(1) To assure the faithful performance of its obligations to its members or subscribers in the event of insolvency, every home warranty association shall, before the issuance of its license by the office, deposit with the department securities of the type eligible for deposit by insurers under s. 625.52, which securities shall have at all times a market value of not less than $100,000.
(2) In lieu of any deposit of securities required under subsection (1), the association may:
(a) Deposit with the department securities of the type eligible for deposit by insurers under s. 625.52, which securities shall have at all times a market value of not less than $25,000; and
(b) File with the office a surety bond in the amount of $75,000. The bond shall be one issued by an authorized surety insurer, shall be for the same purpose as the deposit in lieu of which it is filed, and shall be subject to the approval of the office. The bond shall guarantee that the home warranty association will faithfully and truly perform all the conditions of any home warranty contract. No such bond may be canceled or subject to cancellation unless at least 60 days’ advance notice thereof in writing is filed with the office. In the event that notice of termination of the bond is filed with the office, the home warranty association insured thereunder shall, within 30 days of the filing of notice of termination, provide the office with a replacement bond meeting the requirements of this part or deposit additional securities as required under subsection (1). The cancellation of a bond will not relieve the obligation of the issuer of the bond for claims arising out of contracts issued before cancellation of the bond unless a replacement bond or securities are filed pursuant to this section. In no event may the liability of the issuer under the bond exceed the face amount of the bond. If within 30 days of filing the notice of termination no replacement bond or additional security is provided, the office shall suspend the license of the association until the deposit requirements are satisfied.
(3) Securities or bonds posted by an association pursuant to this section are for the benefit of, and subject to action thereon in the event of insolvency of any association or insurer by, any person or persons sustaining an actionable injury due to the failure of the association faithfully to perform its obligations to its warranty holders. Whenever the market value of the securities deposited with the department is less than 95 percent of the amount required, the association shall deposit additional securities or otherwise increase the deposit to the amount required.
(4) The state is responsible for the safekeeping of all securities deposited with the department under this part. Such securities are not, on account of being in this state, subject to taxation, but shall be held exclusively and solely to guarantee the faithful performance by the association of its obligations to its members or subscribers.
(5) The depositing association shall, during its solvency, have the right to exchange or substitute other securities of like quality and value for securities so on deposit, to receive the interest and other income accruing to such securities, and to inspect the deposit at all reasonable times.
(6) Such deposit or bond shall be maintained unimpaired as long as the association continues in business in this state. Whenever the association ceases to do business in this state and furnishes the office proof satisfactory to the office that it has discharged or otherwise adequately provided for all its obligations to its members or subscribers in this state, the office and department shall release the deposited securities to the parties entitled thereto, on presentation of the receipts of the department for such securities, or shall release any bond filed with it pursuant to this section.
History.—s. 1, ch. 77-339; s. 3, ch. 81-148; s. 2, ch. 81-318; s. 3, ch. 83-265; ss. 4, 32, 33, 34, ch. 83-323; s. 1, ch. 84-94; s. 184, ch. 91-108; s. 20, ch. 93-195; s. 1455, ch. 2003-261.