor or its employee is not licensed as a property and casualty insurance agent or home protection contract limited lines agent, the vendor is not qualified or authorized to do either of the following:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>Answer claim-related technical questions about the benefits, exclusions, and conditions of any of the home protection contracts offered by the utility on behalf of the home protection company.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Evaluate the adequacy of the prospective consumer’s existing home protection contract or other insurance coverage.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>A home protection company and a home protection contract limited lines agent shall not pay a home protection contract vendor an override commission for, or based on, the number of home protection contracts sold by the home protection contract vendor’s employees. </xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>A home protection contract limited lines agent is permitted to pay a home protection contract vendor both of the following: </xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>Marketing or administrative fees that are not contingent on the number of home protection contracts sold. </xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>For billing or collection services under a utility line item billing program approved by the California Public Utilities Commission. </xhtml:p>"?> (d)

(1) A home protection contract vendor may receive compensation for billing and collection services based on the services rendered.

(2) Compensation received by the home protection contract vendor shall comply with

Section 12760. (

e) If home protection contract fees are collected by the home protection contract vendor on behalf of a home protection contract limited lines agent or property and casualty insurance agent through the utility bill on a recurring basis, the home protection contract limited lines agent or property and casualty insurance agent shall provide each customer written or electronic notice not fewer than calendar days and not more than calendar days prior to every anniversary of the customer’s enrollment date. The notice shall clearly and conspicuously disclose, as applicable, all the following:

(1) The anniversary date of the customer’s enrollment.

(2) The date or dates on which the renewal period begins, and if the customer’s home protection contract renews, the length of the renewal period.

(3) The home protection contract fee that will be charged to the customer on a recurring basis and the frequency of charges.

(4) How the customer may cancel the home protection contract.

(5) How the customer may request a copy of the home protection contract.

(6) Contact information for the home protection contract limited lines agent or property and casualty insurance agent. 12771. (

a) In addition to the items listed in paragraph (

a) of

Section 12762, a home protection contract transacted pursuant to this

chapter shall include all of the following: (1) (

A) A prominent and readily noticeable statement explaining how to make a claim, including a toll-free telephone number, for claim service and cancellation requests. (

B) Beginning on January 1, 2028, this statement shall also include a digital contact.

(2) A disclosure, with the telephone number in boldface type in substantially the following form: “Performance to you under this contract is guaranteed by a California approved insurance company. You may file a claim with this insurance company if any obligation in the home protection contract has not been honored within days after your request. The name and address of the insurance company is: (insert name, address, and contact information). If you are not satisfied with the insurance company’s response, you may contact the California Department of Insurance at 1-800-927-4357 or file a complaint online at the department’s internet website (www.insurance.ca.gov).”

(3) A provision permitting the customer to return a home protection contract to the home protection company, the home protection contract limited lines agent, or the property and casualty insurance agent and void the home protection contract, within days of purchase, if no claims have been made. The purchaser may return the home protection contract by contacting the home protection company, or home protection company limited lines agent, or property and casualty insurance agent to request that the home protection contract be voided.

If returned within the 30-day window and no claims have been made, the home protection contract shall be deemed void and the full purchase price of the home protection contract shall be refunded to the customer.

(4) A statement that a customer paying for the home protection contract through their utility bill may elect to pay for their home protection contract using another method of payment and an explanation of how the customer may change the payment method associated with their home protection contract, including a description of the payment methods available to the customer. 12772. (

a) The individual identified in the register maintained pursuant to subdivision (

c) of

Section 12768, who directs or controls the home protection contract vendor’s home protection contract-related operations, shall receive annual training provided by the home protection contract limited lines agent. The training material shall contain instruction on both of the following:

(1) Home protection contract law, including the marketing disclosure requirements, and the rules related to home protection contract fee collection.

(2) The types of home protection contracts being offered. (

b) The training materials, and any material changes to the training, shall be submitted for approval to the department prior to use. The training materials, including any changes, shall be deemed approved for use unless the home protection contract limited lines agent is notified by the department to the contrary within days of submission. (

c) Failure to submit training materials or changes for departmental review, or use of unapproved or disapproved training materials, shall constitute grounds for denial of an application for a license, nonrenewal or suspension of a license, or other action as deemed appropriate by the commissioner. 12773. (

a) If the commissioner determines that a home protection contract vendor has violated any provision of this part or any provision of this code incorporated into this part, the commissioner may do either of the following:

(1) Direct the home protection limited lines agent or property and casualty insurance agent to do either of the following: (

A) Implement a corrective action plan with the home protection contract vendor. (

B) Revoke the authorization of the home protection contract vendor to solicit home protection contracts or collect home protection contract fees on its behalf and under its license and direct the home protection contract limited lines agent to remove the home protection contract vendor’s name from its register.

