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SENATE FLOOR VERSION
April 9, 2024
ENGROSSED HOUSE
BILL NO. 3761 By: Cantrell of the House
and
Thompson (Kristen) of the
Senate
An Act relating to contracts; amending 15 O.S. 2021,
Section 141.2, as amended by Section 1, Chapter 248,
O.S.L. 2022 (15 O.S. Supp. 2023, Section 141.2),
which relates to the Service Warranty Act; modifying
definitions; and providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 15 O.S. 2 021, Section 141.2, as
amended by Section 1, Chapter 248, O.S.L. 2022 (15 O.S. Supp. 2023,
Section 141.2), is amended to read as follows:
Section 141.2 As used in the Service Warranty Act:
1. "Commissioner" means the Insurance Commissioner;
2. "Consumer product" means tangible personal property
primarily used for personal, family, or household purposes;
3. "Department" means the Insurance Department;
4. "Gross income" means the total amount of revenue received in
connection with business -related activity;
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5. "Gross written provider fee " means the total amount of
consideration, inclusive of commissions, paid by a consumer for a
service warranty issued in this state;
6. "Impaired" means having liabilities in excess of assets;
7. "Indemnify" means to undertake repair or replacement of a
consumer product or a newly-constructed newly constructed
residential structure including any appliances , electrical,
plumbing, heating, cooling or air conditioning systems, in return
for the payment of a segregated provi der fee, when the consumer
product or residential structure becomes defective or suffers
operational failure;
8. "Insolvent" means any actual or threatened delinquency
including, but not limited to, any one or more of the following
circumstances:
a. (1) for an association relying on subsection A of
Section 141.6 of this title, if the association 's
total liabilities exceed the association 's total
assets as calculated in accordance with statutory
accounting principles, or
(2) for an association relying on su bsection B of
Section 141.6 of this title, if the association 's
total liabilities exceed the association 's total
assets as calculated in accordance with generally
accepted accounting principles,
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b. the business of any such association is being
conducted fraudulently, or
c. the association has knowingly overvalued its assets;
9. "Insurer" means any property or casualty insurer duly
authorized to transact such business in this state;
10. "Motor vehicle ancillary service " includes any one or more
of the following services:
a. repair or replacement of tires and/or wheels on a
motor vehicle damaged as a result of coming into
contact with road hazards,
b. the removal of dents, dings or creases on a motor
vehicle that can be repaired using the process of
paintless dent removal without affecting the existing
paint finish and without replacement vehicle body
panels, sanding, bonding or painting,
c. the repair of chips or cracks in or the replacement of
motor vehicle windshields as a result of damage caused
by road hazards,
d. the replacement of a motor vehicle key or key fob in
the event that the key or key fob becomes inoperable
or is lost or stolen,
e. payment to or services provided under the terms of an
ancillary protection product, or
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f. other services which may be approved by the
Commissioner, if not inconsistent with other
provisions of this act.
A motor vehicle ancillary service does not include repair and/or
replacement of damage to the interior surfaces of a vehicle, or for
repair and/or replacement of damag e to the exterior paint or finish
of a vehicle; however, such coverage may be offered in connection
with the sale of a motor vehicle ancillary protection product as
defined in this section;
11. "Motor vehicle ancillary protection product " or "ancillary
protection product" means a protective chemical substance, device or
system that:
a. is installed on or applied to a motor vehicle,
b. is designed to prevent loss or damage to a motor
vehicle from a specific cause, and
c. includes, within or as an accompanim ent to a service
warranty, a written agreement that provides that, if
the ancillary protection product fails to prevent loss
or damage to a motor vehicle from a specific cause,
the provider will pay to or on behalf of the service
warranty holder specified incidental costs as a result
of the failure of the ancillary protection product to
perform pursuant to the terms of the ancillary
protection product warranty. The reimbursement of
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incidental cost(s) promised under an ancillary
protection product warranty must be tied to the
purchase of a physical product that is formulated or
designed to make the specified loss or damage from a
specific cause less likely to occur.
For purposes of this section, the term ancillary protection
product shall include, but not be limited to, protective chemicals,
alarm systems, body-part-marking products, steering locks, window -
etch products, pedal and ignition loc ks, fuel and ignition kill
switches and electronic, radio or satellite tracking devices.
