Need help navigating the service contract, extended warranty or GAP waiver regulatory process?

If you are a provider, administrator, seller or insurer of service contracts or GAP waivers; or want to be, let us be your guide to all the state service contract/extended warranty and GAP waiver laws around the country.  We can help guide you through the licensing and registration hoops;  and also help you establish and maintain a compliant service contract, extended warranty or GAP program.

The Service Contracts Compass is designed to assist companies like yours by providing valuable information about changes in laws and regulations which may impact your service contract or GAP waiver programn and by offering compliance consulting services that can help you keep pace with the insurance laws. service contract laws and GAP waiver laws that govern your industry.

Depending on how your service contract program is structured, or if you are just starting out, some or all of the questions below may be worth exploring…and we can help!

– Do you wonder about recent law changes and need help implementing them accurately and timely?

– Do you need help developing a strategy to expand your program into other states?

– Are you considering the acquisition of an existing provider or program and need a due diligence audit?

– Do you and your program partners have the right license(s) for the kinds of service contracts that you offer or sell?

– Do you qualify for any exemptions that you may be unaware of?

– Are you calculating and returning refunds accurately in every jurisdiction?

– Could you benefit from a limited scope operational audit conducted by someone that is “on your team” to help identify potential regulatory problems before a regulator does?

– Do you have a knowledgeable resource who can offer issue-by-issue and state-by-state support for regulatory matters that may arise regarding your service contract program?

Be proactive rather than reactive!  Whether it’s regulatory filing support, contract analysis, or help communicating with a regulator, we have the experience and expertise in the world of service contract laws to offer strategies and solutions for every aspect of your program.

Please explore other areas of this site and be sure to read more about our firm’s practice group and its services. Check out our Service Contract and Extended Warranty Law Services and learn more about our Insurance Regulatory Practice Group.

Legislation & Regulatory Activity

  • 02/24/19
    Florida Home Warranty Legislation

    House Bill 925, introduced last week in Florida, establishes new requirements for licensed home warranty associations offering warranties in the state.  The bill proposes the following changes to current law:   Associations maintaining a funded earned premium account, rather than insuring obligations under a contractual liability policy, would now be required to maintain separate auditable accounts, for Florida contracts. Home warranties providing replacement coverage for wear and tear of components of an HVAC system but which do not cover functional components of the system necessary to maintain compatibility and efficiency requirements of the manufacturer, would be required to provide the read more

    Virginia Eliminates Bond/Letter of Credit Option

    Virginia Senate Bill 1188 was recently approved by the state's Legislature.  The new law, applicable to providers of motor vehicle and consumer goods service contracts,  eliminates the requirement that  providers file and maintain a bond or letter of credit with the Commissioner of the Department of Agriculture and Consumer Services (VDACS).     As passed, service contract providers now will only be required to demonstrate financial responsibility by either insuring obligations under a reimbursement insurance policy or maintaining a net worth of $100M.   The bill also (i) requires service contracts to include a disclosure advising a purchaser that he orshe read more

  • 02/22/19
    Hawaii – Adding Eligible Benefits to Motor Vehicle Service Contracts

    Hawaii House Bill 154 (2019) proposes to add various ancillary benefits to its current definition of "service contract".   In recent years, the Hawaii Division of Insurance has informally opined that such benefits could be included in a service contract.  However, passage of this legislation would provide regulatory certainty to providers wishing to offer motor vehicle service contracts in the state.   Specifically, the legislation would permit:   tire & wheel benefits and windshield crack repair/replacement due to "road hazard" which is defined in the legislation; paintless dent removal benefits and key or key fob replacement if the key or fob become read more

    District of Columbia – New Legislation to Regulate all Service Contracts

    The District of Columbia has recently introduced legislation that will regulate the service contract industry in a manner consistent with many other states.  Legislative Bill 22-584 proposes to establish a regulatory framework that includes the following:   Registration of all Providers (obligors) with no registration for Administrators; Would be applicable to motor vehicle, consumer goods and home service contracts; Includes a partial exemption for motor vehicle manufacturer obligors Would permit "accidental damage from handling" and "power surge" benefits Would permit tire & wheel benefits and windshield crack repair/replacement due to "road hazard"; Would also permit paintless dent removal; repair of read more

