                                 CODE OF VIRGINIA

BOND OR LETTER OF CREDIT REQUIRED (§ 59.1-434.3)

A. 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.

B. Each provider, before it is registered under &#xA7; 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:
			The 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. 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.

D. 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&#8217;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&#8217; notice to the Commissioner.

HISTORY: 2017, c. 727.