A new law regulating “property service contracts” has been enacted in the State of Wiscosin. Senate Bill 492 was effective in late April and provides a statutory framework for regulating service contracts in a manner similar to that of many other states.
An interesting feature of the recently enacted legislation, is that it does not repeal Wisconsin’s “old” law governing “warranty plans”. A “warranty plan” under the old law and a “property service contract” under the new law are essentially the same thing. However, the new law does expressly authorize a provider under the new law to offer property service contracts that include ancillary coverage benefits like road hazard, paintless dent removal, and windshield crack repair. The new law continues to requires licensure of providers (obligors) and registration of administrators, however financial responsibility requirements have changed for both, to include no longer requiring the annual filing of audited financial statements.
It is important to note that a representative of the Wisconsin Office of the Insurance Commissioner advises that an obligor that issued warranty plan contracts under the old law must remain so licensed until such contracts expire. In other words, an entity will not be allowed to simply “surrender” its warranty plan obligor certificate of authority, in favor of becoming licensed as a property service contract provider, and maintain or service the old contracts under the new license.
