HB 1542 takes effect on January 1, 2018, and will require Virginia home service contract providers to post a surety bond when becoming licensed.
Virginia home service contract providers offer contracts that are for the repair, service, replacement, or maintenance of residential property or to cover the cost of service, repair, replacement, or maintenance of property that failed due to defects in materials or workmanship or due to normal wear and tear. Home service contracts can also cover roof leakage and damage sustained from power surges.
HB 1542 moves oversight of Virginia home service contract providers from the Department of Insurance to the Department of Agriculture and Consumer Services (VDACS). Providers must obtain a license from the VDACS and pay a $300 registration fee every year. Licenses must be renewed annually on or before July 1, and if a provider fails to register before selling a contract, the provider will be fined a $100 late filing fee for every 30-day period or portion thereof that registration is late. Providers that do not renew their registration on time must pay a $50 late fee for every 30-day period or portion thereof that registration is late.
The surety bond required of Virginia home service contract providers will be determined based on the value of unexpired home service contracts the provider has sold. The bond amount is determined as follows:
- $50,001 to $300,000 in contracts�$40,000 surety bond
- $300,001 to $750,000 in contracts�$65,000 surety bond
- $750,001 or more in contracts�$90,000 surety bond
Home service contract providers’ surety bonds guarantee that they will not cause financial damage to customers. In the event that a provider causes a customer to incur financial damage, the customer can file a claim against the provider’s surety bond and seek reimbursement.
Ready to get bonded as a home service contract provider? Get in touch with Single Source Insurance today!