(2) After notice and hearing, either of the following: (

A) Suspend or revoke the license of the home protection contract limited lines agent. (

B) Assess an administrative penalty against the home protection contract limited lines agent, the property and casualty agent, the home protection company, or any combination thereof. (

b) A home protection contract limited lines agent or property and casualty insurance agent who allows a home protection contract vendor to continue to do business after being directed to revoke the home protection contract vendor’s authorization or takes positive actions to assist the home protection contract vendor in doing so, in addition to any other action authorized under this section, may be subject to a monetary penalty pursuant to paragraph (3) of subdivision (

a) of

Section 12921.8. (

c) Notwithstanding subdivision (

h) of

Section 12768, the conduct of the home protection contract vendor who solicits home protection contracts in connection with, or on behalf of the home protection contract limited lines agent or property and casualty insurance agent, may, at the discretion of the commissioner, be imputed to the home protection contract limited lines agent, property and casualty insurance agent, the home protection company, or any combination thereof, for purposes of this part. 12774. (

a) In addition to the provisions listed in

Section 12743, the following provisions of

Chapter 5 (commencing with

Section 1621) of Part of Division shall apply to a home protection limited lines agent:

(1) Article 1 (commencing with

Section 1621) to

Article 4 (commencing with

Section 1652), inclusive.

(2) Article 6 (commencing with

Section 1666) to

Article 13 (commencing with

Section 1737), inclusive.

(3) Article 14 (commencing with

Section 1750). (

b) A property and casualty insurance agent shall not act as an agent of a home protection company to transact home protection contracts through, or in connection with, a utility pursuant to this chapter, unless a home protection company has filed with the commissioner a notice of appointment, executed by the home protection company, appointing the property and casualty insurance agent as the home protection company’s agent.

The authority to transact home protection contracts given to a property and casualty insurance agent by a home protection company shall be effective as of the date the notice of appointment is signed. An appointment made under this subdivision shall by its terms continue in force until either of the following occur:

(1) The cancellation or expiration of the license applied for or held at the time the appointment is filed.

(2) A notice of termination is filed by the home protection contract company, in accordance with

Section 1707. (

c) The home protection contract limited lines agent shall be subject to the production agency records regulations adopted by the commissioner pursuant to

Section 1727. (c)</xhtml:p>"?> (

d) If there is a conflict between the provisions made applicable by this

section and this part, this part shall prevail. <caml:Num>12772.</caml:Num><caml:LawSectionVersion id="id_06512552-E079-4F62-BF3E-1087E935D525"><caml:Content><xhtml:p>Notwithstanding any other provision of this part, a written announcement regarding the availability of a home protection contract through a specific home protection company, home protection contract limited lines agent, or a property and casualty insurance agent shall not constitute the transaction of home protection contracts if the written announcement only includes general information regarding the following:</xhtml:p><xhtml:p>(a)<xhtml:span class="EnSpace"/>The home protection contract being offered.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>The attributes or character of the home protection company, the home protection contract limited lines agent, or the property and casualty insurance agent offering the home protection contract. </xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection><caml:LawSection id="id_71AE9643-AFAC-4CC7-8F21-ABD27510E7D0"><caml:Num>12773.</caml:Num><caml:LawSectionVersion id="id_932CB530-3BBD-4EF8-9B23-31C78B0FD53B"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>Notwithstanding any other provision of this code, a utility may collect home protection fees on behalf of a property and casualty insurance agent or home protection company limited lines agent if the utility was collecting protection contract fees on behalf of the property and casualty insurance agent prior to January 1, 2025.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>Notwithstanding

Section 12775, this

section shall become operative on January 1, 2027, and shall remain in effect until December 31, 2027, and as of that date is repealed.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection>"?> 12775. (

a) A home protection company that transacts home protection contracts pursuant to this

chapter shall maintain an insurance policy covering percent of the home protection company’s contractual obligations associated with the home protection contracts. Except as provided in subdivision (h), the insurance policy shall be submitted to and approved by the commissioner prior to use. The insurance policy submitted to the commissioner for approval pursuant to this subdivision shall be deemed approved days after filing unless the home protection company is notified by the commissioner to the contrary.

