{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/59.1-434.3.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/59.1-434.3.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/59.1-434.3.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/59.1-434.3.html"}],"law_id":80675,"edition_id":1,"section_id":80675,"structure_id":15582,"section_number":"59.1-434.3","catch_line":"Bond or letter of credit required","history":"2017, c. 727.","full_text":"A\n\nEvery provider shall maintain a funded reserve account for its obligations under its home service contracts issued and outstanding in the Commonwealth. The reserves shall not be less than 40 percent of gross consideration received, less claims paid, on the sale of the home service contract for all in-force home service contracts sold in the Commonwealth.B\n\nEach provider, before it is registered under § 59.1-434.2, shall file and maintain with the Commissioner, in form and substance satisfactory to him, a bond with corporate surety, from a company authorized to transact business in the Commonwealth or a letter of credit from a bank insured by the Federal Deposit Insurance Corporation, in the amount of $10,000. Additional bond or letter of credit amounts shall be similarly filed with the Commissioner and shall be adjusted from time to time, in accordance with the following schedule:\n\t\t\tThe total amount of unexpired home service contracts shall be the total consideration paid by all purchasers to the provider for all home service contracts currently in effect. The bond or letter of credit required by this subsection shall be in favor of the Commonwealth for the benefit of purchasers of home service contracts for property in the event that the provider does not fulfill its obligations under such home service contracts for any reason, including insolvency or bankruptcy.C\n\nThe aggregate liability of the bond or letter of credit to all persons for all breaches of the conditions of the bond or letter of credit shall in no event exceed the amount of the bond or letter of credit. The bond or letter of credit shall not be cancelled or terminated except with the consent of the Commissioner.D\n\nIn lieu of compliance with subsections A and B, a provider may demonstrate financial responsibility by filing with the Commissioner a copy of a liability insurance policy issued by an insurer authorized to transact business in the Commonwealth and that covers 100 percent of the provider’s home service contract liabilities, including the administration of claims and the cost for such administration. Reimbursement insurance policies filed pursuant to this section may not be canceled by either the provider or the issuing insurer without providing 60 days’ notice to the Commissioner.","order_by":null,"text":{"0":{"id":289146,"text":"Every provider shall maintain a funded reserve account for its obligations under its home service contracts issued and outstanding in the Commonwealth. The reserves shall not be less than 40 percent of gross consideration received, less claims paid, on the sale of the home service contract for all in-force home service contracts sold in the Commonwealth.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":289147,"text":"Each provider, before it is registered under § 59.1-434.2, shall file and maintain with the Commissioner, in form and substance satisfactory to him, a bond with corporate surety, from a company authorized to transact business in the Commonwealth or a letter of credit from a bank insured by the Federal Deposit Insurance Corporation, in the amount of $10,000. Additional bond or letter of credit amounts shall be similarly filed with the Commissioner and shall be adjusted from time to time, in accordance with the following schedule:\n\t\t\tThe total amount of unexpired home service contracts shall be the total consideration paid by all purchasers to the provider for all home service contracts currently in effect. The bond or letter of credit required by this subsection shall be in favor of the Commonwealth for the benefit of purchasers of home service contracts for property in the event that the provider does not fulfill its obligations under such home service contracts for any reason, including insolvency or bankruptcy.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":289148,"text":"The aggregate liability of the bond or letter of credit to all persons for all breaches of the conditions of the bond or letter of credit shall in no event exceed the amount of the bond or letter of credit. The bond or letter of credit shall not be cancelled or terminated except with the consent of the Commissioner.