Existing law provides for the registration and regulation of providers of service contracts in this State by the Commissioner of Insurance. (Chapter 690C of NRS) Existing law defines “service contract” to generally mean a contract pursuant to which a provider 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, goods that are described in the service contract. (NRS 690C.080) Sections 11 and 12 of this bill, respectively, revise the definitions of “provider” and “service contract” to, among other things, include the servicing of a good as a service for which a provider may be obligated under a service contract. Section 12 also revises the definition of “service contract” to include a “home service contract,” which is defined in section 4 of this bill to generally mean a service contract that covers goods which are household appliances, systems or components. Section 10 of this bill revises the definition of “goods” to specify that the term includes a household appliance, system or component. Section 5 of this bill imposes certain requirements on a provider who issues or sells a home service contract relating to claims for services under the contract. Section 6 of this bill prohibits certain practices by providers who have issued or sold a home service contract. Section 3.5 of this bill defines “emergency service contract” to mean a home service contract whereby the provider agrees to provide repairs on an expedited basis and within a specified period of time. Section 6.5 of this bill requires a provider to include certain disclosures in any advertising, sales, marketing or other promotional materials offering a home service contract that is not an emergency service contract. Existing regulations require a provider to refund the unearned purchase price of a service contract to a holder who requests the cancellation of the service contract in accordance with the terms of the contract. Existing regulations authorize a provider to impose a reasonable fee for such a cancellation under certain circumstances. (NAC 690C.120) Section 7 of this bill codifies these provisions in statute. Section 7 also provides that, for a home service contract, 10 percent of the purchase price of the contract or $75, whichever is less, is deemed to be a reasonable cancellation fee. Section 7 further allows a provider to deduct from the portion of the purchase price that is unearned by the provider any claims paid by the provider during the contract year in which the holder requests the cancellation of the service contract. Section 18 of this bill revises provisions of existing law which prohibit the cancellation of a service contract from becoming effective until at least 15 days after notice of cancellation is mailed to the holder for the purpose of clarifying this prohibition applies only to the cancellation of a service contract by the provider who issued or sold the contract. (NRS 690C.270) Existing law provides that the sale of a service contract pursuant to the provisions of existing law governing the sale of service contracts to consumers does not constitute the business of insurance for the purposes of certain provisions of federal law that impose civil and criminal penalties upon certain persons engaged in the business of insurance who engage in certain fraudulent activities. (NRS 690C.100; 18 U.S.C. §§ 1033-1034) Section 13 of this bill provides that the sale of a service contract to any other third party also does not constitute the business of insurance for the purposes of those provisions of federal law. Existing law requires a provider who wishes to issue, sell or offer for sale service contracts in this State to pay an initial fee in the amount of $1,300 at the time of submission of an application for registration and an annual fee in the amount of $1,300. (NRS 680C.110, 690C.160) Sections 2 and 14 of this bill instead require a provider to pay an initial fee in the amount of $2,600 and a biennial fee in the amount of $2,600. Section 15 of this bill revises provisions relating to the amount of money that a provider is required to maintain in a reserve account and the amount of a security that a provider is required to deposit with the Commissioner to satisfy certain requirements for the issuance of a certificate of registration. (NRS 690C.170) Existing law sets forth certain requirements for the content of a service contract. (NRS 690C.260) Section 17 of this bill requires certain additional information to be included in a service contract. Section 9 of this bill makes a conforming change to indicate the proper placement of new provisions in the Nevada Revised Statutes.

Statutes affected:
As Introduced: 604A.250, 680C.110, 690C.010, 690C.050, 690C.070, 690C.080, 690C.100, 690C.160, 690C.170, 690C.250, 690C.260, 690C.270
Reprint 1: 604A.250, 680C.110, 690C.010, 690C.050, 690C.070, 690C.080, 690C.100, 690C.160, 690C.170, 690C.250, 690C.260, 690C.270
Reprint 2: 680C.110, 690C.010, 690C.050, 690C.070, 690C.080, 690C.100, 690C.160, 690C.170, 690C.250, 690C.260, 690C.270