SB 655

Under current law, service contracts are generally exempt from regulation

under the insurance statutes but are subject to limited regulation by the Office of the

Commissioner of Insurance. Service contracts with motor vehicle manufacturers are

subject to some of those limited regulations. Service contracts, as defined in current

law, are contracts or agreements for separate consideration for a specified time

period to perform repair, replacement, or maintenance of property under certain

circumstances. Current law provides a list of contracts or agreements that constitute

service contracts. This bill adds to the list the repair or replacement of a motor

vehicle key or key fob that has become inoperable or is lost or stolen. The bill also

adds to the list the repair, replacement, or maintenance of a motor vehicle, directly

or by indemnification, for excess wear that results in excess wear and use charges

at the end of a lease under a motor vehicle lease agreement, if the value of any

benefits under the contract or agreement does not exceed the purchase price of the

motor vehicle.

Also, current law requires a person obligated by a warranty (warrantor) for a

vehicle protection product that prevents loss or damage to vehicles to register and

file certain information with OCI. The bill specifies that a warrantor is not required

to obtain approval from OCI for the terms of a vehicle protection product warranty.