California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 3 - Insurers
Article 16 - Home Protection Companies
Section 2570.02 - Definitions

(a) "Unearned home protection contract fees" as used in Section 2570.06(g)(2) (B)7 and the reserves contemplated in Section 985 of the Insurance Code as required by Section 12751 of the Insurance Code means that a home protection company must make provision for reinsurance of the outstanding risk on policies which provide that premiums are fully earned at inception and on policies which for any other reason do not provide for a return premium to the insured on cancellation prior to expiration.

Standards for reasonably estimating the amount required to reinsure under Sections 980 through 988 of the Insurance Code to provide adequate safeguards for the contract holders, creditors and the public will be provided from time to time by the Commissioner after giving consideration to the developing experience of the home protection business.

(b) "Service claims adjusted and unpaid or in the process of adjustment" as used in Section 2570.06(g)(2) (B)1 means a reserve estimated in the aggregate to provide for the payment of all service claims for which a home protection company may be liable and to provide for the expense of adjustment or settlement of all service claims. This includes the cost to purchase home appliances, systems or components and to pay for installation and service.

"Service claim" as used herein means a claim by the holder of a home protection contract for the provision of service for the replacement or repair of a covered appliance, system or component pursuant to a home protection contract.