Iowa proposal would license service contract sellers and protect customers

The proposal would require people who sell covered service contracts in Iowa to be licensed. This covers people issuing, offering for sale, or selling motor vehicle and residential service contracts in Iowa. People providing support services would not need a license under this chapter, but a licensed company using them would have to ensure they follow the rules. The proposal would take effect January 1, 2027.

The proposal would require companies to give customers contract information and follow specified cancellation and urgent repair rules. These terms cover motor vehicle and residential service contracts issued, sold, or offered in Iowa. Customers would get a sample contract before buying and a completed copy within ten business days. Faster repair and update rules would apply only when a covered home system loss is essential to the customer's or family's health and safety. Unchanged contract forms filed before January 1, 2027, could remain in use through January 1, 2028.

The proposal would require companies to file contract forms and give regulators specified information, and would authorize investigations and penalties. These provisions concern service companies, people under investigation, and the Iowa insurance commissioner. After a hearing, the commissioner could order a person to stop a violation and impose a penalty. The commissioner could immediately suspend a company's license without advance notice or a hearing in specified urgent circumstances. The proposal would take effect January 1, 2027. The exception for certain older contract forms runs through January 1, 2028.