In contrast to an “exemption” bill moving its way through the Pennsylvania Legislature, a new measure that proposes to regulate all forms of service contracts was introduced in the Senate earlier this month. PA Senate Bill 1436, introduced on July 2, 2010, would regulate motor vehicle, home and consumer goods service contract providers in a manner consistent with model legislation already enacted in a number of states. The bill provides for registration of providers with the Department of Insurance and would require demonstration of financial responsibility by insuring the service contract program through a reimbursement insurance policy, maintaining a funded reserve account and posting a security deposit of at least $25,000, or maintaining a net worth of at least $100M.
The bill would require standardized contract disclosures including a “free look” period, clear cancellation and deductible provisions as well as transferability information. It does not appear that the service contract would be subject to prior approval or filing with the Department. Lastly, the bill contains a “grandfather” provision addressing persons that have been engaged in the service contract business in the Commonwealth before the adoption of the bill.
