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General Assembly Raised Bill No. 1425
January Session, 2025
LCO No. 5341
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)
AN ACT CONCERNING MOTOR VEHICLE PROTECTION PRODUCTS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 42-260 of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective October 1, 2025): 2
(a) As used in this section: 3
(1) "Extended warranty" means a contract or agreement to either 4
perform or provide indemnification for the repair, replacement or 5
maintenance of a product because of operational or structural failure of 6
such product due to a defect in materials, skill or workmanship or 7
normal wear and tear given for consideration over and above the lease 8
or purchase price of a product. "Extended warranty" includes, but is not 9
limited to: (A) The repair or replacement of tires or wheels on a motor 10
vehicle damaged as a result of coming into contact with road hazards, 11
including, but not limited to, pot holes, rocks, wood debris, metal parts, 12
glass, plastic, curbs or composite scraps; (B) the removal of dents, dings 13
or creases on a motor vehicle using the process of paintless dent removal 14
without (i) affecting the existing paint finish, (ii) replacing vehicle body 15
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panels, (iii) sanding, (iv) bonding, or (v) painting; (C) the repair of chips 16
or cracks in, or the replacement of, a motor vehicle windshield as a result 17
of damage caused by such road hazards; (D) the replacement of a motor 18
vehicle key or key fob if such key or key fob becomes inoperable, or is 19
lost or stolen; or (E) in conjunction with a motor vehicle leased for 20
personal use, the repair, replacement or maintenance of property or 21
indemnification for repair, replacement or maintenance, due to excess 22
wear and use damage for items, including, but not limited to, tires, paint 23
cracks or chips, interior stains, rips or scratches, exterior dents or 24
scratches, windshield cracks or chips, missing interior or exterior parts 25
or excess mileage that result in a lease-end charge, provided any such 26
charge shall not exceed the purchase price of the motor vehicle. 27
"Extended warranty" does not include portable electronics insurance, as 28
defined in section 38a-397. 29
(2) "Extended warranty provider" means a person who issues, makes, 30
provides or offers to provide an extended warranty to a buyer and who 31
is contractually obligated to provide service under such extended 32
warranty, excluding a retail seller of an extended warranty if such seller: 33
(A) Is the manufacturer of the product covered under the extended 34
warranty, or a subsidiary of the manufacturer; (B) sells or offers an 35
extended warranty for a product obligating the manufacturer, a 36
subsidiary of the manufacturer, a distributor or an importer to provide 37
the service or indemnification arising under the extended warranty; or 38
(C) performs at least ninety per cent of the repair service provided to 39
buyers pursuant to extended warranties purchased from such seller. 40
(3) "Buyer" means a person who purchases an extended warranty 41
from an extended warranty provider. 42
(4) "Extended warranty reimbursement insurance policy" means a 43
policy of insurance providing coverage for all obligations and liabilities 44
incurred by an extended warranty provider under the terms of the 45
extended warranty sold to a buyer by such provider. 46
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(5) "Vehicle theft protection product" means any device or system 47
that (A) is installed on or applied to a covered motor vehicle; (B) is 48
designed to prevent loss or damage to such covered motor vehicle from 49
theft; and (C) includes a vehicle theft protection product warranty; and 50
(6) "Vehicle theft protection product warranty" means a contract or 51
agreement obligating a warrantor to pay to, or on behalf of, the vehicle 52
theft protection product warranty holder specified incidental costs as a 53
result of the failure of such vehicle theft protection product to perform 54
pursuant to the terms of such contract or agreement. 55
(b) An extended warranty shall obligate the extended warranty 56
provider to supply to the buyer all services and functional parts that 57
may be necessary to repair the product for the duration of the extended 58
warranty without additional charge, except as otherwise expressly 59
provided. 60
(c) An extended warranty shall contain all of the following: 61
(1) A clear description and identification of the product; 62
(2) The date when the extended warranty commences and its 63
duration, and, if the extended warranty is for less than one year, the 64
extended warranty shall include a provision for the automatic extension 65
of the extended warranty while the product is in the custody of the 66
extended warranty provider for repair under such warranty; 67
(3) A description of the limits on transfer or assignment of the 68
extended warranty if the enforceability of an extended warranty is 69
limited to the original buyer or is limited to persons other than every 70
consumer owner of the covered product during the term of the extended 71
warranty; 72
(4) A statement of the obligation of the extended warranty provider 73
