Bill Summary – FastDemocracy

****
68th Legislature 2023                                                                                               HB 668.1
                                                  HOUSE BILL NO. 668
                                           INTRODUCED BY R. FITZGERALD
  3
  A BILL FOR AN ACT ENTITLED: “AN ACT REVISING LAWS RELATED TO SERVICE CONTRACTS TO
  INCLUDE VEHICLE THEFT PROTECTION PRODUCTS; PROVIDING DEFINITIONS; PROVIDING
  REQUIREMENTS FOR CONDUCTING BUSINESS; PROVIDING FOR DISCLOSURES; PROVIDING THAT
  CERTAIN VEHICLE THEFT PROTECTION PRODUCTS AND SERVICE CONTRACTS ARE NOT SUBJECT
  TO THE INSURANCE CODE; AND AMENDING SECTIONS 30-14-1301, 30-14-1302, 30-14-1303, 30-14-
  1304, AND 33-1-102, MCA.”
 10
  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
 12
          Section 1. Section 30-14-1301, MCA, is amended to read:
          "30-14-1301.      Definitions. As used in this part, the following definitions apply:
          (1)        "Administrator" means the person who is responsible for the administration of service contracts.
          (2)        "Department" means the department of justice provided for in 2-15-2001.
          (3)        "Incidental costs" means expenses specified in a vehicle theft protection product warranty that
  are incurred by the vehicle theft protection product warranty holder due to the failure of a vehicle theft protection
  product to perform as provided in the contract. Incidental costs may include but are not limited to insurance
  policy deductibles, rental vehicle charges, the difference between the actual value of the stolen vehicle at the
  time of theft and the cost of a replacement vehicle, sales taxes, registration fees, transaction fees, and
  mechanical inspection fees. Incidental costs may be reimbursed in either a fixed amount specified in the vehicle
  theft protection product warranty or by use of a formula itemizing specific incidental costs incurred by the
  warranty holder.
          (3)(4)     "Person" means an individual, partnership, corporation, incorporated or unincorporated
  association, limited liability company, limited liability partnership, joint-stock company, reciprocal insurer,
  syndicate, or any similar entity or combination of entities acting in concert.
          (4)(5)     "Provider" means a person who is contractually obligated to the service contract holder or
                                                                 -1-                     Authorized Print Version – HB 668
****
68th Legislature 2023                                                                                              HB 668.1
  vehicle theft protection product warranty holder under the terms of the service contract or vehicle theft
  protection product warranty.
          (5)(6)     "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 nonperformance, 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.
          (6)(7)     "Road hazard" means a hazard that is encountered while driving a motor vehicle, including but
  not limited to potholes, rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps.
          (8)        (a) "Service contract" has the meaning provided in 33-1-102(10)(b) means a contract or
  agreement for a separately stated consideration for a specific duration to perform the repair, replacement, or
  maintenance of property or to indemnify for the repair, replacement, or maintenance of property if an
  operational or structural failure is due to a defect in materials or manufacturing or to normal wear and tear, with
  or without an additional provision for incidental payment or indemnity under limited circumstances, including but
  not limited to towing, rental, and emergency road service. A service contract may provide for the repair,
  replacement, or maintenance of property for damage resulting from power surges or accidental damage from
  handling.
          (b)        The term includes a contract or agreement sold for a separately stated consideration for a
  specific duration that provides for any of the following:
          (i)        the repair or replacement of tires and wheels on a motor vehicle damaged as a result of coming
  into contact with a road hazard;
          (ii)       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 sanding, bonding,
  painting, or replacing a vehicle body panel;
          (iii)      the repair of small motor vehicle windshield chips or cracks, which may include replacement of
  the windshield for chips or cracks that cannot be repaired;
          (iv)       the replacement of one or more motor vehicle keys or key fobs in the event that the key or key
  fob becomes inoperable, lost, or stolen;
                                                                   -2-                 Authorized Print Version – HB 668
****
68th Legislature 2023                                                                                               HB 668.1
            (v)      in conjunction with a motor vehicle leased for use, the repair, replacement, or maintenance of
  property, or indemnification for repair, replacement, or maintenance of property, due to any of the following that
  result in a lease-end charge or any other charge for damage that is deemed as excess wear and use by a
  lessor under a motor vehicle lease, provided any payment may not exceed the purchase price of the vehicle:
            (A)      excess wear and use;
            (B)      damage for items such as tires, paint cracks or chips, interior stains, rips or scratches, exterior
  dents or scratches, windshield cracks or chips, missing interior or exterior parts; or
            (C)      excess mileage; or
            (vi)     other services that may be approved by the department, if not inconsistent with the provisions
  of this title.
