Last reviewed: 4 November 2026
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United StatesFlorida service warranty associations: what chapter 634, Part III requires
Florida regulates service warranties on consumer products under Part III of chapter 634 of the Florida Statutes (sections 634.401 to 634.444).11 Part III requires a company that offers service warranties to Florida residents to hold a license from the Office of Insurance Regulation, to keep a deposit or bond with the state, to back its contracts with a reserve, insurance or net worth, and to put a cancellation and refund provision in every contract.3456 This page walks through those sections. Florida home warranties fall under Part II instead, and motor vehicle service agreements under Part I.112
In short
- Who licenses them: "No person in this state shall provide or offer to provide service warranties to residents of this state unless authorized therefor under a subsisting license issued by the office" (s. 634.403(1)). The license fee is $200 per license year.3
- What it covers: a written promise "for a specific duration" to repair, replace or maintain a consumer product, or pay for that, after failure "due to a defect in materials or workmanship, normal wear and tear, power surge, or accidental damage from handling," for "a segregated charge by the consumer" (s. 634.401(13)).1
- What backs it: a deposit or surety bond with the state, plus either a funded unearned premium reserve of at least 25 per cent of gross written premiums, contractual liability insurance covering 100 per cent of claim exposure, or a $100 million net worth route (ss. 634.405, 634.406).45
- Refunds: if the holder cancels, the refund is at least 90 per cent of the unearned pro rata premium, less claims paid or repair costs; if the association cancels, 100 per cent, less the same (s. 634.414(1)).6
- Complaints: the Department of Financial Services' Division of Consumer Services takes insurance concerns, and its contact page lists warranties among the products it covers.16
Who regulates a Florida service warranty association
Part III defines a "service warranty association" as "any person, other than an authorized insurer, issuing service warranties."1 Section 634.403 says no person may provide or offer service warranties to Florida residents without a license issued by "the office," and sets the license fee at $200 for each license year.3 The Office of Insurance Regulation (OIR) lists Part III, "Service Warranty Associations (Sections 634.401-634.444)," and rule chapter 69O-198, "Service Warranty Associations," on its warranties page.12 OIR's specialty product page says the office "licenses entities, examines them for compliance with applicable laws and rules and monitors their financial condition," and lists the service warranty annual report and renewal forms.13
Section 634.4025 says that, except as provided in Part III, service warranty associations "shall be governed by this part and shall be exempt from all other provisions of the Florida Insurance Code."2 Two other routes are written into section 634.403. An insurer authorized for property or casualty insurance in Florida "may also transact a service warranty business without additional qualifications or authority," but is otherwise subject to Part III. And a person who sells service warranties only to nonresidents, and does not market them to Florida residents, is exempt from the license if it files a notification letter with the office when it starts business and every year by March 1.3 Selling without a license can lead to an immediate cease and desist order under section 634.403(3).3
The people who sell the contracts are licensed too. Section 634.419 says "no person or entity shall solicit, negotiate, advertise, or effectuate service warranty contracts in this state unless such person or entity is licensed and appointed as a sales representative." A licensed association does not need a separate sales representative license to sell its own products.7 The DFS service warranty overview points to section 634.420 for salesperson licensing.14
What counts as a service warranty, and what does not
Section 634.401(13) defines a service warranty as "any warranty, guaranty, extended warranty or extended guaranty, maintenance service contract equal to or greater than 1 year in length," or other written promise "for a specific duration" to repair, replace or maintain a consumer product, or to indemnify for that, for "operational or structural failure due to a defect in materials or workmanship, normal wear and tear, power surge, or accidental damage from handling in return for the payment of a segregated charge by the consumer."1 A "consumer product" is "tangible property primarily used for personal, family, or household purposes."1 The definition leaves out several things:1
| Item | What the statute says |
|---|---|
| Short maintenance contracts | Maintenance service contracts "written for less than 1 year" that have no indemnification and give no parts-and-labor discount above 20 per cent (s. 634.401(13)(a))1 |
| Motor vehicle service agreements | Excluded from the Part III definition (s. 634.401(13)(a)); OIR lists them under Part I121 |
| Home warranties | "Home warranties subject to regulation under part II of this chapter" are excluded (s. 634.401(13)(a))1 |
| Condominium contracts | "Service contracts between consumers and condominium associations" (s. 634.401(13)(b))1 |
| Section 624.125 transactions | Transactions exempt under s. 624.125 (s. 634.401(13)(a))1 |
Where a home-related contract lands depends on what it covers. Part II defines a home warranty as a contract covering repair or replacement of "any structural component or appliance of a home," but says Part II "does not apply to a contract or agreement offered by a warranty association in compliance with part III, provided such contract or agreement only relates to the systems and appliances of the covered residential property and does not cover any structural component of the residential property" (s. 634.301(2)).10 Our Florida home warranty page covers Part II.
