On November 1, 2011, Oklahoma’s new Home Service Contract Act became effective, establishing a new framework for regulating the home service contract industry in this state.
The new law enacts a regulatory framework much like what has been adopted in a number of states for regulating all forms of service contracts. However, this new law applies only to home service contracts and does not change ore repeal current requirements applicable to obligor companies (service warranty associations) offering service warranties (service contracts) covering motor vehicles or consumer goods.
The new law requiresa three-year registration of the provider (oblig0r) which includes demonstrating compliance with one of three financial responsibility methods: 1) insuring the program through a contractual liability policy; 2) maintaining an unearned premium reserve AND posting a security deposit with the Insurance Commissioner, or 3) maintaining net worth of at least $25 million. The net worth of an obigor’s parent company may be considered when meeting this net worth standard.
The new law also establishes certain requirements for the content (consumer disclosures) of a home service contract as well as any contractual liability policy used to qualify as an obligor/provider. In addition, an insurer that writes such a CLP must meet minimum capital and surplus requirements as well.