including statements of: (A) Any services, parts, components, defects, 74
malfunctions, conditions, repairs or remedies that are excluded from the 75
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scope of the extended warranty; (B) any limits on the obligations of the 76
extended warranty provider; (C) any additional services which the 77
extended warranty provider will supply; (D) whether the buyer has the 78
responsibility of any other obligations and, if so, the nature and 79
frequency of such obligations, and the consequences of any 80
noncompliance; 81
(5) A step-by-step explanation of the procedure which the buyer shall 82
follow in order to obtain performance of any obligation under the 83
extended warranty including: (A) The full legal and business name of 84
the extended warranty provider; (B) the mailing address of the extended 85
warranty provider; (C) the persons or class of persons that are 86
authorized to perform service; (D) the name or title and address of any 87
agent, employee or department of the extended warranty provider that 88
is responsible for the performance of any obligations; (E) the method of 89
giving notice to the extended warranty provider of the need for service; 90
(F) whether in-home service is provided or, if not, whether the costs of 91
transporting the product for service or repairs will be paid by the 92
extended warranty provider; (G) if the product must be transported to 93
the extended warranty provider, either the place where the product may 94
be delivered for service or repairs or a toll-free telephone number which 95
the buyer may call to obtain that information; (H) all other steps which 96
the buyer must take to obtain service; and (I) all fees, charges and other 97
costs that the buyer must pay to obtain service; 98
(6) A description of the services the extended warranty provider will 99
supply under the extended warranty; and 100
(7) A statement of a right to cancel the warranty if the buyer returns 101
the product or the product is sold, lost, stolen or destroyed, or a 102
statement that there is no right to cancel. 103
(d) (1) An extended warranty shall not be issued, sold or offered for 104
sale unless the extended warranty provider is insured under an 105
extended warranty reimbursement insurance policy issued by an 106
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insurer authorized to do business in this state or the extended warranty 107
provider can demonstrate that reserves for claims contained in the 108
provider's financial statements are not in excess of one-half of a 109
provider's audited net worth. If such reserves are in excess of one-half 110
of a provider's net worth, the reserves shall be held in trust by an 111
independent trustee and certified annually as adequate by an actuary. 112
(2) The extended warranty reimbursement insurance policy shall 113
cover the obligations under the extended warranty sold by the extended 114
warranty provider during the period of time that such provider's 115
insurance policy is in force. 116
(3) An insurer authorized to issue an extended warranty 117
reimbursement insurance policy in this state shall, at the time the policy 118
is filed with the Insurance Commissioner as set forth in subsection (c) of 119
section 38a-676 and continuously thereafter: (A) Maintain a surplus as 120
to policyholders and paid-in capital of not less than fifteen million 121
dollars; (B) demonstrate to the satisfaction of said commissioner that the 122
company maintains a ratio of net written premiums, wherever written, 123
to a surplus as to policyholders and paid-in capital of not greater than 124
three to one; and (C) annually file with the Insurance Commissioner 125
copies of such insurer's audited financial statements, its National 126
Association of Insurance Commissioners' Annual Statement and the 127
actuarial certification required by and filed in such insurer's state of 128
domicile. 129
(e) An extended warranty provider shall submit to the Insurance 130
Commissioner: (1) A copy of the extended warranty form issued by said 131
provider; and (2) a copy of said provider's extended warranty 132
reimbursement insurance policy form issued by an insurer authorized 133
to do business in this state or a certification by a certified public 134
accountant attesting to the adequacy of the reserves for claims reported 135
on said provider's financial statements or contained in said provider's 136
trust account. 137
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(f) (1) An extended warranty shall contain the name and address of 138
the insurers insuring the obligations and liabilities of such warranty and 139
instructions on how the buyer, or successor to the buyer's rights, of the 140
product may file a claim with the insurer if the extended warranty 141
provider fails to perform according to the terms of the extended 142
warranty. 143
(2) An insurer of an extended warranty shall not refuse to renew any 144
policy unless such insurer or its agent shall send, by registered or 145
certified mail or by mail evidenced by a certificate of mailing or delivery 146
to the Insurance Commissioner, at least sixty days' advance notice of its 147
intention not to renew. The notice of intent not to renew shall state or be 148
