1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 HOUSE BILL 3761 By: Cantrell
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6 AS INTRODUCED
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7 An Act relating to contracts; amending 15 O.S. 2021,
7 Section 141.2, as amended by Section 1, Chapter 248,
8 O.S.L. 2022 (15 O.S. Supp. 2023, Section 141.2),
8 which relates to the Service Warranty Act; modifying
9 definitions; and providing an effective date.
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12 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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13 SECTION 1. AMENDATORY 15 O.S. 2021, Section 141.2, as
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14 amended by Section 1, Chapter 248, O.S.L. 2022 (15 O.S. Supp. 2023,
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15 Section 141.2), is amended to read as follows:
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16 Section 141.2 As used in the Service Warranty Act:
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17 1. "Commissioner" means the Insurance Commissioner;
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18 2. "Consumer product" means tangible personal property
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19 primarily used for personal, family, or household purposes;
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20 3. "Department" means the Insurance Department;
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21 4. "Gross income" means the total amount of revenue received in
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22 connection with business-related activity;
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 1 5. "Gross written provider fee" means the total amount of
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2 consideration, inclusive of commissions, paid by a consumer for a
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3 service warranty issued in this state;
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4 6. "Impaired" means having liabilities in excess of assets;
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5 7. "Indemnify" means to undertake repair or replacement of a
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6 consumer product or a newly-constructed newly constructed
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7 residential structure including any appliances, electrical,
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8 plumbing, heating, cooling or air conditioning systems, in return
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9 for the payment of a segregated provider fee, when the consumer
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10 product or residential structure becomes defective or suffers
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11 operational failure;
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12 8. "Insolvent" means any actual or threatened delinquency
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13 including, but not limited to, any one or more of the following
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14 circumstances:
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15 a. (1) for an association relying on subsection A of
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16 Section 141.6 of this title, if the association's
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17 total liabilities exceed the association's total
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18 assets as calculated in accordance with statutory
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19 accounting principles, or
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20 (2) for an association relying on subsection B of
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21 Section 141.6 of this title, if the association's
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22 total liabilities exceed the association's total
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23 assets as calculated in accordance with generally
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24 accepted accounting principles,
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 1 b. the business of any such association is being
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2 conducted fraudulently, or
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3 c. the association has knowingly overvalued its assets;
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4 9. "Insurer" means any property or casualty insurer duly
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5 authorized to transact such business in this state;
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6 10. "Motor vehicle ancillary service" includes any one or more
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7 of the following services:
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8 a. repair or replacement of tires and/or wheels on a
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9 motor vehicle damaged as a result of coming into
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10 contact with road hazards,
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11 b. the removal of dents, dings or creases on a motor
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12 vehicle that can be repaired using the process of
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13 paintless dent removal without affecting the existing
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14 paint finish and without replacement vehicle body
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15 panels, sanding, bonding or painting,
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16 c. the repair of chips or cracks in or the replacement of
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17 motor vehicle windshields as a result of damage caused
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18 by road hazards,
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19 d. the replacement of a motor vehicle key or key fob in
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20 the event that the key or key fob becomes inoperable
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21 or is lost or stolen,
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22 e. payment to or services provided under the terms of an
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23 ancillary protection product, or
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 1 f. other services which may be approved by the
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2 Commissioner, if not inconsistent with other
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3 provisions of this act.
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4 A motor vehicle ancillary service does not include repair and/or
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5 replacement of damage to the interior surfaces of a vehicle, or for
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6 repair and/or replacement of damage to the exterior paint or finish
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7 of a vehicle; however, such coverage may be offered in connection
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8 with the sale of a motor vehicle ancillary protection product as
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9 defined in this section;
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10 11. "Motor vehicle ancillary protection product" or "ancillary
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11 protection product" means a protective chemical substance, device or
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12 system that:
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13 a. is installed on or applied to a motor vehicle,
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14 b. is designed to prevent loss or damage to a motor
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15 vehicle from a specific cause, and
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16 c. includes, within or as an accompaniment to a service
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17 warranty, a written agreement that provides that, if
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18 the ancillary protection product fails to prevent loss
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19 or damage to a motor vehicle from a specific cause,
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20 the provider will pay to or on behalf of the service
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21 warranty holder specified incidental costs as a result
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22 of the failure of the ancillary protection product to
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23 perform pursuant to the terms of the ancillary
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24 protection product warranty. The reimbursement of
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 1 incidental cost(s) promised under an ancillary
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2 protection product warranty must be tied to the
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3 purchase of a physical product that is formulated or
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4 designed to make the specified loss or damage from a
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5 specific cause less likely to occur.
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6 For purposes of this section, the term ancillary protection
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7 product shall include, but not be limited to, protective chemicals,
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8 alarm systems, body-part-marking products, steering locks, window-
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9 etch products, pedal and ignition locks, fuel and ignition kill
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10 switches and electronic, radio or satellite tracking devices.