Ancillary protection produc t does not include fuel additives, oil
additives or other chemical products applied to the engine,
transmission, or fuel system of a motor vehicle;
12. "Net assets" means the amount by which the total assets of
an association exceed the total liabilities of the association;
13. "Person" includes an individual, company, corporation,
association, insurer, agent and any other legal entity;
14. "Provider fee" means the total consideration received or to
be received including sales commissions, by whatever na me called, by
a service warranty association for, or related to, the issuance and
delivery of a service warranty including any charges designated as
assessments or fees for membership, policy, survey, inspection, or
service or other charges. However, a re pair charge is not a
provider fee unless it exceeds the usual and customary repair fee
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charged by the association, provided the repair is m ade before the
issuance and delivery of the warranty;
15. "Road hazard" means a hazard that is encountered while
driving a motor vehicle and which may include, but not be limited
to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs
or composite scraps;
16. "Sales representative " means any person utilized by an
insurer or service warranty association for the purpose of selling
or issuing service warranties;
17. "Service warranty" means a contract or agreement for a
separately stated consid eration for a specific duration to perform
the repair or replacement of property or indemnification for repair
or replacement for the operational or structural failure due to a
defect or failure in materials or workmanship, with or without
additional provision for incidental payment of indemnity under
limited circumstances including, but not limited to, failure due to
normal wear and tear, towing, rental and emergency road service,
road hazard, power surge, and accidental damage from handling or as
otherwise provided for in the contract or agreement. The term
"service warranty" includes a contract or agreement to provide one
or more motor vehicle ancillary service(s) as defined by this
section. However:
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a. maintenance service contracts under the terms of which
there are no provisions for such indemnification are
expressly excluded from this definition,
b. those contracts issued solely by the manufacturer,
distributor, importer or seller of the product, or any
affiliate or subsidiary of the foregoing entitie s,
whereby such entity has contractual liability
insurance policies in place, from one or more insurers
licensed in the state, which collectively cover one
hundred percent (100%) of the claims exposure on all
contracts written without being predicated on the
failure to perform under such contracts, are expressly
excluded from this definition,
c. the term "service warranty" does not include service
contracts entered into between consumers and nonprofit
organizations or cooperatives the members of which
consist of condominium associations and condominium
owners, which contracts require the performance of
repairs and maintenance of appliances or maintenance
of the residential property,
d. the term "service warranty" does not include
warranties, guarantees, extended warranties, extended
guarantees, contract agreements or any other service
contracts issued by a company which pe rforms at least
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seventy percent (70%) of the service work itself and
not through subcontractors, and which has been selling
and honoring such contracts in this state for at least
twenty (20) years,
e. the term "service warranty" does not include
warranties, guarantees, extended warranties, extended
guarantees, contract agreements or any other service
contracts, whether or not such service contracts
otherwise meet the definition of service warranty,
issued by a company which has net assets in excess of
One Hundred Million Dollars ($100,000,000.00). A
service warranty association may use the net assets of
a parent company to qualify under this section if the
net assets of the company issuing the policy total at
least Twenty-five Million Dollars ($25,000,000.0 0) and
the parent company maintains net assets of at least
Seventy-five Million Dollars ($75,000,000.00) not
including the net assets held by the service warranty
associations,
f. service warranties are not insurance in this state or
otherwise regulated un der the Insurance Code, and
g. motor service club contracts governed under Article 31
of Title 36 of the Oklahoma Statutes are expressly
excluded from this definition , and
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h. home service contracts and home warranties governed
under Section 6750 et seq. of Title 36 of the Oklahoma
Statutes are expressly excluded from this definition ;
18. "Service warranty association " or "association" means any
person, other than an authorized insurer, contractually obligated to
a service warranty holder under the terms of a service warranty;
provided, this term shall not mean any person engaged in the
business of erecting or otherwise constructing a new home ;
19. "Warrantor" means any service warranty association engaged
in the sale of service warranties and deriving not more than fifty
percent (50%) of its gross income from the sale of service
warranties; and
20. "Warranty seller" means any service warranty association
engaged in the sale of service warranties and deriving more than
fifty percent (50%) of its gross incom e from the sale of service
warranties.
SECTION 2. This act shall become effective November 1, 2024.
COMMITTEE REPORT BY: C OMMITTEE ON JUDICIARY
April 9, 2024 - DO PASS