AB1931 - Insurance: home protection companies.

Amended IN Senate August 20, 2026 Amended IN Senate August 13, 2026 Amended IN Senate June 18, 2026 Amended IN Assembly April 16, 2026 Amended IN Assembly April 15, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 1931 Introduced by Assembly Member Papan February 13, 2026 An act to add Chapter 4 (commencing with Section 12766) to Part 7 of Division 2 of the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST AB 1931, as amended, Papan. Insurance: home protection companies. Existing law regulates home protection companies, which issue contracts for the repair or replacement of a component, system, or appliance of a home. Existing law prohibits a person from issuing home protection contracts in this state unless they hold a home protection company license issued by the Department of Insurance, except as specified. Existing law requires a home protection contract, as defined, to specify certain information in clear and conspicuous terms, including, but not limited to, every appliance, system, or component covered by the contract and all exclusions and limitations respecting the extent of the contract. This bill would, beginning on July 1, 2027, establish a license for a home protection contract limited lines agent, as defined, for an organization authorized to transact home protection contracts on behalf of a home protection company and in connection with a home protection contract vendor, as defined. The bill would additionally authorize a utility to solicit home protection contracts and transmit protection contract fees if it is a vendor acting on behalf of specified entities, including a licensed home protection contract limited lines agent. The bill would require an applicant for a license to submit specified items to the commissioner, including an application and a certificate stating the named applicant is trustworthy. The bill would authorize an agent to authorize a home protection contract vendor, as defined, to solicit contracts and collect home protection contract fees on its behalf subject to specified conditions, and would authorize a purchaser to return the contract within 30 days of purchase if no claim has been made. The bill would allow a vendor to collect fees on behalf of an agent through the utility bill if the bill makes it clear that the home protection contract is issued by a third party and not the utility, lists the protection contract fees separately from the utility charges, and the bill includes a telephone number for customers to inquire about their contract. The bill would also require the contract to include specified disclosures. The bill would prohibit an unlicensed employee of a vendor from participating in the transaction of home protection contracts other than clerical or billing services, and would require the home protection contract limited lines agent or property and casualty insurance agent to ensure the home protection contract vendor informs its employees about the restrictions. The bill would authorize the commissioner to implement specified penalties if a vendor violates these provisions. The bill would also require a home protection company to maintain a single insurance policy covering 100% of the company’s contractual obligation associated with the home protection contracts, among other specified requirements. The bill would prohibit a property and casualty insurance agent from acting as an agent of a home protection company in connection with a utility unless the company has filed a notice of appointment with the commissioner. The bill would require the notice of appointment to continue until specified documents are filed. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Chapter 4 (commencing with Section 12766) is added to Part 7 of Division 2 of the Insurance Code, to read: CHAPTER 4. Home Protection Contract Limited Lines Agent 12766. (a) A utility may solicit home protection contracts and transmit protection contract fees if it is a home protection contract vendor acting on behalf of, or in connection with, either of the following: (1) A home protection contract limited lines agent. (2) A property and casualty insurance agent that has been appointed by a home protection company pursuant to Section 12772. (b) (1) A home protection contract vendor, or its unlicensed employees, shall not enroll customers in a home protection contract or answer questions related to the contract, except as permitted by subdivision (d) of Section 12769. The home protection contract vendor shall direct customers to a home protection company, home protection contract limited lines agent, or property and casualty insurance agent for enrollment or home protection contract specific questions. (2) The home protection contract limited lines agent or property and casualty insurance agent shall ensure that the home protection contract vendor informs its unlicensed employees involved in home protection contract-related operations of the restrictions in this subdivision. (c) For purposes of this chapter, the following definitions apply: (1) “Home protection contract limited lines agent” means an organization licensed pursuant to this chapter, authorized to transact home protection contracts on behalf of a home protection company and in connection with a home protection contract vendor. (2) “Home protection contract vendor” means a utility complying with the requirements of this chapter and either of the following: (A) Registered pursuant to Section 12768. (B) Acting on behalf of or in connection with a property and casualty insurance agent. (3) “Utility” means an organization or an affiliate of an organization regulated by the Public Utilities Commission. 12767. (a) An applicant for a home protection contract limited lines agent license under this section shall submit all of the following to the commissioner: (1) An electronic or written application for licensure, signed by an officer of the applicant, in a form prescribed by the commissioner. (2) A certificate issued by the home protection company that is to be named in the home protection contract limited lines agent license, stating that the home protection company has satisfied itself that the named applicant is trustworthy and competent to act as its home protection contract limited lines agent and that the home protection company will appoint the applicant to act as its agent if the home protection contract limited lines agent license is issued by the commissioner. The certification shall be signed by an officer of the home protection company on a form prescribed by the commissioner. (3) An application fee of ten thousand dollars ($10,000) and, for each license period thereafter, a renewal fee of five thousand dollars ($5,000). ($5,000) or any fee amount designated by the commissioner by a bulletin pursuant to Section 12978. (b) Costs associated with an enforcement action shall be assessed against the organization licensed pursuant to this chapter. 