accompanied by a statement specifying the reason for such nonrenewal. 149
(g) The Insurance Commissioner shall develop regulations, in 150
accordance with chapter 54, implementing an arbitration process to 151
settle disputes arising from extended warranty contracts between 152
extended warranty providers and buyers. 153
(h) Nothing in this section shall apply to a home warranty contract or 154
home warranty service agreement, as defined in section 38a-320, or 155
regulated utilities. 156
(i) No contract or agreement providing any extended warranty or 157
vehicle theft protection product warranty shall constitute engaging in 158
the business of insurance in this state. 159
Sec. 2. Section 38a-47 of the general statutes is repealed and the 160
following is substituted in lieu thereof (Effective October 1, 2025): 161
(a) All domestic insurance companies and other domestic entities 162
subject to taxation under chapter 207, and extended warranty providers 163
and warrantors of vehicle theft protection products, as such terms are 164
defined in section 42-260, as amended by this act, shall, in accordance 165
with section 38a-48, as amended by this act, annually pay to the 166
Insurance Commissioner, for deposit in the Insurance Fund established 167
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under section 38a-52a, an amount equal to: 168
(1) The actual expenditures made by the Insurance Department 169
during each fiscal year, and the actual expenditures made by the Office 170
of the Healthcare Advocate, including the cost of fringe benefits for 171
department and office personnel as estimated by the Comptroller; 172
(2) The amount appropriated to the Office of Health Strategy from 173
the Insurance Fund for the fiscal year, including the cost of fringe 174
benefits for office personnel as estimated by the Comptroller, which 175
shall be reduced by the amount of federal reimbursement received for 176
allowable Medicaid administrative expenses; 177
(3) The expenditures made on behalf of the department and said 178
offices from the Capital Equipment Purchase Fund pursuant to section 179
4a-9 for such year, but excluding such estimated expenditures made on 180
behalf of the Health Systems Planning Unit of the Office of Health 181
Strategy; and 182
(4) The amount appropriated to the Department of Aging and 183
Disability Services for the fall prevention program established in section 184
17a-859 from the Insurance Fund for the fiscal year. 185
(b) The expenditures and amounts specified in subdivisions (1) to (4), 186
inclusive, of subsection (a) of this section shall exclude expenditures 187
paid for by fraternal benefit societies, foreign and alien insurance 188
companies and other foreign and alien entities under sections 38a-49 189
and 38a-50. 190
(c) Payments shall be made by assessment of all such domestic 191
insurance companies, [and] other domestic entities, extended warranty 192
providers and warrantors of vehicle theft protection products calculated 193
and collected in accordance with the provisions of section 38a-48, as 194
amended by this act. Any such domestic insurance company, [or] other 195
domestic entity, extended warranty provider or warrantor of a vehicle 196
theft protection product aggrieved because of any assessment levied 197
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under this section may appeal therefrom in accordance with the 198
provisions of section 38a-52. 199
Sec. 3. Section 38a-48 of the general statutes, as amended by section 200
31 of public act 24-1 of the June special session, is repealed and the 201
following is substituted in lieu thereof (Effective October 1, 2025): 202
(a) On or before June thirtieth, annually, the Commissioner of 203
Revenue Services shall render to the Insurance Commissioner a 204
statement certifying the total amount of taxes reported to the 205
Commissioner of Revenue Services on returns filed with said 206
commissioner by each domestic insurance company or other domestic 207
entity under chapter 207, or by any extended warranty provider or 208
warrantor of a vehicle theft protection product, as such terms are 209
defined in section 42-260, as amended by this act, on business done in 210
this state during the calendar year immediately preceding the prior 211
calendar year. For purposes of preparing the annual statement under 212
this subsection, the total amount of taxes required to be set forth in such 213
statement shall be the amount of tax reported by each domestic 214
insurance company or other domestic entity under chapter 207, each 215
extended warranty provider and warrantor of a vehicle theft protection 216
product to the Commissioner of Revenue Services prior to the 217
application of any credits allowable or available under law to each such 218
domestic insurance company or other domestic entity under chapter 219
207, extended warranty provider or warrantor of a vehicle theft 220
protection product. 221
(b) On or before July thirty-first, annually, the Insurance 222
Commissioner shall render to each domestic insurance company, [or] 223
other domestic entity, extended warranty provider or warrantor of a 224
vehicle theft protection product liable for payment under section 38a-225
47, as amended by this act: 226
(1) A statement that includes (A) the amount appropriated to the 227