            (c)      The term does not include a motor club service as defined in 61-12-301.
            (7)(9)   "Service contract holder" or "contract holder" means the person who is the purchaser or holder
  of a service contract.
            (10)     (a) "Vehicle theft protection product" means a device or system that:
            (i)      is installed on or applied to a motor vehicle;
            (ii)     is designed to prevent loss or damage to a motor vehicle from theft; and
            (iii)    includes a vehicle theft protection product warranty.
            (b)      The term does not include fuel additives, oil additives, or other chemical products applied to the
  engine, transmission, or fuel system or to interior or exterior surfaces of a motor vehicle.
            (11)     "Vehicle theft protection product warranty" means a written agreement by a warrantor that
  provides that if the vehicle theft protection product fails to prevent loss or damage to a motor vehicle from theft,
  then the warrantor will pay to or on behalf of the vehicle theft protection product warranty holder specified
  incidental costs as a result of the failure of the vehicle theft protection product to perform pursuant to the terms
  of the written agreement.
            (12)     "Vehicle theft protection product warranty holder" or "warranty holder" means the person who is
  the purchaser of a vehicle theft protection product and the holder of a vehicle theft protection product warranty."
 27
            Section 2. Section 30-14-1302, MCA, is amended to read:
                                                                 -3-                      Authorized Print Version – HB 668
****
68th Legislature 2023                                                                                              HB 668.1
          "30-14-1302.     Requirements for conducting business. (1) A provider may appoint an administrator
  or other designee to be responsible for any or all of the administration of service contracts or vehicle theft
  protection product warranties in compliance with this part.
          (2)      Service contracts or vehicle theft protection product warranties may not be issued, sold, or
  offered for sale in the state unless the provider complies with the requirements of one of the following three
  provisions:
          (a)      insures all service contracts or vehicle theft protection product warranties under a
  reimbursement insurance policy issued by an insurer that is licensed, registered, or otherwise authorized to do
  business in the state and either:
          (i)      at the time the policy is issued and during the duration of the policy, maintains a surplus as to
  policyholders and paid-in capital of at least $15 million and annually files copies of the insurer's financial
  statements, its national association of insurance commissioners annual statement, and any actuarial
  certification required by and filed in the insurer's state of domicile; or
          (ii)     at the time the policy is issued and during the duration of the policy, maintains a surplus as to
  policyholders and paid-in capital of less than $15 million but at least equal to or greater than $10 million and:
          (A)      upon request of the department, demonstrates that the company maintains a ratio of net written
  premiums, whenever written, to surplus as to policyholders and paid-in capital of not greater than 3-to-1; and
          (B)      annually files copies of the insurer's audited financial statements, its national association of
  insurance commissioners annual statement, and any actuarial certification required by and filed in the insurer's
  state of domicile;
          (b)      (i) maintains a funded reserve account, which may be subject to examination and review by the
  department, for its obligations under its contracts issued and outstanding in this state, the reserves of which
  may not be less than 40% of gross consideration received, less claims paid, on the sale of the service contract
  or vehicle theft protection product warranty for all service contracts or vehicle theft protection product warranties
  issued and in force;
          (ii)     maintains a financial security deposit having a value of not less than 5% of the gross
  consideration received, less claims paid, on the sale of the service contract or vehicle theft protection product
  for all service contracts or vehicle theft protection product warranties issued and in force, but not less than
                                                                 -4-                     Authorized Print Version – HB 668
****
68th Legislature 2023                                                                                               HB 668.1
  $25,000 and consisting of one of the following:
          (A)      a surety bond issued by an authorized surety;
          (B)      securities of the type eligible for deposit by authorized insurers in this state;
          (C)      cash; or
          (D)      a letter of credit issued by a qualified financial institution; or
          (c)      maintains, either alone or with its parent company, a net worth of stockholders' equity of $100
  million and provides the department, upon request, with:
          (i)      a copy of the provider's or the provider's parent company's most recent Form 10-K or Form 20-
  F filed with the securities and exchange commission within the last calendar year; or
          (ii)     if the company does not file with the securities and exchange commission, a copy of the
  company's audited financial statements showing a net worth of the provider or its parent company of at least
  $100 million.
