The SCIC has adopted model legislation that contains comprehensive consumer disclosures and a set of requirements for doing business that protects both the business that offers the service contract and the consumer who elects to purchase one.
FLORIDA: Governor Scott signed House Bill 875, amending the motor vehicle service agreement law. It expressly authorizes tire and wheel coverage and key or key-fob replacement. It also clarifies that the term “additive product” does not include wet appearance care products, and that “road hazard” does not include damage caused by collision with another vehicle, vandalism or other causes covered by an automobile damages policy. This law becomes effective July 1, 2016.
IDAHO: Idaho Senate Bill 1262 was signed by Governor Otter, amending the Motor Vehicle Service Contract law to exempt from the definition of a motor vehicle service contract or a contract of insurance, agreements whereby an employer, or a third party contracted by an employer, provides mileage reimbursement and incidental maintenance and repairs to its employees for personal vehicles used for business purposes. The bill goes into effect 60 days after the adjournment of session.
VIRGINIA: Governor McAuliffe signed Virginia House Bill 304, changing the license renewal cycle for home service contract providers from biennial to annual beginning July 1, 2017. it also revises the application fee from $1,000 biennially to $500 annually. It also revises the method for calculating the self-funded reserve by making clear that the 40% reserve amount is applied to the number that results from taking the gross provider fees and subtracting any claims paid. The bill became effective upon signing, February 29, 2016.
ALABAMA: Governor Bentley signed Alabama House Bill 7 on April 4, 2016, amending the definition of vehicle service contract. The new definition includes tire and wheel coverage, paintless dent repair, windshield repair or replacement, and replacement of keys or key-fobs. The bill also provides a definition of "road hazard" as a hazard that is encountered while driving a motor vehicle, including, but not limited to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs or composite scraps. The bill will become effective July 1, 2016.
KENTUCKY: Governor Bevin signed Kentucky Senate Bill 58, legislation being pursued by the SCIC to clarify the law that was inadvertently changed as the result of House Bill 417 that passed in 2012. This bill recodifies the requirement for vehicle service contract providers to maintain insurance backing along with the exemption from such requirement for a manufacturer or distributor of motor vehicles or a wholly owned subsidiary of a manufacturer or distributor. The bill also amends the definition of vehicle service contract to include: tire and wheel coverage; paintless dent repair; windshield repair or replacement; and key or key-fob coverage. The bill removes the restriction on the sale of vehicle service contracts and permits the contracts to be sold outside of a dealership setting. The bill becomes effective July 14, 2016.
COLORADO: Governor Hickenlooper approved Colorado House Bill 1317, amending the definition of vehicle service contract to include: tire and wheel coverage; paintless dent repair; windshield repair or replacement; and key or key-fob coverage. The bill also specifies that the definition of a motor vehicle service contract or service contract does not include mechanical breakdown insurance. The bill will be effective August 10, 2016.
OKLAHOMA: Governor Fallin approved Oklahoma House Bill 2715 on April 18, 2016. Pursuant to the SCIC's negotiations with the Department of Insurance last year, the requirement to license and appoint sales representatives was removed from the bill, in addition to the Department including a delayed effective date for new contract disclosure requirements. The bill requires the identity of the service warranty association and its license number to be preprinted on service contracts, with a delayed effective date of July 1, 2017. This bill will go into effect on November 1, 2016.
WASHINGTON: Governor Inslee signed Washington Senate Bill 6309, legislation being pursued by the SCIC, on April 1, 2016. The bill removes the two-year seasoning requirement for new applicants and makes clear that CLP-backed programs may use certified financial statements. It also allows an applicant that is using its parent company's net worth to demonstrate financial responsibility to avoid submitting the applicant's own financial statements or demonstrate its net worth if the parent company provides a parental guarantee. Additionally, the bill makes clear that audited financial statements are not required during the annual report submission if the licensee utilizes a CLP to demonstrate financial responsibility and that a licensee is not required to submit its own financial statements during the annual reporting process if it utilizes its parent company's net worth to demonstrate financial responsibility. The bill becomes effective June 9, 2016.
MARYLAND: Governor Hogan signed Maryland House Bill 675 on May 10, 2016. This bill revises the mechanical repair contracts section of the motor vehicle laws to authorize an "agent" to offer, sell or negotiate a mechanical repair contract. It also adds a definition of "agent" to make it clear that the term refers to a business entity. In addition, the bill increases the maximum penalty for sales through channels other than direct from an obligor company or through licensed dealers from $1,000 to $5,000. This doesn't affect sales made by the obligor or a licensed vehicle dealer. The bill becomes effective October 1, 2016.
LOUISIANA: Governor Edwards signed Louisiana House Bill 208 into law on May 26, 2016. The bill amends home service contract law regarding registration with the Secretary of State. Under the bill, each application for registration must be accompanied by a fee of $600.00 as opposed to previous language of not to exceed $600.00. Renewals must be accompanied by a renewal fee of $250.00. The bill became effective upon the Governor's signature, May 26, 2016.
Through these and similar activities, the SCIC has become the national leader with respect to the regulation and integrity of service contract providers.