1.

 Requirements.

 A reimbursement insurance policy insuring a motor vehicle service contract or residential service contract issued, sold, or offered for sale in this state shall provide for all of the following:

 a. The reimbursement insurance policy shall obligate the insurer that issued such policy to reimburse or pay on behalf of the service company any covered sums that the service company is legally obligated to pay according to the terms of the contract or, in the event of nonperformance by the service company, provide the service which the service company is legally obligated to perform according to the terms of the service contract, which shall be conspicuously stated in the reimbursement insurance policy.
 b. The reimbursement insurance policy shall entitle a service contract holder to make a claim directly against the insurance policy if the service company fails to pay or provide service on a claim within sixty days after proof of loss is filed with the service company.
 c. The insurer that issued a reimbursement insurance policy shall be deemed to have received the premiums upon the payment of the total purchase price of the service contract by the service contract holder.

Terms Used In Iowa Code 523C.6

  • Commissioner: means the commissioner of insurance. See Iowa Code 523C.1
  • Contract: means the same as defined in section 554D. See Iowa Code 554E.1
  • Contract: A legal written agreement that becomes binding when signed.
  • 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
  • Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
  • Insurer: means a person duly licensed in this state as an insurance company pursuant to this subtitle. See Iowa Code 510.1B
  • Motor vehicle: means any self-propelled vehicle subject to registration under chapter 321. See Iowa Code 523C.1
  • Premium: means the consideration paid to an insurer for a reimbursement insurance policy. 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
  • 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
  • Service contract: means 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
 2.

 Termination.

 As applicable, an insurer that issued a reimbursement insurance policy shall not terminate the policy unless a written notice has been received by the commissioner and by each applicable service company. The notice shall fix the date of termination at a date no earlier than ten days after receipt of the notice by the commissioner. The termination of a reimbursement insurance policy shall not reduce the issuer’s responsibility for a service contract issued by an insured service company prior to the date of termination.

 3.

 Indemnification or subrogation.

 This section does not prevent or limit the right of an insurer that issued a reimbursement insurance policy to seek indemnification from or subrogation against a service company if the insurer pays or is obligated to pay a service contract holder sums that the service company was obligated to pay pursuant to the provisions of a service contract or pursuant to a contractual agreement.

 4.

 Premium tax liability.

 Payments for the purchase price of a service contract by a service contract holder shall be exempt from premium tax. However, premiums shall be subject to premium tax.

 5.

 Qualifications of insurer.

 An insurer issuing a reimbursement insurance policy under this chapter shall be authorized, registered, or otherwise permitted to transact business in this state and shall meet one of the following requirements:

 a. At the time the policy is filed with the commissioner, and continuously thereafter, the insurer maintains surplus as to policyholders and paid-in capital of at least fifteen million dollars and annually files copies of the insurer’s financial statements, national association of insurance commissioners annual statement, and actuarial certification, if required and filed in the insurer’s state of domicile.
 b. At the time the policy is filed with the commissioner and continuously thereafter, the insurer does all of the following:

 (1) Maintains surplus as to policyholders and paid-in capital of less than fifteen million dollars but at least ten million dollars.
 (2) Demonstrates to the satisfaction of the commissioner that the insurer maintains a ratio of net written premiums, wherever written, to surplus as to policyholders and paid-in capital of not greater than three to one.
 (3) Files copies annually of the insurer’s financial statements, national association of insurance commissioners annual statement, and actuarial certification, if required and filed in the insurer’s state of domicile.