Insurance Department, the Office of the Healthcare Advocate and the 228
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Office of Health Strategy from the Insurance Fund established under 229
section 38a-52a for the fiscal year beginning July first of the same year, 230
(B) the cost of fringe benefits for department and office personnel for 231
such year, as estimated by the Comptroller, (C) the estimated 232
expenditures on behalf of the department and the offices from the 233
Capital Equipment Purchase Fund pursuant to section 4a-9 for such 234
year, not including such estimated expenditures made on behalf of the 235
Health Systems Planning Unit of the Office of Health Strategy, and (D) 236
the amount appropriated to the Department of Aging and Disability 237
Services for the fall prevention program established in section 17a-859 238
from the Insurance Fund for the fiscal year; 239
(2) A statement of the total amount of taxes reported in the annual 240
statement rendered to the Insurance Commissioner pursuant to 241
subsection (a) of this section; and 242
(3) The proposed assessment against [that] such company, [or] entity, 243
extended warranty provider or warrantor of vehicle theft protection 244
products calculated in accordance with the provisions of subsection (c) 245
of this section, provided for the purposes of this calculation the amount 246
appropriated to the Insurance Department, the Office of the Healthcare 247
Advocate and the Office of Health Strategy from the Insurance Fund 248
plus the cost of fringe benefits for department and office personnel and 249
the estimated expenditures on behalf of the department and said offices 250
from the Capital Equipment Purchase Fund pursuant to section 4a-9, 251
not including such expenditures made on behalf of the Health Systems 252
Planning Unit of the Office of Health Strategy shall be deemed to be the 253
actual expenditures of the department and said offices, and the amount 254
appropriated to the Department of Aging and Disability Services from 255
the Insurance Fund for the fiscal year for the fall prevention program 256
established in section 17a-859 shall be deemed to be the actual 257
expenditures for the program. 258
(c) (1) The proposed assessments for each domestic insurance 259
company, [or] other domestic entity, extended warranty provider or 260
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warrantor of a vehicle theft protection product shall be calculated by (A) 261
allocating twenty per cent of the amount to be paid under section 38a-262
47, as amended by this act, among the domestic entities organized under 263
sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, 264
in proportion to their respective shares of the total amount of taxes 265
reported in the annual statement rendered to the Insurance 266
Commissioner pursuant to subsection (a) of this section, and (B) 267
allocating eighty per cent of the amount to be paid under section 38a-47, 268
as amended by this act, among all domestic insurance companies, [and] 269
domestic entities other than those organized under sections 38a-199 to 270
38a-209, inclusive, and 38a-214 to 38a-225, inclusive, extended warranty 271
providers and warrantors of vehicle theft protection products, in 272
proportion to their respective shares of the total amount of taxes 273
reported in the annual statement rendered to the Insurance 274
Commissioner pursuant to subsection (a) of this section, provided if 275
there are no domestic entities organized under sections 38a-199 to 38a-276
209, inclusive, and 38a-214 to 38a-225, inclusive, at the time of 277
assessment, one hundred per cent of the amount to be paid under 278
section 38a-47, as amended by this act, shall be allocated among such 279
domestic insurance companies, [and] domestic entities, extended 280
warranty providers and warrantors of vehicle theft protection products. 281
(2) When the amount any such company , [or] entity, extended 282
warranty provider or warrantor of a vehicle theft protection product is 283
assessed pursuant to this section exceeds twenty-five per cent of the 284
actual expenditures of the Insurance Department, the Office of the 285
Healthcare Advocate and the Office of Health Strategy from the 286
Insurance Fund, such excess amount shall not be paid by such company, 287
[or] entity, extended warranty provider or warrantor of a vehicle theft 288
protection product, but rather shall be assessed against and paid by all 289
other such companies, [and] entities, extended warranty providers or 290
warrantors of vehicle theft protection products in proportion to their 291
respective shares of the total amount of taxes reported in the annual 292
statement rendered to the Insurance Commissioner pursuant to 293
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subsection (a) of this section, except that for purposes of any assessment 294
made to fund payments to the Department of Public Health to purchase 295
vaccines, such company or entity shall be responsible for its share of the 296
costs, notwithstanding whether its assessment exceeds twenty-five per 297
cent of the actual expenditures of the Insurance Department, the Office 298
of the Healthcare Advocate and the Office of Health Strategy from the 299
