AB 1931 makes utility-billed repair plans a regulated product
AB 1931 was approved by Governor Gavin Newsom on September 27, 2026. It became Chapter 561 of the Statutes of 2026 and adds Insurance Code sections 12766 through 12777. The new chapter becomes operative on July 1, 2027.
The bill covers home protection contracts sold through or in connection with a utility. These are the repair plans that may appear in a utility mailing or as a separate line connected to a utility account.
A typical situation we see is a composite, not a specific job. New owners move into an older house. A few months after closing, they receive an insert or see a line item offering a water and sewer line repair plan through their utility bill.
Their inspection report had noted a cast iron or clay sewer line of age. It recommended a sewer scope. No one ordered one. The owners are trying to decide whether the plan is the fix.
It is not the same thing as finding out what condition the line is in. AB 1931 adds rules around the offer, the billing, the contract, and the company or agent behind it. It does not turn a repair plan into an inspection.
A home protection contract pays for covered failures, not every problem in the house
A home protection contract obligates a home protection company to repair or replace all or part of a covered component, system, or appliance when the need is caused by wear and tear, deterioration, or an inherent defect during a specified period. The customer pays a predetermined fee. Many people call these contracts home warranties.
Traditional homeowners insurance answers a different question. The Assembly Insurance Committee analysis for the April 22, 2026 hearing says home protection contracts generally address wear and tear, rather than an unforeseen occurrence such as fire or theft.
A contract can cover a later repair without telling you whether the system is already damaged. Keep those questions separate.
The California Department of Insurance regulates home protection companies, and those companies must be licensed. Existing Insurance Code section 12762 already requires a contract to state, in clear and conspicuous terms, the covered appliances, systems, and components, along with exclusions, limitations, the contract period, fees, renewal terms, any service fee, and a representation that services will be initiated within 48 hours after a request.
That 48-hour statement concerns starting service, not finishing the repair. Our article on California homeowners insurance nonrenewals and roof age addresses that separate insurance issue. A utility repair plan is not a replacement for a homeowners policy.
Service lines belong in the inspection conversation before a utility offer arrives
The Legislature acted in part because many homeowners do not know who maintains the pipes and wires between the house and the utility main. The committee analysis says those connections, known as service lines, are not maintained by the utility. They are the homeowner’s responsibility to maintain.
The author’s stated examples were a broken water service line and a malfunctioning HVAC system, neither of which may be covered under a standard homeowners insurance policy.
The California Water Association, a trade group representing 116 CPUC-regulated water utilities, said the average cost of replacing a water service line exceeds $3,000. The group said sewer service line replacement costs approximately $6,500. Those are the trade group’s figures, not ours.
On the sewer side, the lateral from the house to the sewer main is typically the owner’s responsibility. A standard home inspection does not run a camera through that line. A sewer scope does. Buyers should read whether a California sewer scope is worth it before deciding that a repair contract answers the same question.
Some Bay Area jurisdictions go further. EBMUD’s regional Private Sewer Lateral program covers cities such as Oakland and can require compliance at certain triggers; see our Oakland inspection page. The water side raises the same ownership question, covered in our piece on water service lines and change of ownership.
Utilities can offer the plan, but the bill cannot make it look like a utility service
Before AB 1931, the committee analysis says a utility needed a full property and casualty agent license to offer or recommend these contracts. The utility could only “announce” availability. The result, according to the analysis, was short and uninformative notes.
The new law creates a “home protection contract limited lines agent” license. The Insurance Commissioner issues it to an organization transacting these contracts through or with a utility. A utility may solicit contracts and transmit fees as a vendor acting for a licensed agent, or for an appointed property and casualty agent.
That authority has limits. An unlicensed vendor employee may perform clerical or billing services. That employee may not enroll customers or answer questions about the contract.
The committee analysis explains the intended boundary. An unlicensed vendor employee is not authorized to answer claim-related questions about benefits, exclusions, and conditions. That employee also may not evaluate whether the customer’s existing coverage is adequate.
Marketing must say:
“The purchase of a home protection contract is optional and not required to purchase any other product or service offered by the utility.”
