Earlier this year, the Colorado Legislature enacted new law within the state’s Insurance Code to govern the sales of a consumer goods service contract. House Bill 1199 was signed by the Governor in May and will become effective January 1, 2015.
This new law establishes a framework for regulating such contracts, in a manner comparable to that which is in place in a number of states. It contains the following:
– Providers (obligors) are required to register with the Commissioner of Insurance;
– Defines “consumer product” as “any tangible personal property that is distributed in commerce and is normally used for personal, family or household purposes, including any tangible personal property intended to be attached or installed in any real property without regard to whether it is so attached or installed”
– Requires that the provider/obligor either insure its programs through a qualifying reimbursement insurance policy or demonstrate that is has a minimum net worth of $100 million.
– The content and disclosures for such a service contract are set forth in the new law, however the filing of such form does not appear to be required in connection with a providers’ registration application
– Standards for recordkeeping are also established.
The legislation specifically exempts “pre-owned home warranty service contracts” already regulated under the state’s Professions and Occupations (Real Estate section) law; as well as motor vehicle service contracts regulated under the state’s Vehicles and Traffic law. The legislation also exempts service contracts covering certain powersports vehicles, also regulated under the Professions and Occupations (Automobiles section) law.