The policy shall be issued by an insurer admitted in this state and authorized by the commissioner to issue that insurance in this state. The insurance required by this subdivision shall be subject to both of the following:

(1) The insurer shall, at the time the policy is filed with the commissioner, and continuously thereafter, have an AM Best Financial Strength Rating of B++ or better, maintain surplus as to policyholders and paid-in capital of at least fifteen million dollars ($15,000,000), and annually file audited financial statements with the commissioner.

(2) The policy shall provide that all purchasers of home protection contracts in this state transacted pursuant to this

chapter shall be entitled to satisfaction by the insurer of all obligations arising under home protection contracts of the named home protection company, only upon the existence of both of the following conditions: (

A) The home protection company is unable, refuses, or otherwise fails to satisfy an obligation arising under the home protection contract within days of the date the purchaser submits proof of loss to the home protection company. (

B) The purchaser provides written notice to the insurer that the home protection company has failed to comply with an obligation under the home protection contract. (

b) A home protection company that transacts home protection contracts subject to subdivision (

a) shall allow claims to be filed against the insurance described under this section. (

c) An insurer’s liability under a policy submitted pursuant to this

section shall not be negated or otherwise diminished by a failure of the home protection contract vendor, home protection limited lines agent, property and casualty insurance agent, home protection company, or affiliates of these entities to report the issuance of a home protection contract or to remit moneys to another person pursuant to a contractual agreement. The policy shall state that payment of the home protection contract fee by the purchaser for a home protection contract insured by the policy is deemed payment to the insurer. (

d) In the event an insurer cancels a policy that has been submitted to the commissioner pursuant to this section, the home protection company named on the policy shall do either of the following:

(1) Submit a copy of a new policy to the commissioner, before the termination of the prior policy, providing no lapse in coverage following the termination of the prior policy.

(2) Take immediate action to discontinue the sale and marketing of home protection contracts by home protection contract vendors until a new insurance policy is filed and approved by the commissioner pursuant to subdivision (a). (2)<xhtml:span class="EnSpace"/>Discontinue acting as a home protection company in this state as of the termination date of the policy until a</xhtml:p>"?> (

e) When home protection contract fees are being collected on behalf of the home protection company, and an insurer cancels the policy associated with that home protection company, unless a new policy becomes effective and has been accepted and acknowledged by the commissioner, the home protection company shall do both of the following:

(1) Make all reasonable efforts to secure a new payment method from affected customers.

(2) Discontinue the collection of home protection contract fees through the home protection contract vendor’s utility bill within days of the cancellation of the policy. (e)</xhtml:p>"?> (

f) This

section shall not relieve a home protection company from any obligation incurred under home protection contracts issued prior to the date the policy was terminated. (f)</xhtml:p>"?> (

g) The commissioner may issue a cease and desist order pursuant to

Section 1065.2 to a home protection company that violates this section. The powers vested in the commissioner by this

section are in addition to any and all other powers and remedies vested in the commissioner by law, and nothing herein shall be construed as requiring the commissioner to employ the powers conferred in this

section instead of or as a condition precedent to the exercise of any other power or remedy vested in the commissioner. (g)</xhtml:p>"?> (

h) Notwithstanding subdivision (a), a home protection company may satisfy the requirements of this

section through the use of an insurance policy that covers percent of the home protection company’s contractual obligations in this state and is filed pursuant to another provision of this code. A copy of the insurance policy shall be provided to the department with the home protection company’s annual statement. 12776. The commissioner may adopt, amend, or repeal regulations to implement the provisions of this chapter. <caml:Num>12775.</caml:Num><caml:LawSectionVersion id="id_2F4B4CC3-1E1D-46B9-BB82-EA9EF82CDB20"><caml:Content><xhtml:p>Except as provided in

Section 12773, this</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection>"?> 12777. This

chapter shall become operative on July 1, 2027.

Document details

Collection	California Bills
Citation	AB 1931
Date	2026-06-18
Type	bill
Language	en
Source	CA_BILL
Identifier	20250AB193196AMD