  • 09/11/18
    Arizona – Change in Eligible Deposits for Service Companies

    In the event your company hasn't gotten "the word", newly enacted legislation in Arizona effective 08/03/2018 affects Service Companies (Motor Vehicle, Consumer Goods and Home obligors)  in several areas, one of them being the types of valid financial security deposit to maintain a Service Company Permit.  Certificates of Deposit are no longer an option as financial security.   The valid forms of security deposit are now a Contractual Liability Policy ("CLP"), a surety bond for $100,000, or marketable securities deposited with our custodial bank Union Bank in the amount of $100,000.  The steps that need to be taken are dependent read more

    Nevada – New Disclosure Requirement – Service Contracts

    Nevada has recently amended its administrative rule relating to Service Contracts.  The amendment was effective June 26, 2018.  The existing regulation already required that in the event a service contract relates to “goods that are essential to the health and safety of the holder”, and the repair of such goods involves the loss of heating or cooling, loss of plumbing or substantial loss of electrical service and the emergency renders a dwelling unfit for a person to live in because of defects that immediately endanger the health and safety of the occupants of the dwelling", that repairs are required to read more

  • 05/28/18
    Oklahoma – Eliminates Statutory Accounting Requirement

    The Oklahoma Legislature has changed the rules relating to how a Service Warranty Association (SWA) maintains and reports its financials to the Insurance Department in this state.      Through an amendment to the definition of "net assets" and "insolvent", Senate Bill 1142 effectively eliminates Oklahoma's long-standing requirement that an SWA maintain its financial statements pursuant to Statutory Accounting Principles (SAP).  Under SAP, certain assets are not recognized when evaluating a company's surplus position.   Even though Oklahoma has not historically required that a prescribed level of surplus be maintained,  the state did require that an SWA maintain a "solvent" position read more

    Minnesota – Adds Ancillary Benefits for VSCs

    Minnesota House File 3418, recently signed by the Governor, amends the state's service contract law by permitting the following benefits in a Vehicle Service Contract:   Tire/Wheel due to Road Hazard - which is now clearly defined Paintless Dent Repair Windshield Crack Repair/Replacement Key/Key Fob Replacement   Minnesota's service contract law already permitted benefits related to "road hazard", but the term was not previously defined.  This legislation clarifies the existing law in this area, and authorizes new benefits not previously permitted.   The new law is effective August 1, 2018. read more

  • 05/13/18
    Arizona – Service Contracts – finally a model law!

    Arizona Senate Bill 1381, signed by the Governor April 5, 2018, finally brings this state's regulation of motor vehicle, consumer goods and home service contracts in line with the vast majority of other states regulating such agreements.  The bill adds to the current definition of "service contracts" express authority to provide the following common benefits in a service contract:   Accidental Damage from Handling Power Surge Tire & Wheel repair due to Road Hazard Paintless Dent Removal Key / Key Fob Replacement   Notably absent from the new law is the allowance for windshield crack repair due to encountering a read more

    Utah – Service Contracts, VPP and GAP

    Utah House Bill 39 has enacted new definitions and disclosure requirements for certain service contracts, VPP warranties and GAP waivers.    The bill defines "incidental costs" in connection with a VPP warranty, which heretofore had not been defined.  The bill also adds to the suite of eligible VPP products those that aid in the recovery a the stolen vehicle - no longer being limited only to products that are designed to prevent or deter theft.    In the case of certain VPP disclosures, a "conspicuous statement" is required which is defined, in part, to be in all capital letters, bold read more

The information on this website is provided solely for informational purposes and presents only highly condensed summaries or general information relating to the topics presented. Therefore, it should not be relied upon as a complete record for purposes of regulatory compliance, nor is it intended to furnish legal advice adequate to any particular circumstances.  (c) Copyright Shirley F. Kerns 2016