2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 523C - RESIDENTIAL SERVICE CONTRACTS
523C.5 - REQUIRED BOND, CASH DEPOSIT, OR CUSTODIAL ACCOUNT.

        523C.5  REQUIRED BOND, CASH DEPOSIT, OR CUSTODIAL
      ACCOUNT.
         1.  To assure the faithful performance of obligations under
      residential service contracts issued and outstanding in this state, a
      service company shall, prior to the issuance or renewal of a license,
      file with the commissioner a surety bond in the amount of one hundred
      thousand dollars, which has been issued by an authorized surety
      company and approved by the commissioner as to issuer, form, and
      contents or establish a custodial account in the amount of one
      hundred thousand dollars at an authorized depository.  The bond or
      custodial account shall not be canceled or be subject to cancellation
      unless thirty days' advance notice in writing is filed with the
      commissioner.  Notwithstanding chapter 17A, if a bond or custodial
      account is canceled for any reason and a new bond or notice that a
      new custodial account has been established in the required amount is
      not received by the commissioner on or before the effective date of
      cancellation, the license of the service company is automatically
      revoked as of the date the bond or custodial account ceases to be in
      effect.  A service company whose license is revoked under this
      section may file an application for a new license pursuant to section
      523C.3.
         The bond or custodial account posted by a service company pursuant
      to this section shall be for the benefit of, and subject to recovery
      thereon by any residential service contract holder sustaining
      actionable injury due to the failure of the service company to
      faithfully perform its obligations under a residential service
      contract because of insolvency of the service company.
         If a service company ceases to do business in this state and
      furnishes to the commissioner satisfactory proof that it has
      discharged all obligations to contract holders, the surety bond or
      custodial account shall be released.
         The commissioner may by rule designate institutions authorized to
      act as a depository under this section and establish requirements for
      custodians, custodial agreements, custodial accounts, or the method
      of valuing noncash assets held in a custodial account which the
      commissioner believes necessary to protect the holders of residential
      service contracts issued and outstanding in this state.
         2.  In lieu of the bond or custodial account required by this
      section, the service company may deposit with the treasurer of state
      a cash deposit in the same amount.  The treasurer of state shall not
      refund a deposit until sixty days after the service company has
      ceased doing business in this state, a bond has been filed with the
      commissioner which complies with this section, or a custodial account
      is established which complies with this section.  

         83 Acts, ch 87, § 6; 88 Acts, ch 1112, § 705; 92 Acts, ch 1078, §
      3
         Referred to in § 523C.1, 523C.3, 523C.4, 523C.9, 523C.18