Marketing materials must identify the licensed agent’s name, contact information, and license number. The marketing cannot appear directly on the utility bill.
When a home protection contract fee is collected on the utility bill, the bill must state clearly that the contract is issued by a third party and not by the utility. The protection contract fee must be listed separately from utility charges. The bill must provide a phone number for the licensed agent.
Payments are applied to utility charges first, so a customer can see what is owed for utility service and what is owed for the separate contract.
HomeServe USA Corporation sponsored AB 1931. SoCalGas told the committee that more than 200,000 of its customers were enrolled in home protection plans paid through their utility bill, covering utility systems and major appliance repairs, including HVAC and water heater repairs. SoCalGas said that without the legislation it would soon need to stop collecting those payments.
The contract must explain claims, the 30-day return, and the insurer behind it
AB 1931 adds contract disclosure requirements for plans sold through utilities.
The contract must prominently explain how to make a claim and provide a toll-free number. Beginning January 1, 2028, digital contact must also be available for claims.
The contract must include a boldface statement that says:
“Performance to you under this contract is guaranteed by an insurance company.”
It must name and provide the address of that insurer. It must also provide the California Department of Insurance consumer line, 1-800-927-4357, and www.insurance.ca.gov.
The contract must state that the customer may return the contract within 30 days of purchase for a full refund if no claims have been made. It must also address alternative payment methods.
Read those provisions before you enroll, and save the contract, the enrollment material, and the bill showing the charge.
Renewal information has its own timing rule. The customer must receive notice no fewer than 15 calendar days and no more than 45 calendar days before every anniversary. The notice must state the anniversary date, renewal dates and length, the fee, how to cancel, how to request a copy of the contract, and the agent’s contact information.
The existing law also addresses cancellation during the initial term. Under Insurance Code section 12764, a contract is noncancellable during its initial term except for nonpayment, fraud or material misrepresentation, or a property sale when the contract makes coverage contingent on the sale not occurring. A monthly utility charge does not mean the contract can be ended at any time.
A home protection company selling through utilities must maintain one insurance policy covering 100 percent of its contractual obligations under Insurance Code section 12775.
The backing insurer must pay if the home protection company is unable, refuses, or otherwise fails to satisfy an obligation arising under the contract within 60 days after proof of loss. The purchaser must give written notice to the insurer.
That is a backstop for the company’s obligations, not a promise that every reported condition is covered. The contract still controls covered systems, exclusions, service fees, and claim procedure. The Commissioner can require corrective action plans, revoke a vendor’s authorization, suspend or revoke the agent license, and assess penalties.
A repair plan cannot tell you whether the sewer line is already failing
An inspection and a home protection contract answer different questions.
The inspection asks what could be observed at the time of the inspection. The contract addresses what happens later if a covered failure occurs under its terms. Neither replaces the other.
A standard home inspection does not run a camera down a sewer lateral. Order a sewer scope when the property, line material, age, access, or inspection findings make that information necessary. Our home inspection coverage guide explains why some systems require a specialist or an add-on service.
The same applies to a water service line. A visual inspection may not reveal the full condition of a buried line between the house and the main. A repair plan may offer future coverage. It does not provide a camera image, a material identification, or a current condition report.
Root intrusion is the classic lateral failure; our Santa Ana sewer lateral and root intrusion guide shows what a camera finds. Local requirements differ city to city, so check the pages for Santa Ana, Downey, and San Diego for the local picture.
The inspection can also identify visible clues that belong in a plan comparison. If the report found a water heater at the end of its service life, or an HVAC unit with an existing defect, ask the plan in writing how it treats a condition that existed before the contract started.
Many contracts list exclusions and limitations. California law requires those exclusions and limitations to be spelled out. Do not assume every plan treats pre-existing conditions the same way. Read the contract and compare it to the report.
At InspectionRE, an InterNACHI-certified inspection includes same-day digital reports and photos. FLIR infrared can help identify hidden moisture near plumbing. A sewer scope is available as an add-on. Those services show condition. They do not promise that a plan will pay for a repair.
