Fla. Stat. 634.3077
Financial requirements
(1)
An association licensed under this part shall maintain a funded, unearned premium reserve account, consisting of unencumbered assets, equal to a minimum of 25 percent of the gross written premiums received by it from all warranty contracts in force in this state. Such assets must be held in the form of cash or invested in securities for investments as provided in part II of chapter 625. Such reserve account must be a separate auditable account for contracts in force in this state.(2)
An association shall maintain, at a minimum, net assets equal to one-sixth of the written premiums it receives for the issuance and delivery of any binder or warranty in force. Net assets may be less than one-sixth of the premiums written, provided the association has net assets of not less than $500,000 and maintains a funded, unearned premium reserve account consisting of unencumbered assets equal to a minimum of 40 percent of the gross written premiums received by it from all warranty contracts in force in this state, which must be held in the form of cash or invested in securities for investments as provided in part II of chapter 625. Such reserve account must be a separate auditable account for contracts in force in this state.(3)
An association may not be required to set up an unearned premium reserve if it has purchased contractual liability insurance which demonstrates to the satisfaction of the office that 100 percent of its claim exposure is covered by such insurance. Such contractual liability insurance shall be obtained from an insurer or insurers that hold a certificate of authority to do business within the state or from an insurer or insurers approved by the office as financially capable of meeting the obligations incurred pursuant to the policy. For purposes of this subsection, the contractual liability policy shall contain the following provisions:In the event that the home warranty association is unable to fulfill its obligation under its contracts issued in this state for any reason, including insolvency, bankruptcy, or dissolution, the contractual liability insurer will pay losses and unearned premiums under such plans directly to persons making claims under such contracts.The insurer issuing the policy shall assume full responsibility for the administration of claims in the event of the inability of the association to do so.The policy may not be canceled or not renewed by the insurer or the association unless 60 days’ written notice thereof has been given to the office by the insurer before the date of such cancellation or nonrenewal.The contractual liability insurance policy shall insure all home warranty contracts that were issued while the policy was in effect whether or not the premium has been remitted to the insurer.(a)
In the event that the home warranty association is unable to fulfill its obligation under its contracts issued in this state for any reason, including insolvency, bankruptcy, or dissolution, the contractual liability insurer will pay losses and unearned premiums under such plans directly to persons making claims under such contracts.(b)
The insurer issuing the policy shall assume full responsibility for the administration of claims in the event of the inability of the association to do so.(c)
The policy may not be canceled or not renewed by the insurer or the association unless 60 days’ written notice thereof has been given to the office by the insurer before the date of such cancellation or nonrenewal.(d)
The contractual liability insurance policy shall insure all home warranty contracts that were issued while the policy was in effect whether or not the premium has been remitted to the insurer.(4)
An association that purchases contractual liability insurance on the warranties that it issues shall provide the office with claim statistics required to be filed by associations not purchasing such insurance.(5)
An association licensed under this part is not required to establish an unearned premium reserve or maintain contractual liability insurance and may allow its premiums to exceed the ratio to net assets limitation of this section if the association complies with the following:The association or, if the association is a direct or indirect wholly owned subsidiary of a parent corporation, its parent corporation has, and maintains at all times, a minimum net worth of at least $100 million and provides the office with the following:A copy of the association’s annual audited financial statements or the audited consolidated financial statements of the association’s parent corporation, prepared by an independent certified public accountant in accordance with generally accepted accounting principles, which clearly demonstrate the net worth of the association or its parent corporation to be $100 million, and a quarterly written certification to the office that the association or its parent corporation continues to maintain the net worth required under this paragraph.
The association’s or its parent corporation’s Form 10-K, Form 10-Q, or Form 20-F as filed with the United States Securities and Exchange Commission or such other documents required to be filed with a recognized stock exchange, which shall be provided on a quarterly and annual basis within 10 days after the last date each such report must be filed with the Securities and Exchange Commission, the National Association of Securities Dealers Automated Quotation system, or other recognized stock exchange.
Failure to timely file the documents required under this paragraph may, at the discretion of the office, subject the association to suspension or revocation of its license under this part.
If the net worth of a parent corporation is used to satisfy the net worth provisions of paragraph (a), the following provisions must be met:The parent corporation must guarantee all service warranty obligations of the association, wherever written, on a form approved in advance by the office. A cancellation, termination, or modification of the guarantee does not become effective unless the parent corporation provides the office written notice at least 90 days before the effective date of the cancellation, termination, or modification and the office approves the request in writing. Before the effective date of the cancellation, termination, or modification of the guarantee, the association must demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, including whether the association will meet the requirements of this section by the purchase of contractual liability insurance, establishing required reserves, or other method allowed under this section. If the association or parent corporation does not demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, the association or parent association shall immediately cease writing new and renewal business upon the effective date of the cancellation, termination, or modification.
The association must maintain at all times net assets of at least $750,000.
(a)
The association or, if the association is a direct or indirect wholly owned subsidiary of a parent corporation, its parent corporation has, and maintains at all times, a minimum net worth of at least $100 million and provides the office with the following:A copy of the association’s annual audited financial statements or the audited consolidated financial statements of the association’s parent corporation, prepared by an independent certified public accountant in accordance with generally accepted accounting principles, which clearly demonstrate the net worth of the association or its parent corporation to be $100 million, and a quarterly written certification to the office that the association or its parent corporation continues to maintain the net worth required under this paragraph.The association’s or its parent corporation’s Form 10-K, Form 10-Q, or Form 20-F as filed with the United States Securities and Exchange Commission or such other documents required to be filed with a recognized stock exchange, which shall be provided on a quarterly and annual basis within 10 days after the last date each such report must be filed with the Securities and Exchange Commission, the National Association of Securities Dealers Automated Quotation system, or other recognized stock exchange.Failure to timely file the documents required under this paragraph may, at the discretion of the office, subject the association to suspension or revocation of its license under this part.
(b)
If the net worth of a parent corporation is used to satisfy the net worth provisions of paragraph (a), the following provisions must be met:The parent corporation must guarantee all service warranty obligations of the association, wherever written, on a form approved in advance by the office. A cancellation, termination, or modification of the guarantee does not become effective unless the parent corporation provides the office written notice at least 90 days before the effective date of the cancellation, termination, or modification and the office approves the request in writing. Before the effective date of the cancellation, termination, or modification of the guarantee, the association must demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, including whether the association will meet the requirements of this section by the purchase of contractual liability insurance, establishing required reserves, or other method allowed under this section. If the association or parent corporation does not demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, the association or parent association shall immediately cease writing new and renewal business upon the effective date of the cancellation, termination, or modification.The association must maintain at all times net assets of at least $750,000.(6)
An association operating in this state that issues home warranty or home service contracts in other states must comply with all financial requirement laws of such other states.
Source:
Section 634.3077 — Financial requirements, https://www.flsenate.gov/Laws/Statutes/2024/0634.3077 (accessed Aug. 7, 2025).