Service companies would follow licensing and contract rules

Service companies would need a state license to issue, offer, or sell motor vehicle or residential service contracts. The rule covers people and businesses selling these contracts in Iowa. Support-service providers are excluded, but licensed service companies remain responsible for their support services' compliance. A company must keep its license while it still owes duties to a contract holder, unless the commissioner orders otherwise after a hearing. Applications must include company, ownership, management, contract-form, financial-responsibility, and disciplinary information, plus a $500 fee. The act states that it takes effect January 1, but the year is missing from the supplied text.

Service companies would have to give buyers contract receipts and sample and completed copies, and include clear terms about coverage, fees, exclusions, cancellation, and substitute parts. These requirements apply to motor vehicle and residential service contracts offered, sold, or issued in Iowa. Residential claims involving essential heating, cooling, plumbing, or electrical service have added response rules when health or safety is at risk. Companies must accept cancellations by telephone, email, or the method used to enter the contract. A company cancellation generally requires at least 15 calendar days' written notice, but exceptions include nonpayment, material misrepresentation, and certain serious breaches. A buyer generally may cancel within at least 30 calendar days if no claim has been paid. Refunds may be reduced by paid claims and may include a limited administrative fee in some cases. A completed contract copy would be due within 10 business days after purchase. Essential repairs would start within 48 hours after a qualifying claim and be completed as soon as reasonably practicable.

The insurance commissioner could suspend or revoke licenses, deny applications, order violations to stop, and impose civil penalties for violations of the service-contract rules. The enforcement rules cover licensed companies, people selling contracts, and support services. Contracts sold by an unlicensed company would be void and unenforceable. Penalties could reach $1,000 per violation, or $5,000 when the person knew or reasonably should have known about the violation, subject to stated aggregate limits. The commissioner may immediately suspend a license without advance notice or a hearing when insolvency or an imminent threat to public health, safety, or welfare is found. Information gathered during investigations would generally remain confidential, although the commissioner could share or publish certain information in the public interest. A person or company may request a hearing after a license suspension, revocation, denial, or nonrenewal. The supplied text does not provide a complete effective-date year.