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":289149,"text":"In lieu of compliance with subsections A and B, a provider may demonstrate financial responsibility by filing with the Commissioner a copy of a liability insurance policy issued by an insurer authorized to transact business in the Commonwealth and that covers 100 percent of the provider’s home service contract liabilities, including the administration of claims and the cost for such administration. Reimbursement insurance policies filed pursuant to this section may not be canceled by either the provider or the issuing insurer without providing 60 days’ notice to the Commissioner.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C"}},"ancestry":[{"id":15582,"edition_id":1,"name":"Home Service Contract Providers","identifier":"33.1","label":"chapter","depth":2,"order_by":1,"parent_id":12809,"metadata":{},"date_created":"2026-06-26 03:56:32","date_modified":"2026-06-26 03:56:32","permalink":{"id":261425,"object_type":"structure","relational_id":15582,"identifier":"33.1","token":"59.1\/33.1","url":"\/59.1\/33.1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12809,"edition_id":1,"name":"Trade and Commerce","identifier":"59.1","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:54","date_modified":"2026-06-26 03:43:54","permalink":{"id":259521,"object_type":"structure","relational_id":12809,"identifier":"59.1","token":"59.1","url":"\/59.1\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":84450,"structure_id":15582,"section_number":"59.1-434.1","catch_line":"Definitions","url":"\/59.1-434.1\/","token":"59.1\/33.1\/59.1-434.1","metadata":false},{"id":82404,"structure_id":15582,"section_number":"59.1-434.2","catch_line":"Registration; fees","url":"\/59.1-434.2\/","token":"59.1\/33.1\/59.1-434.2","metadata":false},{"id":80675,"structure_id":15582,"section_number":"59.1-434.3","catch_line":"Bond or letter of credit required","url":"\/59.1-434.3\/","token":"59.1\/33.1\/59.1-434.3","metadata":false},{"id":79305,"structure_id":15582,"section_number":"59.1-434.4","catch_line":"Regulations","url":"\/59.1-434.4\/","token":"59.1\/33.1\/59.1-434.4","metadata":false},{"id":60617,"structure_id":15582,"section_number":"59.1-434.5","catch_line":"Investigations","url":"\/59.1-434.5\/","token":"59.1\/33.1\/59.1-434.5","metadata":false},{"id":73050,"structure_id":15582,"section_number":"59.1-434.6","catch_line":"Production of records","url":"\/59.1-434.6\/","token":"59.1\/33.1\/59.1-434.6","metadata":false},{"id":73836,"structure_id":15582,"section_number":"59.1-434.7","catch_line":"Home service contracts not insurance; exemptions","url":"\/59.1-434.7\/","token":"59.1\/33.1\/59.1-434.7","metadata":false},{"id":59451,"structure_id":15582,"section_number":"59.1-434.8","catch_line":"Violations of chapter; penalty","url":"\/59.1-434.8\/","token":"59.1\/33.1\/59.1-434.8","metadata":false}],"previous_section":{"id":82404,"structure_id":15582,"section_number":"59.1-434.2","catch_line":"Registration; fees","url":"\/59.1-434.2\/","token":"59.1\/33.1\/59.1-434.2","metadata":false},"next_section":{"id":79305,"structure_id":15582,"section_number":"59.1-434.4","catch_line":"Regulations","url":"\/59.1-434.4\/","token":"59.1\/33.1\/59.1-434.4","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/59.1-434.3\/","history_text":"

This law was first created in 2017. The record of its establishment is cataloged in chapter 727<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year.<\/p>","references":false,"refers_to":[{"id":82404,"section_number":"59.1-434.2","catch_line":"Registration; fees","order_by":null,"url":"\/59.1-434.2\/"}],"permalink":{"id":261435,"object_type":"law","relational_id":80675,"identifier":"59.1-434.3","token":"59.1\/33.1\/59.1-434.3","url":"\/59.1-434.3\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/59.1-434.3\/","token":"59.1\/33.1\/59.1-434.3","dublin_core":{"Title":"Bond or letter of credit required","Type":"Text","Format":"text\/html","Identifier":"\u00a7 59.1-434.3","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> Every provider<\/span> shall maintain a funded reserve account for its obligations under its home service contracts<\/span> issued and outstanding in the Commonwealth. The reserves shall not be less than 40 percent of gross consideration received, less claims paid, on the sale of the home service contract<\/span> for all in-force home service contracts<\/span> sold in the Commonwealth. