Senate Bill sb2006e1

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    CS for SB 2006                                 First Engrossed



  1                      A bill to be entitled

  2         An act relating to warranty associations;

  3         amending s. 634.401, F.S.; redefining the term

  4         "service warranty" for purposes of regulation

  5         of service warranty associations; amending s.

  6         634.011, F.S.; including paintless dent-removal

  7         in the services that may be covered by a motor

  8         vehicle service agreement; amending s. 634.041,

  9         F.S.; revising requirements governing

10         qualifications for a license to issue such

11         agreements; providing for use of a 50-percent

12         reserve or contractual liability coverage by

13         certain service agreement companies; amending

14         s. 634.136, F.S.; requiring a motor vehicle

15         service contract company to maintain additional

16         information relating to motor vehicle service

17         agreements; providing an effective date.

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19  Be It Enacted by the Legislature of the State of Florida:

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21         Section 1.  Paragraph (c) is added to subsection (7) of

22  section 634.011, Florida Statutes, to read:

23         634.011  Definitions.--As used in this part, the term:

24         (7)  "Motor vehicle service agreement" or "service

25  agreement" means any contract or agreement indemnifying the

26  service agreement holder for the motor vehicle listed on the

27  service agreement and arising out of the ownership, operation,

28  and use of the motor vehicle against loss caused by failure of

29  any mechanical or other component part, or any mechanical or

30  other component part that does not function as it was

31  originally intended; however, nothing in this part shall


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    CS for SB 2006                                 First Engrossed



 1  prohibit or affect the giving, free of charge, of the usual

 2  performance guarantees by manufacturers or dealers in

 3  connection with the sale of motor vehicles. Transactions

 4  exempt under s. 624.125 are expressly excluded from this

 5  definition and are exempt from the provisions of this part.

 6  The term "motor vehicle service agreement" includes any

 7  contract or agreement that provides:

 8         (a)  For the coverage or protection defined in this

 9  subsection and which is issued or provided in conjunction with

10  an additive product applied to the motor vehicle that is the

11  subject of such contract or agreement; or

12         (b)  For payment of vehicle protection expenses.

13         1.a.  "Vehicle protection expenses" means a

14  preestablished flat amount payable for the loss of or damage

15  to a vehicle or expenses incurred by the service agreement

16  holder for loss or damage to a covered vehicle, including, but

17  not limited to, applicable deductibles under a motor vehicle

18  insurance policy; temporary vehicle rental expenses; expenses

19  for a replacement vehicle that is at least the same year,

20  make, and model of the stolen motor vehicle; sales taxes or

21  registration fees for a replacement vehicle that is at least

22  the same year, make, and model of the stolen vehicle; or other

23  incidental expenses specified in the agreement.

24         b.  "Vehicle protection product" means a product or

25  system installed or applied to a motor vehicle or designed to

26  prevent the theft of the motor vehicle or assist in the

27  recovery of the stolen motor vehicle.

28         2.  Vehicle protection expenses shall be payable in the

29  event of loss or damage to the vehicle as a result of the

30  failure of the vehicle protection product to prevent the theft

31  of the motor vehicle or to assist in the recovery of the


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    CS for SB 2006                                 First Engrossed



 1  stolen motor vehicle. Vehicle protection expenses covered

 2  under the agreement shall be clearly stated in the service

 3  agreement form, unless the agreement provides for the payment

 4  of a preestablished flat amount, in which case the service

 5  agreement form shall clearly identify such amount.

 6         3.  Motor vehicle service agreements providing for the

 7  payment of vehicle protection expenses shall either:

 8         a.  Reimburse a service agreement holder for the

 9  following expenses, at a minimum: deductibles applicable to

10  comprehensive coverage under the service agreement holder's

11  motor vehicle insurance policy; temporary vehicle rental

12  expenses; sales taxes and registration fees on a replacement

13  vehicle that is at least the same year, make, and model of the

14  stolen motor vehicle; and the difference between the benefits

15  paid to the service agreement holder for the stolen vehicle

16  under the service agreement holder's comprehensive coverage

17  and the actual cost of a replacement vehicle that is at least

18  the same year, make, and model of the stolen motor vehicle; or

19         b.  Pay a preestablished flat amount to the service

20  agreement holder.

