Insurance Code section 12850

(a)

An obligor has the burden of proving that a claim is not covered by a service contract. An obligor has the burden of proving that a claim settlement amount is proper under the terms of the contract.

(b)

No seller of a service contract who participates in or influences, directly or indirectly, the processing, administration, or adjustment of claims, shall enter into any agreement or understanding the effect of which is to make the amount of the seller’s commission or compensation contingent upon savings effected in the adjustment, settlement, or payment of losses covered by the contract.

Source: Section 12850, https://leginfo.­legislature.­ca.­gov/faces/codes_displaySection.­xhtml?lawCode=INS§ionNum=12850.­ (accessed Jun. 2, 2025).

Last Updated

May 12, 2025

§ 12850’s source at ca​.gov