This recently filed legislation defines “ancillary protection product warranty” and “ancillary protection product service contract” and creates a carve-out from regulation under the Insurance Code for such agreements.
The ancillary protection product (“APP”) warranty would allow a warrantor to cover incidental costs that result from the failure of the protection product to prevent loss or damage to a motor vehicle from specific causes. Ancillary protection products include such things as chemical additives, alarm systems, steering locks, window etch products and ignition kill switches.
The legislation provides that covered incidental costs may include insurance deductibles, rental vehicle costs, sales or registration taxes associated with replacing a vehicle as well as the difference between the ACV and replacement cost of a stolen vehicle.
Under this bill, the APP service contract could include such benefits or services as repair or replacement of tires or wheels due to road hazards; paintless dent removal and repair of windshield chips or cracks.
The legislation would permit an APP warranty or service contract to be offered on a stand-alone basis or offered in conjunction with the purchase of a vehicle service contract. Vehicle service contracts are currently regulated by the Insurance Department under the Nebraska Vehicle Service Contract Reimbursement Act and are required to be insured under a first-dollar reimbursement insurance policy.The content of VSC consumer disclosures are regulated as well. The legislation does not change this with regard to VSCs. However, it appears that if an APP warranty or APP service contract is offered on a stand-alone basis, there would be no reimbursement insurance requirement or other terms and conditions disclosure requirements.