Buyers, sellers, and agents should check the product before adding it to the file
The closing-time home warranty offered through a real estate transaction is a separate product from a plan offered later through a utility bill. Existing law exempts licensed real estate agents from the home protection contract licensing requirement under Insurance Code section 1635(j). That is why buyers often see a home warranty offered through the purchase transaction.
A utility-billed plan does not automatically replace the transaction product. If you already have one, check for overlap before adding a second plan.
Use this checklist:
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Identify who issued the contract, who the licensed agent is, and whether the agent’s name, contact information, and license number appear in the marketing.
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Separate the covered system from the repair location. A water heater, HVAC system, water service line, sewer lateral, and utility main are not interchangeable descriptions.
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Read every exclusion, limitation, service fee, renewal term, and cancellation provision. Compare those terms with the inspection report and any specialist report.
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Ask in writing how the contract treats a condition that was documented before the start date. Keep the answer with the contract.
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Confirm the claim phone number, the digital claim method required beginning January 1, 2028, the insurer’s name and address, and the Department of Insurance contact information.
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Check the utility bill for the third-party statement and a separate protection contract fee. Direct coverage questions to the licensed agent, not the utility’s billing staff.
Buyers should not treat an offer of coverage as evidence that a buried line is sound. Agents should keep the inspection question and the contract question separate. A water heater flagged in the report, for the kinds of installation problems our Thousand Oaks water heater guide walks through, is a condition to price now, not just a claim to file later.
California’s earlier attempts explain the added consumer rules
AB 1931 followed AB 1883, introduced by Calderon in 2024. That earlier bill was also sponsored by HomeServe and was broader. It stalled in the Senate Insurance Committee over concerns from the California Department of Insurance about its breadth.
AB 1931 is narrower. Its limited lines agent license covers only contracts transacted through or in connection with a utility.
The committee analysis also described a 2024 PG&E billing arrangement that was shut down because of customer confusion and low uptake. A November 8, 2024 Press Democrat article quoted in the analysis described PG&E customers asking whether HomeServe mailers were “simply an attempted scam.” The same article said HomeServe paid $850,000 in 2023 over alleged violations of the Kansas Consumer Protection Act. HomeServe did not admit wrongdoing.
That history explains the bill’s focus on plain billing, optional-purchase language, and agent identification. The California Water Association, California Water Service Company, San Diego Gas and Electric Company, SoCalGas, and the American Property Casualty Insurance Association supported the bill. There was no registered opposition on file for the April 22, 2026 hearing.
Five questions buyers and homeowners are likely to ask
Does AB 1931 require me to buy a utility repair plan?
No. Marketing must state that purchasing a home protection contract is optional and is not required to purchase another product or service offered by the utility.
Does the plan cover my sewer lateral because the fee appears on my utility bill?
Not automatically. Read the contract’s covered components, exclusions, limitations, and service fees. A sewer lateral from the house to the main is typically the owner’s responsibility, but the contract controls whether and how that component is addressed.
Can a utility employee tell me whether my existing home warranty is enough?
An unlicensed vendor employee cannot answer contract questions about benefits, exclusions, and conditions or evaluate whether existing coverage is adequate. Ask the licensed agent identified in the marketing or contract.
What should I do if the inspection report found an old water heater or HVAC defect?
Compare the finding to the contract. Ask in writing how the plan treats a condition that existed before the contract began. Keep the response with the inspection report and contract. Do not assume the plan will pay.
Can I return the contract after buying it?
The contract must provide that the customer may return it within 30 days of purchase for a full refund if no claims have been made. Follow the stated return procedure and keep proof of the request.
Check the line before you trust the plan
AB 1931 adds useful rules to a product that can otherwise look like a utility charge. Starting July 1, 2027, covered utility-billed plans must identify the third party, separate the fee, identify the licensed agent, explain claims, disclose the insurer, provide renewal information, and carry the required insurance backing.
Your next step should be specific. Pull the inspection report. Mark every system or line mentioned in it. Read the proposed contract beside those findings. Order a sewer scope if the lateral was not evaluated and the property conditions call for one. Ask written questions about existing defects, exclusions, and overlap with any closing-time home warranty.
For an inspection, review what is included, the inspection FAQ, and a sample inspection report. You can also call Inspection.re at 1-888-88-INSP-9.
