Definitions.

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As used in the Service Contract Regulation Act:

A. "administrator" means a person who is responsible for administering a service contract that is issued, sold or offered for sale by a provider or sold by a seller;

B. "automatic renewal provision" means a provision within a service contract that acts to automatically renew the service contract after the end of the original term for a renewal term greater than two months, and such renewal is effective unless the holder gives notice to the provider or administrator of the holder's intention to terminate the service contract;

C. "consumer" means a person who purchases, other than for resale, property used primarily for personal, family or household purposes and not for business or research purposes;

D. "holder" means a resident of this state who:

(1) purchases a service contract; or

(2) is legally in possession of a service contract and is entitled to enforce the rights of the original purchaser of the service contract;

E. "incidental costs" means expenses specified in a warranty that are incurred by the warranty holder due to the failure of the product to perform as provided in the contract. Incidental costs may include, without limitation, insurance policy deductibles, rental vehicle charges, the difference between the actual value of a motor vehicle at the time of failure and the cost of a replacement vehicle, gross receipts taxes, registration fees, transaction fees and mechanical inspection fees. Incidental costs may be reimbursed in either a fixed amount specified in the warranty or by use of a formula itemizing specific incidental costs incurred by the warranty holder;

F. "maintenance agreement" means a contract for a limited period that provides only for scheduled maintenance;

G. "major manufacturing company" means a person who:

(1) manufactures or produces and sells products under its own name or label or is a wholly owned subsidiary or affiliate of the person who manufactures or produces products; and

(2) maintains, or its parent company maintains, a net worth or stockholders' equity of at least one hundred million dollars ($100,000,000);

H. "property" means all property, whether movable at the time of purchase or a fixture, that is used primarily for personal, family or household purposes;

I. "provider" means a person who is contractually obligated to a holder or to indemnify the holder for the costs of repairing, replacing or performing maintenance on property;

J. "reimbursement insurance policy" means a policy of insurance issued to a provider to either provide reimbursement to the provider under the terms of the insured service contracts issued or sold by the provider or, in the event of the provider's non-performance, to pay on behalf of the provider all covered contractual obligations incurred by the provider under the terms of the insured service contracts issued or sold by the provider;

K. "road hazard" means a hazard that is encountered while driving a motor vehicle and that may include potholes, rocks, wood debris, metal parts, glass, plastic, curbs or composite scraps;

L. "seller" means a person who sells service contracts that contractually obligate another party or parties;

M. "service contract" means a contract pursuant to which a provider, in exchange for separately stated consideration, is obligated for a specified period to a holder to repair, replace or perform maintenance on, or indemnify or reimburse the holder for the costs of repairing, replacing or performing maintenance on, property that is described in the service contract and that has an operational or structural failure as a result of a defect in materials, workmanship or normal wear and tear, including a contract that provides or includes one or more of the following:

(1) incidental payment of indemnity under limited circumstances, including towing, rental and emergency road service and food spoilage;

(2) the repair, replacement or maintenance of property for damages that result from power surges or accidental damage from handling;

(3) the repair or replacement of tires and wheels on a motor vehicle damaged as a result of coming into contact with road hazards;

(4) the removal of dents, dings or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without replacing vehicle body panels, sanding, bonding or painting;

(5) the repair of chips or cracks in motor vehicle windshields or the replacement of motor vehicle windshields as a result of damage caused by road hazards;

(6) the replacement of a motor vehicle key or key fob in the event the key or key fob becomes inoperable or is lost or stolen; and

(7) other services approved by the superintendent if not inconsistent with other provisions of the Service Contract Regulation Act; and

N. "warranty" means a warranty provided solely by a manufacturer, importer or seller of property for which the manufacturer, importer or seller did not receive separate consideration and that:

(1) is not negotiated or separated from the sale of the property;

(2) is incidental to the sale of the property; and

(3) guarantees to indemnify the consumer for defective parts, mechanical or electrical failure, labor or other remedial measures required to repair or replace the property and may provide specified incidental costs.

History: Laws 2001, ch. 206, § 2; 2013, ch. 74, § 37; 2017, ch. 125, § 2; 2019, ch. 254, § 1.

ANNOTATIONS

The 2019 amendment, effective June 14, 2019, defined "automatic renewal provision" as used in the Service Contract Regulation Act; and added a new Subsection B and redesignated former Subsections B through M as Subsections C through N, respectively.

The 2017 amendment, effective June 16, 2017, defined "incidental costs", "reimbursement insurance policy", "road hazard" and "seller", expanded the required components of a "service contract", and revised the definitions of certain terms, as used in the Service Contract Regulation Act; in Subsection A, after "provider", added "or sold by a seller"; added new Subsection D and redesignated former Subsections D through G as Subsections E through H, respectively; in Subsection F, in Paragraph F(1), after "subsidiary", added "or affiliate"; added new Subsections I through K and redesignated former Subsections H and I as Subsections L and M, respectively; in Subsection L, in the introductory clause, after "including", added "a contract that provides or includes one or more of the following", in Paragraph L(1), deleted "a contract that includes a provision for", and deleted "and" at the end of the paragraph, in Paragraph L(2), deleted "a contract that provides for", and deleted "and" at the end of the paragraph, and added Paragraphs L(3) through L(7); and in Subsection M, Paragraph M(3), after "property", added "and may provide specified incidental costs".

The 2013 amendment, effective March 29, 2013, deleted the definition of "superintendent"; and deleted Subsection I, which defined "superintendent" to mean the superintendent of insurance of the insurance division of the public regulation commission.


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