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22  Payments shall not duplicate any benefits or expenses paid to

23  the service agreement holder by the insurer providing

24  comprehensive coverage under a motor vehicle insurance policy

25  covering the stolen motor vehicle; however, the payment of

26  vehicle protection expenses at a preestablished flat amount of

27  $5,000 or less does not duplicate any benefits or expenses

28  payable under any comprehensive motor vehicle insurance

29  policy; or.

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    CS for SB 2006                                 First Engrossed



 1         (c)1.  For the payment for paintless dent-removal

 2  services provided by a company whose primary business is

 3  providing such services.

 4         2.  "Paintless dent-removal" means the process of

 5  removing dents, dings, and creases, including hail damage,

 6  from a vehicle without affecting the existing paint finish,

 7  but does not include services that involve the replacement of

 8  vehicle body panels or sanding, bonding, or painting.

 9         Section 2.  Subsection (9) of section 634.041, Florida

10  Statutes, is amended to read:

11         634.041  Qualifications for license.--To qualify for

12  and hold a license to issue service agreements in this state,

13  a service agreement company must be in compliance with this

14  part, with applicable rules of the commission, with related

15  sections of the Florida Insurance Code, and with its charter

16  powers and must comply with the following:

17         (9)(a)  In meeting the requirements of this part,

18  except as provided in paragraph (b), a service agreement

19  company may not utilize both the 50-percent reserve and

20  contractual liability insurance simultaneously. However, a

21  company may have contractual liability coverage on service

22  agreements previously sold and sell new service agreements

23  covered by the 50-percent reserve, and the converse of this is

24  also allowed. A service agreement company must be able to

25  distinguish how each individual service agreement is covered.

26         (b)  A service agreement company that maintains net

27  assets of at least $7.5 million may use the 50-percent reserve

28  or the contractual liability coverage for specific blocks of

29  new service agreements.  For purposes of this paragraph, the

30  term "specific blocks of new service agreements" means the

31  service agreements sold by a single designated licensed


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    CS for SB 2006                                 First Engrossed



 1  salesperson.  A service agreement must distinguish how each

 2  individual service agreement is covered.

 3         Section 3.  Subsection (4) of section 634.136, Florida

 4  Statutes, is amended to read:

 5         634.136  Office records required.--Each licensed motor

 6  vehicle service contract company, as a minimum requirement for

 7  permanent office records, shall maintain:

 8         (4)  A detailed service agreement register, in

 9  numerical order by service agreement number, of agreements in

10  force, which register shall include the following information:

11  service agreement number, date of issue, issuing dealer, name

12  of agreement holder, whether the agreement is covered by

13  contractual liability insurance or the unearned premium

14  reserve account, description of motor vehicle, service

15  agreement period and mileage, gross premium, commission to

16  salespersons, commission to dealer, and net premium.

17         Section 4.  Subsection (13) of section 634.401, Florida

18  Statutes, is amended to read:

19         634.401  Definitions.--As used in this part, the term:

20         (13)  "Service warranty" means any warranty, guaranty,

21  extended warranty or extended guaranty, maintenance service

22  contract equal to or greater than 1 year in length or which

23  does not meet the exemption in paragraph (a), contract

24  agreement, or other written promise for a specific duration to

25  perform the repair, replacement, or maintenance of a consumer

26  product, or for indemnification for repair, replacement, or

27  maintenance, for operational or structural failure due to a

28  defect in materials or workmanship, normal wear and tear,

29  power surge, or accidental damage from handling to indemnify

30  against the cost of repair or replacement of a consumer

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    CS for SB 2006                                 First Engrossed



 1  product in return for the payment of a segregated charge by

 2  the consumer; however:

 3         (a)  Maintenance service contracts written for less

 4  than 1 year or less which do not contain provisions for

 5  indemnification and which do not provide a discount to the

 6  consumer for any combination of parts and labor in excess of

 7  20 percent during the effective period of such contract, motor

 8  vehicle service agreements, transactions exempt under s.

 9  624.125, and home warranties subject to regulation under parts

10  I and II of this chapter are excluded from this definition;

11  and

12         (b)  The term "service warranty" does not include

13  service contracts between consumers and condominium

14  associations; and.

15         (c)  All contracts that include coverage for accidental

16  damage from handling must be covered by the contractual

17  liability policy referred to in s. 634.406(3).

18         Section 5.  This act shall take effect July 1, 2005.

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