What's happening
This bill amends insurance law to clarify and expand the definition of service contracts, including new services like key replacement and road hazard coverage.
Why it matters
Expands consumer protection and choice. by explicitly including key replacement, road hazard, windshield repair, and paintless dent repair services under the definition of service contracts, allowing consumers to purchase coverage for a wider range of vehicle-related risks.
Clarifies regulatory boundaries. by stating that these service contracts are not considered insurance and are only subject to insurance laws if specifically stated, potentially reducing regulatory burden and making it easier for providers to offer these contracts.
Introduces regulatory flexibility. by allowing the Superintendent of Financial Services to approve additional types of service contracts in the future, ensuring the law can adapt to new products and services as the market evolves.
Modifies fee transparency requirements. by clarifying that provider fees for certain service contracts must be filed with the state and can be set below the filed amount, potentially resulting in more competitive pricing for consumers.
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Who cares
Headline styles
Expand Service Contract Coverage
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to insurance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
8525
IN SENATE
May 9, 2018
Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to service contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 7901 of the insurance law is amended by adding a new subsection (c) to read as follows:
(c) The products listed in subsection (b) of this section shall also not constitute insurance and shall not be subject to the insurance laws of this state except as made expressly applicable to them.
§ 2. Subsection (k) of section 7902 of the insurance law, as amended by chapter 409 of the laws of 2012, is amended and a new subsection (j-1) is added to read as follows:
(j-1) "Road hazard" means a hazard that is encountered while driving a motor vehicle and which may include, but not be limited to potholes, rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps.
(k) "Service contract" means a contract or agreement, for a separate or additional consideration, for a specific duration to perform the repair, replacement or maintenance of property, or indemnification for repair, replacement or maintenance, due to a defect in materials or workmanship or wear and tear, with or without additional provision for indemnity payments for incidental damages, provided any such indemnity payment per incident shall not exceed the purchase price of the property serviced. Service contracts may include towing, rental and emergency road service, and may also provide for the repair, replacement or maintenance of property for damage resulting from power surges and accidental damage from handling. Service contracts may also include contracts to repair, replace or maintain residential appliances and systems. Such term shall also mean a contract or agreement [made] to provide one or more of the following services (1) [by or for the manufacturer or seller of a motor vehicle tire for] repair or replacement of the tire or wheel as the result of damage arising from a road hazard, (2) [by or for the supplier or seller of a service for] repair
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15858-01-8
S. 8525 2
of chips or cracks in a motor vehicle windshield, but not including services that involve the replacement of the entire windshield, [and] (3) [by or for the supplier or seller of a service for] repair or removal of dents, dings or creases from a motor vehicle without affecting the existing paint finish using paintless dent repair techniques, but not including services that involve the replacement of vehicle body panels, or sanding, bonding or painting, (4) the replacement of a motor vehicle key or key-fob in the event that the key or key-fob becomes inoperable or is lost or stolen, and (5) other services which may be approved by the superintendent, if not inconsistent with other provisions of this article.
§ 3. Subsection (a) of section 7903 of the insurance law, as amended by chapter 409 of the laws of 2012, is amended to read as follows:
(a) Notwithstanding any other provision of this chapter to the contrary, the marketing, sale, offering for sale, issuance, making, proposing to make and administration of service contracts by any provider, administrator or other person, shall be exempt from all other provisions of this chapter. A provider may, but is not required to, appoint an administrator or other designee to be responsible for any or all of the administration of service contracts and compliance with this article. Notwithstanding any other provision of this article, a provider of a service contract, as defined in paragraphs two and three of subsection (k) of section seven thousand nine hundred two of this article, shall, at least thirty days prior to the effective date of an initial provider fee, or a change in a provider fee, file the amount of the provider fee with the superintendent and such filing shall be open to public inspection; and provided further that the provider fee shall not exceed, but may be less than, the amount filed. The requirement to file the amount of the provider fee with the superintendent in this subsection shall not apply to fees set forth in any agreement to which an authorized insurer is a party.
§ 4. This act shall take effect on the ninetieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to service contracts
Purpose
This bill would expand the types of services that may be included under a service contract in order to provide consumers with the opportunity to better budget for unexpected expenses related to their vehicles.
Summary of provisions
Section 1 amends section 7901 of the insurance law to add a new subsection (c) to make clear that warranties and maintenance agreements, that many of our members sell, are not considered insurance.
Section 2 amends section 7902 to add a new subsection (j-1) to add the definition of "road hazard" to mean a hazard that is encountered while driving a motor vehicle and which may include, but not be limited to potholes, rocks, wood debris, metal parts, glass, plastic, curbs or composite scraps. Additionally, this section amends the current subdivi- sion (k) by adding replacement of keys and key fobs to the definition of what services can be included under service contracts; and allows the Superintendent of DFS to add additional services to what can be consid- ered service contracts, so long as it is not inconsistent with other portions of the Insurance law.
Section 3 amends section 7903 to provide that the rate charged for a service contract cannot exceed, but can be less than, the rate that is filed with the Department of Financial Services.
Section 4 establishes the effective date.
Justification
Currently, service contracts provided in New York must meet certain statutory requirements, and often are subject to regulation as insur- ance, when such a categorization is ill-fitting. Most auto service contracts and warranties provide protection for consumers from unex- pected fees and costs associated with owning a vehicle, which may fall outside of their coverage under the standard warranties. Modifying the law to permit these products will allow consumers to better plan and budget for expenses related to their vehicles, and help to protect them from unexpected costs.
This bill makes several changes to the service contract statute in the insurance law. This bill will ensure that there is explicit statutory reference to exclude service contracts and warranty from treatment as insurance, expand coverage, and allow providers to charge less for a service contract than the rate that is filed with the Department of Financial Services. These changes will make more products available to consumers, and allow greater flexibility to the industry, while remain- ing compliant with New York's guidelines and regulatory scheme for service contracts.
Legislative history
New bill.
Fiscal implications
None.
Effective date
This act shall take effect on the ninetieth day after it shall become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.