UPDATE – Finally, a service contract law the industry can follow in New Jersey. Senate Bill 854 (companion to previously reported House Bill 1740) has been signed by the Governor and service contracts will be regulated, but not as insurance.
The Governor’s approval ends a very long stretch of legislative efforts by interested parties within the service contract industry and will, once and for all, established a statutory framework for regulation motor vehicle, home and consumer goods service contracts that everyone can understand.
The legislation provides a framework much like the service contract model act adopted in a number of states already. It also provides for motor vehicle ancillary protection product contracts, sold for a separate consideration, and which provide benefits relating to tire & wheel/road hazard, paintless dent removal and windshield crack repair.
The new law will be administered by the Division of Consumer Affairs within the Department of Law and Public Safety. It would not require registration of providers (obligors), administrators or retail sellers, but it will establish compliance requirements relating to financial responsibility (insuring via CLP, maintaining a funded reserve account or maintain a net worth of at least $100M); statutorily mandated terms and conditions; and recordkeeping standards.
Among other things, this legislation also allows for the electronic delivery of the contract to the consumer and provides that any person who sells, or any provider who issues, a service contract that is not in compliance with the law is deemed to be jointly and severally liability for all covered contractual obligations arising from the non-compliant contract.
The new legislation will be effective 180 days after enactment. …”around” the middle of July, 2014.