12768. A home protection contract limited lines agent may authorize a home protection contract vendor to solicit home protection contracts and collect protection contract fees on its behalf and under its authority, under the following conditions: (a) The home protection contract limited lines agent certifies that the home protection contract vendor has not been convicted of violating Section 1033 of Title 18 of the United States Code. (b) Home protection contract marketing materials distributed by the home protection contract vendor to solicit home protection contracts includes the disclosures listed in subdivision (b) of Section 12769. (c) (1) The home protection contract limited lines agent maintains a register in a form prescribed by, or acceptable to, the commissioner listing the home protection contract vendors permitted to solicit home protection contracts and collect protection contract fees on its behalf. The register shall include both of the following: (A) (1) The name and contact information for both of the following: (i) (A) The home protection contract vendor. (ii) (B) An officer or person who directs or controls the home protection contract vendor’s home protection contract-related operations. (B) (2) The identification number provided by the Public Utilities Commission to the utility, or the affiliate, when the affiliate holds the identification number. (d) The home protection contract limited lines agent submits the register to the commissioner annually or upon request. (e) The home protection contract limited lines agent designates an individual licensed in the state to transact property and casualty insurance to be responsible for its compliance with home protection contract laws, rules, and regulations of the state. (f) The individual designated under subdivision (e) and any of the organization’s partners, members, controlling persons, officers, directors, and managers complies with the background check requirements as required by the commissioner. (g) The home protection contract limited lines agent has paid the applicable licensing fees required by Section 12767. 12769. (a) The marketing materials distributed by the home protection contract vendor to solicit home protection contracts shall be provided or approved by the home protection company and the home protection contract limited lines agent or the property and casualty agent. (b) The marketing materials described in subdivision (a) shall comply with Section 1725.5 and shall include a clear and conspicuous disclosure of all of the following: (1) The home protection contract limited lines agent’s or property and casualty insurance agent’s name, email address or other comparable electronic communication method, telephone number, and license number. (2) The purchase of a home protection contract is optional and not required to purchase any other product or service offered by the utility. (c) Marketing or advertisements for home protection contracts shall not appear directly on the utility bill. (d) An unlicensed employee of the home protection contract vendor shall not participate in the transaction of home protection contracts except to provide clerical or billing services. Nothing in this section shall prohibit a home protection contract vendor’s unlicensed employee from transferring a phone call from a customer or directing a customer to contact a home protection contract limited lines agent, property and casualty insurance agent, or home protection company to answer home protection contract-related questions. 12770. (a) A home protection contract vendor may collect protection contract fees through the utility bill on behalf of a home protection contract limited lines agent or a property and casualty insurance agent if the utility bill does all of the following: (1) Includes a clear statement that the home protection contract is issued by a third party and not the utility. (2) Lists the protection contract fees separately from any utility charges or fees, with clear identification that the fees are charged by the home protection contract limited lines agent or property and casualty insurance agent. (3) Includes a telephone number, and if space allows, a digital contact for customers to contact the home protection contract limited lines agent or property and casualty insurance agent to inquire about their home protection contract. (b) A home protection contract vendor that collects fees through a utility bill shall ensure that customer payments are applied first to charges due for utility services prior to applying payments for home protection contracts. (c) A home protection contract vendor shall not be required to maintain protection contract fees in a segregated account if the home protection company has provided in writing that the funds need not be segregated from funds received by a home protection contract vendor for utility services. All protection contract fees received by a home protection contract vendor from a customer shall be considered funds held in trust by the home protection contract vendor in a fiduciary capacity for the benefit of the home protection company. (d) (1) Compensation received by the home protection contract vendor shall comply with Section 12760. (2) Notwithstanding Section 12760, a home protection company shall not pay an override commission or marketing fee to an employee of the home protection contract vendor for the solicitation of, or for the sale of, home protection contracts resulting from the solicitation of home protection contracts by the home protection contract vendor. (3) Nothing in this section shall be construed to prohibit a home protection contract vendor from receiving compensation for billing and collection services, provided the compensation is not contingent on the amount of protection contract fees collected or attributable to the home protection contract vendor’s solicitation of home protection contracts. (e) If protection contract fees are collected by the home protection contract vendor on behalf of a home protection contract limited lines agent or property and casualty insurance agent through the utility bill on a recurring basis, the home protection contract limited lines agent or property and casualty insurance agent shall provide each customer written or electronic notice not fewer than 15 calendar days and not more than 45 calendar days prior to every anniversary of the customer’s enrollment date. The notice shall clearly and conspicuously disclose, as applicable, all the following: (1) The anniversary date of the customer’s enrollment. (2) The date or dates on which the renewal period begins, and if the customer’s home protection contract renews, the length of the renewal period. (3) The protection contract fee that will be charged to the customer on a recurring basis and the frequency of charges. (4) How the customer may cancel the home protection contract. (5) How the customer may request a copy of the home protection contract. (6) Contact information for the home protection contract limited lines agent or property and casualty insurance agent. 12771. (a) In addition to the items listed in paragraph (a) of Section 12762, a home protection contract transacted pursuant to this chapter shall include all of the following: (1) (A) A prominent and readily noticeable statement explaining how to make a claim, including a toll-free telephone number, for claim service and cancellation requests. (B) Beginning on January 1, 2028, this statement shall also include a digital contact. (2) A disclosure, with the telephone number in boldface type in substantially the following form: “Performance to you under this contract is guaranteed by an insurance company. You may file a claim with this insurance company if any obligation in the home protection contract has not been honored within 60 days after your request. The name a [Text truncated for display. 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