Warranty Associations

Added new requirement (Section 1(d)(e)) that contractual liability insurance must either pay 100% of claims as they are incurred or pay 100% of claims due if the association fails to pay when due.

Added new provision (Section 2(e)) requiring full refund of unearned premiums to consumers when service warranty is canceled, subject to cancellation fee provisions.

Added new provision (Section 2(f)) clarifying that associations cannot use both unearned premium reserves and contractual liability insurance simultaneously, but can transition between them for previously sold versus new warranties.

Added new Section 3 requiring contracts with accidental damage from handling coverage to be covered by contractual liability insurance specified in 634.406(3), with exceptions for associations exempt from reserve requirements.

Modified premium ratio exemption criteria in Section 2(4) and 2(6) to include specific financial thresholds: $2.5 million net assets with $100 million policyholder surplus insurers, or $200 million policyholder surplus insurers.

Corrected grammatical errors and inconsistencies in insurance policy language throughout the bill, such as changing 'must shall' to 'must' and fixing verb agreement issues.

Added effective date provision stating the act takes effect July 1, 2025.

Added requirement that contracts covering accidental damage from handling must be covered by specific contractual liability insurance policies.

Added new subsection requiring insurers to provide quarterly and annual certification statements regarding premium coverage.

Modified financial thresholds allowing companies with $2.5 million net assets and A-rated insurers to exceed standard premium ratios.

Revised net worth requirements from $100 million for parent corporations to include specific documentation and certification procedures.

Established July 1, 2025 as the effective date for all new provisions.

Corrected grammatical inconsistencies and formatting errors throughout the statute text.