Maryland House Bill 675 was recently signed by the Governor. This legislation addresses an issue that was seemingly overlooked in last year’s update to this state’s Mechanical Repair Contract (a.k.a. Vehicle Service Contract) law.
Under the current law, only registered obligors or licensed Motor Vehicle Dealers are permitted sell a VSC. In other words, no third-party sellers, such as a contracted call center, were permitted to sell VSCs in this state.
This legislation, which becomes effective October 1, 2016, authorizes an “agent”, as well as a registered obligor or MV dealer to offer, sell, or negotiate a mechanical repair contract. “Agent” is defined as “a business entity that is authorized by an obligor or a licensed vehicle dealer to sell a mechanical repair contract.”
The new law also specifically provides that an obligor or a vehicle dealer is liable for the actions of its agents under specified circumstances. In addition, an obligor or a licensed vehicle dealer that uses an agent to sell a mechanical repair contract is required maintain a list of its agents and make the list available to the insurance commissioner on request.
Similarly, any agent selling for an obligor or licensed vehicle dealer must maintain a list containing the names of each employee who is authorized to sell a mechanical repair contract upon request, and must provide the list to its obligor or licensed vehicle dealer within 10 business days from receipt of the request.
