S.B. No. 2584 seeks to amend the Occupations Code to enhance the regulation of service contracts, focusing on consumer protection and accountability. The bill redefines "consumer" to refer specifically to individuals purchasing service contracts and expands the definition of "service contract" to include coverage for damages from power surges, defects in materials or workmanship, and normal wear. It introduces new requirements for residential service contracts, mandating that repairs be conducted by licensed individuals and that providers respond to service requests within 48 hours. Additionally, the bill clarifies exemptions from the chapter, such as maintenance agreements and warranties, and establishes that service contracts sold for non-personal purposes are not covered.

The legislation also imposes stricter record-keeping requirements on providers, necessitating detailed documentation of service contracts and claims, including dates, descriptions, and reasons for claim denials. It specifies that individuals selling or soliciting residential service contracts must be employed by a registered provider or administrator or hold relevant licenses, while allowing for compensation of non-employees under certain conditions. The bill permits the use of reimbursement insurance policies from captive insurance companies, provided a funded reserve is maintained, and prohibits misleading statements in communications about service contracts. Notably, Section 1304.1521 is repealed, and the new regulations will apply only to contracts entered into after the effective date of September 1, 2025.

Statutes affected:
Introduced: Occupations Code 1304.002, Occupations Code 1304.003, Occupations Code 1304.004, Occupations Code 1304.0041, Occupations Code 1304.051, Occupations Code 1304.101, Occupations Code 1304.1531, Occupations Code 1304.154, Occupations Code 1304.155, Occupations Code 1304.157, Occupations Code 1304.1025, Occupations Code 1304.1521 (Occupations Code 1304)