Part III also sorts associations into two kinds by income. A "warrantor" derives "not more than 50 percent of its gross income from the sale of service warranties," and a "warranty seller" derives more than 50 per cent (s. 634.401(15), (16)). The deposit and ratio rules below differ between the two.1
What backs the promise: deposit, reserve, insurance or net worth
Deposit or bond. Section 634.405(1) requires each association, "to assure the faithful performance of its obligations to its members or subscribers in the event of insolvency," to deposit securities with the Department of Financial Services before it is licensed and while it has premiums in force in Florida.4 The amounts are:4
| Association | Deposit |
|---|---|
| New warrantor | $50,000, placed "before the issuance of its license and before receiving any premiums"4 |
| Warrantor, $300,000 or less of gross written premiums in Florida | Not less than $50,0004 |
| Warrantor, more than $300,000 but less than $750,000 | Not less than $75,0004 |
| Warrantor, $750,000 or more | $100,0004 |
| Warranty seller | Not less than $100,000, before the license is issued4 |
A surety bond may be filed instead of the securities if the office approves it, and no warranty may be written for a period beyond the bond's duration (s. 634.405(2)). The deposit or bond is "for the benefit of" any person "sustaining an actionable injury due to the failure of the association to faithfully perform its obligations to its warranty holders" (s. 634.405(3)).4
Reserve or insurance. Section 634.406 then sets the main financial rule. An association must keep "a funded, unearned premium reserve account, consisting of unencumbered assets, equal to a minimum of 25 percent of the gross written premiums received on all warranty contracts in force which are written in this state," and must also deposit with the department a reserve deposit equal to 10 per cent of those gross written premiums (s. 634.406(1), (2)).5 An association does not need the reserve if it has contractual liability insurance that "demonstrates to the satisfaction of the office that 100 percent of its claim exposure is covered," from an insurer authorized in Florida (s. 634.406(3)).5 That policy must say that if the association "does not fulfill its obligation under contracts issued in this state for any reason, including insolvency, bankruptcy, or dissolution," the insurer "will pay losses and unearned premium refunds under such plans directly to the person making a claim under the contract." It must also have the insurer take over claims administration if the association cannot, require 60 days' written notice to the office before cancellation or nonrenewal, and cover all contracts issued while it was in effect (s. 634.406(3)(a) to (d)).5 An association may not use the reserve and the insurance at the same time for the same contracts, and "must be able to distinguish how each individual service warranty is covered" (s. 634.406(3)(f)).5
Net worth. An association that holds no Part I or Part II license may skip both the reserve and the insurance if it, or its parent corporation, "has, and maintains at all times, a minimum net worth of at least $100 million" and files audited statements or SEC reports with the office. Where a parent's net worth is used, the parent must guarantee "all service warranty obligations of the association, wherever written," and the association must keep net assets of at least $750,000 (s. 634.406(7)).5
Premium-to-assets ratio. Warrantors and warranty sellers may not let gross written premiums in force exceed "a 7-to-1 ratio to net assets," with exceptions in section 634.406(4) and (6) for associations that meet higher net asset and insurer-rating tests.5 For how reserves and insurance compare across states, see reimbursement insurance vs. a funded reserve.