Insurance Fund. The provisions of this subdivision shall not be 300
applicable to any corporation that has converted to a domestic mutual 301
insurance company pursuant to section 38a-155 upon the effective date 302
of any public act that amends said section to modify or remove any 303
restriction on the business such a company may engage in, for purposes 304
of any assessment due from such company on and after such effective 305
date. 306
(d) Each annual payment determined under section 38a-47, as 307
amended by this act, and each annual assessment determined under this 308
section shall be calculated based on the total amount of taxes reported 309
in the annual statement rendered to the Insurance Commissioner 310
pursuant to subsection (a) of this section. 311
(e) On or before September first, annually, for each fiscal year, the 312
Insurance Commissioner, after receiving any objections to the proposed 313
assessments and making such adjustments as in the commissioner's 314
opinion may be indicated, shall assess each such domestic insurance 315
company, [or] other domestic entity, extended warranty provider or 316
warrantor of a vehicle theft protection product an amount equal to its 317
proposed assessment as so adjusted. Each domestic insurance company, 318
[or] other domestic entity, extended warranty provider or warrantor of 319
a vehicle theft protection product shall pay to the Insurance 320
Commissioner (1) on or before June thirtieth, annually, an estimated 321
payment against its assessment for the following year equal to twenty-322
five per cent of its assessment for the fiscal year ending such June 323
thirtieth, (2) on or before September thirtieth, annually, twenty-five per 324
cent of its assessment adjusted to reflect any credit or amount due from 325
the preceding fiscal year as determined by the commissioner under 326
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subsection (f) of this section, and (3) on or before the following 327
December thirty-first and March thirty-first, annually, each domestic 328
insurance company, [or] other domestic entity, extended warranty 329
provider or warrantor of a vehicle theft protection product shall pay to 330
the Insurance Commissioner the remaining fifty per cent of its proposed 331
assessment to the department in two equal installments. 332
(f) If the actual expenditures for the fall prevention program 333
established in section 17a-859 are less than the amount allocated, the 334
Commissioner of Aging and Disability Services shall notify the 335
Insurance Commissioner. Immediately following the close of the fiscal 336
year, the Insurance Commissioner shall recalculate the proposed 337
assessment for each domestic insurance company, [or] other domestic 338
entity, extended warranty provider or warrantor of a vehicle theft 339
protection product in accordance with subsection (c) of this section 340
using the actual expenditures made during the fiscal year by the 341
Insurance Department, the Office of the Healthcare Advocate and the 342
Office of Health Strategy from the Insurance Fund, the actual 343
expenditures made on behalf of the department and said offices from 344
the Capital Equipment Purchase Fund pursuant to section 4a-9, not 345
including such expenditures made on behalf of the Health Systems 346
Planning Unit of the Office of Health Strategy, and the actual 347
expenditures for the fall prevention program. On or before July thirty-348
first, annually, the Insurance Commissioner shall render to each such 349
domestic insurance company, [and] other domestic entity, extended 350
warranty provider and warrantor of a vehicle theft protection product a 351
statement showing the difference between their respective recalculated 352
assessments and the amount they have previously paid. On or before 353
August thirty-first, the Insurance Commissioner, after receiving any 354
objections to such statements, shall make such adjustments that in the 355
commissioner's opinion may be indicated, and shall render an adjusted 356
assessment, if any, to the affected companies. Any such domestic 357
insurance company, [or] other domestic entity, extended warranty 358
provider or warrantor of a vehicle theft protection product may pay to 359
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the Insurance Commissioner the entire assessment required under this 360
subsection in one payment when the first installment of such assessment 361
is due. 362
(g) If any assessment is not paid when due, a penalty of twenty-five 363
dollars shall be added thereto, and interest at the rate of six per cent per 364
annum shall be paid thereafter on such assessment and penalty. 365
(h) The Insurance Commissioner shall deposit all payments made 366
under this section with the State Treasurer. On and after June 6, 1991, 367
the moneys so deposited shall be credited to the Insurance Fund 368
established under section 38a-52a and shall be accounted for as expenses 369
recovered from insurance companies. 370
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2025 42-260
Sec. 2 October 1, 2025 38a-47
Sec. 3 October 1, 2025 38a-48
Statement of Purpose:
To regulate the business of extended warranties for motor vehicles and
vehicle theft protection product warranties in this state.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]