          (3)      If information requested in subsection (2)(c)(i) or (2)(c)(ii) comes from the provider's parent
  company, then the parent company shall agree to guarantee the obligations of the provider relating to service
  contracts sold by the provider in this state.
          (4)      Except for the requirements provided in subsection (2), no other financial security requirements
  may be required.
          (5)      The marketing, sale, offering for sale, issuance, making, proposing to make, and administration
  of service contracts or vehicle theft protection products by the providers and related service contract or vehicle
  theft protection product sellers, administrators, and other persons are exempt from all provisions in Title 33, as
  provided in 33-1-102(10)(a)."
 22
          Section 3. Section 30-14-1303, MCA, is amended to read:
          "30-14-1303.    Required disclosures -- reimbursement insurance policy. (1) Reimbursement
  insurance policies insuring service contracts or vehicle theft protection product warranties issued, sold, or
  offered for sale in this state must state that the insurer that issued the reimbursement insurance policy shall
  either reimburse or pay on behalf of the provider any covered sums that the provider is legally obligated to pay
  or, in the event of the provider's nonperformance, shall provide the service that the provider is legally obligated
                                                                  -5-                        Authorized Print Version – HB 668
****
68th Legislature 2023                                                                                               HB 668.1
  to perform according to the provider's contractual obligations under the service contracts or vehicle theft
  protection product warranties issued or sold by the provider.
          (2)      If covered service is not provided by the provider within 60 days of proof of loss by the service
  contract holder or vehicle protection product warranty holder, the contract holder or warranty holder is entitled
  to apply directly to the reimbursement insurance company."
  6
          Section 4. Section 30-14-1304, MCA, is amended to read:
          "30-14-1304.    Required disclosure -- service contracts. (1) Service contracts or vehicle theft
  protection products marketed, sold, offered for sale, issued, made, proposed to be made, or administered in
  this state must be written, printed, or typed in clear understandable language that is easy to read and must
  disclose the requirements set forth in this section, as applicable.
          (2)      Service contracts or vehicle theft protection products insured under a reimbursement insurance
  policy pursuant to 30-14-1302(2)(a) must contain the following items:
          (a)      a statement that is in a form identical or similar to the following: "Obligations of the provider
  under this service contract are insured under a service contract reimbursement insurance policy."; and
          (b)      the name and address of the insurer.
          (3)      Service contracts or vehicle theft protection products not insured under a reimbursement
  insurance policy pursuant to 30-14-1302(2)(a) must contain a statement that is in a form identical or similar to
  the following: "Obligations of the provider under this service contract are backed by the full faith and credit of
  the provider."
          (4)      Service contracts or vehicle theft protection products must state the name and address of the
  provider and must identify any administrator if different from the provider, the service contract seller, and the
  service contract holder or vehicle theft protection product warranty holder if provided by the holder. The
  identities of all parties referred to in this subsection are not required to be preprinted on the service contract and
  may be added to the service contract at the time of the sale.
          (5)      A service contract or vehicle theft protection product or the service contract or vehicle theft
  protection product warranty holder's receipt must state the total purchase price and the terms under which the
  contract is sold. The purchase price is not required to be preprinted on the service contract and may be
                                                                -6-                      Authorized Print Version – HB 668
****
68th Legislature 2023                                                                                               HB 668.1
  negotiated at the time of the sale with the service contract holder or warranty holder.
          (6)      Service contracts or vehicle theft protection products must state the existence of any deductible
  amount, as applicable.
          (7)      Service contracts or vehicle theft protection products must specify the merchandise and
  services to be provided and any limitations, exceptions, or exclusions.
          (8)      Service contracts or vehicle theft protection products covering automobiles must state whether
  the use of nonoriginal manufacturer's parts are allowed.
          (9)      Service contracts or vehicle theft protection products must state any restrictions governing the
  transferability of the service contract, as applicable.
          (10)     Service contracts or vehicle theft protection products must state the terms, restrictions, or
  conditions governing cancellation of the service contract or vehicle theft protection product prior to the
  termination or expiration date of the service contract by either the provider or the service contract holder or
  vehicle theft protection product warranty holder.
          (11)     (a) Except as provided in subsection (11)(b), the provider shall mail a written notice to the
  service contract or vehicle theft protection prod