Iowa would require licenses and clearer service contract rules

A person responsible for a service contract would need an Iowa license to offer or sell it. This would cover people contractually responsible to holders of vehicle or home service contracts sold in Iowa. The licensing rules would not apply to people providing support services, but a licensed company using them would have to ensure they follow the rules. A company would have to keep its license for as long as it remains contractually responsible under a service contract.

Service companies would have to give buyers contract information and follow rules for copies, cancellations, and refunds. These requirements would apply to vehicle and home service contracts offered, sold, or issued in Iowa. Before purchase, the company would have to provide a complete sample contract; it would provide a paper copy on request at its own expense. The completed contract would be due within ten days. The original buyer could cancel within at least 30 days after the contract takes effect for a full refund if no claim has been paid. Other cancellation rules include deductions, possible administrative fees, and exceptions. The sample contract would be due before purchase, and the completed contract within ten calendar days after purchase. The early cancellation period would start when the contract takes effect.

Companies would have to respond to certain urgent home repair claims and give customers updates when repairs take longer. This would cover residential contracts for heating, cooling, plumbing, refrigeration, or electrical service when the claim is essential to health or safety. This would apply to a covered heating, cooling, plumbing, refrigeration, or electrical claim essential to the customer's or family's health or safety. If the company determines it cannot finish within three days, the customer could use an outside provider. The company would cover reasonable costs up to the contract's maximum. Work would have to start within 48 hours after the claim is reported. If the company cannot finish within three days, it would have to provide a status report as soon as practical and no later than three days after the report.

Service companies and their support providers would be barred from certain misleading sales practices, and violations could bring penalties. These provisions would apply to service companies and, for the listed sales statements, their support providers offering service contracts in Iowa. The text bars false or misleading statements about company ties to vehicle makers, warranties, and vehicle contract coverage, including claims that buyers must purchase another contract to keep existing coverage. The commissioner could impose civil penalties for violations of rules adopted under this section; higher limits apply when a person knew or should have known of the violation. The restrictions would apply when service contracts are offered for sale in Iowa.