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11 Ancillary protection product does not include fuel additives, oil
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12 additives or other chemical products applied to the engine,
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13 transmission, or fuel system of a motor vehicle;
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14 12. "Net assets" means the amount by which the total assets of
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15 an association exceed the total liabilities of the association;
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16 13. "Person" includes an individual, company, corporation,
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17 association, insurer, agent and any other legal entity;
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18 14. "Provider fee" means the total consideration received or to
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19 be received including sales commissions, by whatever name called, by
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20 a service warranty association for, or related to, the issuance and
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21 delivery of a service warranty including any charges designated as
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22 assessments or fees for membership, policy, survey, inspection, or
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23 service or other charges. However, a repair charge is not a
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24 provider fee unless it exceeds the usual and customary repair fee
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 1 charged by the association, provided the repair is made before the
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2 issuance and delivery of the warranty;
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3 15. "Road hazard" means a hazard that is encountered while
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4 driving a motor vehicle and which may include, but not be limited
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5 to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs
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6 or composite scraps;
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7 16. "Sales representative" means any person utilized by an
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8 insurer or service warranty association for the purpose of selling
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9 or issuing service warranties;
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10 17. "Service warranty" means a contract or agreement for a
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11 separately stated consideration for a specific duration to perform
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12 the repair or replacement of property or indemnification for repair
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13 or replacement for the operational or structural failure due to a
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14 defect or failure in materials or workmanship, with or without
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15 additional provision for incidental payment of indemnity under
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16 limited circumstances including, but not limited to, failure due to
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17 normal wear and tear, towing, rental and emergency road service,
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18 road hazard, power surge, and accidental damage from handling or as
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19 otherwise provided for in the contract or agreement. The term
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20 "service warranty" includes a contract or agreement to provide one
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21 or more motor vehicle ancillary service(s) as defined by this
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22 section. However:
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 1 a. maintenance service contracts under the terms of which
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2 there are no provisions for such indemnification are
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3 expressly excluded from this definition,
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4 b. those contracts issued solely by the manufacturer,
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5 distributor, importer or seller of the product, or any
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6 affiliate or subsidiary of the foregoing entities,
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7 whereby such entity has contractual liability
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8 insurance policies in place, from one or more insurers
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9 licensed in the state, which collectively cover one
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10 hundred percent (100%) of the claims exposure on all
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11 contracts written without being predicated on the
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12 failure to perform under such contracts, are expressly
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13 excluded from this definition,
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14 c. the term "service warranty" does not include service
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15 contracts entered into between consumers and nonprofit
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16 organizations or cooperatives the members of which
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17 consist of condominium associations and condominium
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18 owners, which contracts require the performance of
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19 repairs and maintenance of appliances or maintenance
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20 of the residential property,
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21 d. the term "service warranty" does not include
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22 warranties, guarantees, extended warranties, extended
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23 guarantees, contract agreements or any other service
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24 contracts issued by a company which performs at least
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 1 seventy percent (70%) of the service work itself and
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2 not through subcontractors, and which has been selling
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3 and honoring such contracts in this state for at least
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4 twenty (20) years,
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5 e. the term "service warranty" does not include
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6 warranties, guarantees, extended warranties, extended
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7 guarantees, contract agreements or any other service
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8 contracts, whether or not such service contracts
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9 otherwise meet the definition of service warranty,
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10 issued by a company which has net assets in excess of
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11 One Hundred Million Dollars ($100,000,000.00). A
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12 service warranty association may use the net assets of
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13 a parent company to qualify under this section if the
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14 net assets of the company issuing the policy total at
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15 least Twenty-five Million Dollars ($25,000,000.00) and
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16 the parent company maintains net assets of at least
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17 Seventy-five Million Dollars ($75,000,000.00) not
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18 including the net assets held by the service warranty
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19 associations,
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20 f. service warranties are not insurance in this state or
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21 otherwise regulated under the Insurance Code, and
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22 g. motor service club contracts governed under Article 31
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23 of Title 36 of the Oklahoma Statutes are expressly
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24 excluded from this definition, and
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 1 h. home service contracts governed under Section 6750 et
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2 seq. of Title 36 of the Oklahoma Statutes are
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3 expressly excluded from this definition;
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4 18. "Service warranty association" or "association" means any
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5 person, other than an authorized insurer, contractually obligated to
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6 a service warranty holder under the terms of a service warranty;
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7 provided, this term shall not mean any person engaged in the
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8 business of erecting or otherwise constructing a new home;
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9 19. "Warrantor" means any service warranty association engaged
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10 in the sale of service warranties and deriving not more than fifty
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11 percent (50%) of its gross income from the sale of service
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12 warranties; and
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13 20. "Warranty seller" means any service warranty association
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14 engaged in the sale of service warranties and deriving more than
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15 fifty percent (50%) of its gross income from the sale of service
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16 warranties.
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17 SECTION 2. This act shall become effective November 1, 2024.
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19 59-2-9368 MAH 01/11/24
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Statutes affected:
Introduced: 15-141.2
Floor (House): 15-141.2
Floor (Senate): 15-141.2
Engrossed: 15-141.2
Enrolled (final version): 15-141.2