The bill amends the Iowa Code to establish new regulations for service companies that offer motor vehicle and residential service contracts. It introduces definitions for key terms such as "service contracts," "gross consideration," and "service contract holder," and mandates that service companies maintain a valid license while servicing contract holders. The licensing process is detailed, requiring a $500 application fee and a $35 fee for each motor vehicle service contract form. Service companies are also obligated to report any material changes or administrative actions to the commissioner within specified timeframes. Additionally, the bill outlines requirements for service contracts, including the provision of sample contracts before purchase, timely delivery of executed contracts, and clear cancellation procedures.

Consumer protection measures are a significant focus of the bill, which requires service companies to provide detailed written explanations for denied claims and to maintain transparency regarding the status of claims. It mandates that service contracts allow holders to cancel within thirty days for a full refund if no claims have been paid. The bill also emphasizes the importance of timely repairs for essential services and includes penalties for late refunds. Furthermore, it grants the commissioner authority to suspend or revoke licenses and imposes civil penalties for violations. The bill repeals Code section 523C.19, which relates to cease and desist orders, thereby streamlining the regulatory framework for service contracts in Iowa.

Statutes affected:
Introduced: 507B.4, 523C.1, 523C.2, 523C.3, 523C.9, 523C.5, 523C.13, 523C.23, 714.16, 523C.19