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> Each provider<\/span>, before it is registered under § 59.1-434.2<\/a>, shall file and maintain with the Commissioner<\/span>, in form and substance satisfactory to him, a bond<\/span> with corporate surety<\/span>, from a company authorized to transact business in the Commonwealth or a letter of credit from a bank insured by the Federal Deposit Insurance Corporation, in the amount of $10,000. Additional bond<\/span> or letter of credit amounts shall be similarly filed with the Commissioner<\/span> and shall be adjusted from time to time, in accordance with the following schedule:\n\t\t\tThe total amount of unexpired home service contracts<\/span> shall be the total consideration paid by all purchasers<\/span> to the provider<\/span> for all home service contracts<\/span> currently in effect. The bond<\/span> or letter of credit required by this subsection shall be in favor of the Commonwealth for the benefit of purchasers<\/span> of home service contracts<\/span> for property<\/span> in the event that the provider<\/span> does not fulfill its obligations under such home service contracts<\/span> for any reason, including insolvency or bankruptcy<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> The aggregate liability of the bond<\/span> or letter of credit to all persons for all breaches of the conditions of the bond<\/span> or letter of credit shall in no event exceed the amount of the bond<\/span> or letter of credit. The bond<\/span> or letter of credit shall not be cancelled or terminated except with the consent of the Commissioner<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> In lieu of compliance with subsections A and B, a provider<\/span> may demonstrate financial responsibility by filing with the Commissioner<\/span> a copy of a liability insurance policy issued by an insurer authorized to transact business in the Commonwealth and that covers 100 percent of the provider<\/span>’s home service contract<\/span> liabilities, including the administration of claims and the cost for such administration. Reimbursement insurance policies filed pursuant to this section may not be canceled by either the provider<\/span> or the issuing insurer without providing 60 days’ notice to the Commissioner<\/span>. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nBOND OR LETTER OF CREDIT REQUIRED (\u00a7 59.1-434.3)\n\nA. Every provider shall maintain a funded reserve account for its obligations\nunder its home service contracts issued and outstanding in the Commonwealth. The\nreserves shall not be less than 40 percent of gross consideration received, less\nclaims paid, on the sale of the home service contract for all in-force home\nservice contracts sold in the Commonwealth.\n\nB. Each provider, before it is registered under § 59.1-434.2, shall file\nand maintain with the Commissioner, in form and substance satisfactory to him, a\nbond with corporate surety, from a company authorized to transact business in\nthe Commonwealth or a letter of credit from a bank insured by the Federal\nDeposit Insurance Corporation, in the amount of $10,000. Additional bond or\nletter of credit amounts shall be similarly filed with the Commissioner and\nshall be adjusted from time to time, in accordance with the following schedule:\n\t\t\tThe total amount of unexpired home service contracts shall be the total\nconsideration paid by all purchasers to the provider for all home service\ncontracts currently in effect. The bond or letter of credit required by this\nsubsection shall be in favor of the Commonwealth for the benefit of purchasers\nof home service contracts for property in the event that the provider does not\nfulfill its obligations under such home service contracts for any reason,\nincluding insolvency or bankruptcy.\n\nC. The aggregate liability of the bond or letter of credit to all persons for\nall breaches of the conditions of the bond or letter of credit shall in no event\nexceed the amount of the bond or letter of credit. The bond or letter of credit\nshall not be cancelled or terminated except with the consent of the\nCommissioner.\n\nD. In lieu of compliance with subsections A and B, a provider may demonstrate\nfinancial responsibility by filing with the Commissioner a copy of a liability\ninsurance policy issued by an insurer authorized to transact business in the\nCommonwealth and that covers 100 percent of the provider’s home service\ncontract liabilities, including the administration of claims and the cost for\nsuch administration. Reimbursement insurance policies filed pursuant to this\nsection may not be canceled by either the provider or the issuing insurer\nwithout providing 60 days’ notice to the Commissioner.\n\nHISTORY: 2017, c. 727.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}