In order to assure the faithful performance of a service company‘s obligations to its contract holders in this state, a licensed service company shall demonstrate financial responsibility to the commissioner by satisfying one of the following, as evidenced by the service company:
 1. Insuring all motor vehicle service contracts and residential service contracts offered for sale in this state under a reimbursement insurance policy that complies with section 523C.6.

Terms Used In Iowa Code 523C.5

  • Account: means the same as defined in section 554. See Iowa Code 554E.1
  • Commission: means the real estate commission as established by chapter 543B. See Iowa Code 543C.1
  • Commissioner: means the commissioner of insurance. See Iowa Code 523C.1
  • following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
  • Licensed service company: means a service company which is licensed by the commissioner pursuant to this chapter. See Iowa Code 523C.1
  • Motor vehicle: means any self-propelled vehicle subject to registration under chapter 321. See Iowa Code 523C.1
  • Reimbursement insurance policy: means a contractual liability insurance policy issued to a service company that either provides reimbursement to a service company under the terms of insured service contracts issued or sold by the service company or, in the event of nonperformance by the service company, pays, on behalf of the service company, all covered contractual obligations incurred by the service company under the terms of the insured service contracts issued or sold by the service company. See Iowa Code 523C.1
  • Rule: includes "regulation". See Iowa Code 4.1
  • Sale: means any sale, offer for sale, or attempt to sell or lease any land, to the public in this state, for cash or on credit. See Iowa Code 543C.1
  • Service company: means a person who is contractually obligated to perform services pursuant to a motor vehicle service contract or residential service contract. See Iowa Code 523C.1
  • state: when applied to the different parts of the United States, includes the District of Columbia and the territories, and the words "United States" may include the said district and territories. See Iowa Code 4.1
  • year: means twelve consecutive months. See Iowa Code 4.1
 2. Doing both of the following:

 a. Maintaining a funded reserve account for the service company’s obligations under any issued and outstanding service contracts in this state, in an amount no less than forty percent of gross consideration received, less claims paid, for the sale of all service contracts issued and in force in this state. The reserve account shall be subject to examination and review by the commissioner.
 b. Placing in trust with the commissioner a financial security deposit in an amount no less than five percent of the gross consideration received by the service company, less claims paid, for the sale of all motor vehicle service contracts and residential service contracts issued and in force in this state, but not less than twenty-five thousand dollars, consisting of one of the following:

 (1) Cash.
 (2) Securities of the type eligible for deposit by insurers authorized to transact business in this state.
 (3) Certificates of deposit.
 (4) A surety bond issued by an authorized surety company.
 (5) Another form of security as prescribed by the commissioner by rule.
 3. Doing both of the following:

 a. Maintaining, on its own or together with a parent company, a minimum net worth or stockholders’ equity of one hundred million dollars or more.
 b. Upon request from the commissioner, providing either:

 (1) A copy of the service company’s financial statements.
 (2) If the service company’s financial statements are consolidated with those of its parent company, a copy of the parent company’s most recent form 10-K or form 20-F filed with the federal securities and exchange commission within the last calendar year, or if the parent company does not file with the federal securities and exchange commission, a copy of the parent company’s audited financial statements showing a net worth of at least one hundred million dollars. If the service company’s financial statements are consolidated with those of its parent company, the service company shall also provide a copy of a written agreement by the parent company guaranteeing the obligations of the service company under motor vehicle service contracts and residential service contracts issued and outstanding by the service company in this state.
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