What the contract must say and when you get it
Section 634.414 lists required provisions. Every service warranty contract "shall contain a cancellation provision."6 The contract, or a separate notice at the time of sale, must disclose "that the rate charged for the contract is not subject to regulation by the office" (s. 634.414(3)).6 The contract must be "mailed, delivered, or electronically transmitted to the warranty holder within 45 days after the date of purchase," and an electronic copy must tell the holder of the right to receive it by mail instead (s. 634.414(4)).6 Contracts that cover accidental damage from handling must be covered by contractual liability insurance under section 634.406(3), unless the association uses the $100 million net worth route in 634.406(7) (s. 634.414(5); s. 634.401(13)(c)).61
Before the sale, section 634.436(9) makes it an unfair practice to fail "to provide a consumer with a complete sample copy of the terms and conditions of the service warranty before the time of sale upon a request for the same by the consumer." An association can meet this by giving a sample copy or by "directing the consumer to a website that displays a complete sample of the terms and conditions."8
Cancelling and refunds
| Who cancels | What the statute says |
|---|---|
| The warranty holder | Return of premium "based upon no less than 90 percent of unearned pro rata premium less any claims that have been paid or less the cost of repairs made on behalf of the warranty holder"6 |
| The association | Return of premium "based upon 100 percent of unearned pro rata premium, less any claims paid or the cost of repairs made on behalf of the warranty holder"6 |
| How it is paid | "By cash, check, store credit, gift card, or other similar means." On the holder's request, "the refund shall be remitted by check"6 |
Refunds may be paid through the sales representative who issued the contract (s. 634.414(1)).6 Section 634.414 does not set a separate free-look period with a full refund.6 For how other states handle this, see cancelling a service contract: state statutes compared.
Claims handling and other unfair practices
Section 634.436 defines unfair methods of competition and unfair or deceptive acts for service warranty business. They include misrepresenting "the benefits, advantages, conditions, or terms of any service warranty contract," and untrue, deceptive or misleading advertising about the business of service warranty (s. 634.436(1), (2)).8 Under subsection (5), unfair claim settlement practices include, when done "with such frequency as to indicate a general business practice," failing to investigate claims properly, denying claims "without conducting reasonable investigations based upon available information," and failing to "promptly provide a reasonable explanation" of the basis for a denial.8 An association must also keep "a record of each complaint received for a 3-year period after the date of the receipt of the written complaint" (s. 634.436(6)), and may not advertise or give a "free" service warranty as an inducement to buy property or services (s. 634.436(8)).8
Section 634.433 gives a civil remedy. "Any person damaged by a violation of the provisions of this part may bring a civil action" in circuit court, and on an adverse ruling the defendant "will be liable for actual damages or $500, whichever is greater, together with court costs and reasonable attorney's fees."9 Before suing, the department and the insurer must be given written notice stating the facts and the law relied on, and "no action will lie if, within 30 days thereafter, the damages are paid or the circumstances giving rise to the violation are corrected." The section does not authorize a class action against a service warranty association (s. 634.433(3), (4)).9
Where to complain in Florida
The Division of Consumer Services at the Department of Financial Services takes insurance concerns online and says it handles concerns "related to insurance products, including bonds, warranties and annuities." Its helpline is 1-877-MY-FL-CFO (1-877-693-5236); out-of-state callers use (850) 413-3089.16 Its "Get Insurance Help" page asks consumers to contact the company first and "allow them the opportunity to resolve your issue," and says it can help with policies purchased in Florida.15 The same page says the division cannot give legal advice or "compel a company to pay a claim, refund a premium, reinstate and/or issue a policy (if they have not violated any law, rule or policy provision)."15 For licensing questions about a service warranty association, OIR lists (850) 413-3148.13 See also where to file a warranty complaint.
Frequently asked questions
Is a Florida service warranty insurance?
Part III treats it as its own regulated product. Section 634.4025 says associations are governed by Part III and exempt from the rest of the Florida Insurance Code, except as Part III provides, and section 634.428 is titled "Insurance business not authorized."211 The license still comes from the Office of Insurance Regulation.3
What if the company goes out of business?
Two parts of the statute speak to this: the deposit or bond under section 634.405, held for people injured by the association's failure to perform, and, for insured contracts, the policy term that the insurer pays losses and unearned premium refunds directly to the claimant "for any reason, including insolvency."45 The DFS service warranty overview also says that if a warranty company is ordered into receivership, "your warranty and any pending claims are not guaranteed. Claims and any return premium will not be covered by any Florida guaranty association."14 See what happens if your warranty company goes out of business.
How do I check that a company is licensed?
The DFS service warranty overview tells buyers to "verify the warranty company is licensed in Florida to sell the product you are considering" and to know "the complete name of the warranty company providing your coverage."14 OIR's specialty product page lists a phone line for service warranty questions.13
Last reviewed: 4 November 2026. Statute text as published by the Florida Legislature (2026 Florida Statutes). This page is general information about a statute, not legal advice.