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Oklahoma House Bill HB3761

Oklahoma 2024 Regular Session

Oklahoma House Bill HB3761 Compare Versions

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334 BILL NO. 3761 By: Cantrell of the House
435
536 and
637
738 Thompson (Kristen) of the
839 Senate
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1545 An Act relating to contracts; amending 15 O.S. 2021,
1646 Section 141.2, as amended by Section 1, Chapter 248,
1747 O.S.L. 2022 (15 O.S. Supp. 2023, Section 141.2),
1848 which relates to the Service Warranty Act; modifying
1949 definitions; and providing an effective date .
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25-SUBJECT: Contracts
26-
2755 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
28-
2956 SECTION 1. AMENDATORY 15 O.S. 2 021, Section 141.2, as
3057 amended by Section 1, Chapter 248, O.S.L. 2022 (15 O.S. Supp. 2023,
3158 Section 141.2), is amended to read as follows:
32-
3359 Section 141.2 As used in the Service Warranty Act:
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3560 1. "Commissioner" means the Insurance Commissioner;
36-
3761 2. "Consumer product" means tangible personal property
3862 primarily used for personal, family, or household purposes;
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4063 3. "Department" means the Insurance Department;
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4264 4. "Gross income" means the total amount of revenue received in
4365 connection with business -related activity;
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4593 5. "Gross written provider fee " means the total amount of
4694 consideration, inclusive of commissions, paid by a consumer for a
4795 service warranty issued in this state;
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4996 6. "Impaired" means having liabilities in excess of assets;
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5197 7. "Indemnify" means to undertake repair or replacement of a
5298 consumer product or a newly-constructed newly constructed
5399 residential structure including any appliances , electrical,
54100 plumbing, heating, cooling or air conditioning systems, in return
55101 for the payment of a segregated provi der fee, when the consumer
56102 product or residential structure becomes defective or suffers
57103 operational failure;
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59104 8. "Insolvent" means any actual or threatened delinquency
60105 including, but not limited to, any one or more of the following
61106 circumstances:
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63107 a. (1) for an association relying on subsection A of
64108 Section 141.6 of this title, if the association 's
65109 total liabilities exceed the association 's total
66110 assets as calculated in accordance with statutory
67111 accounting principles, or
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69112 (2) for an association relying on su bsection B of
70113 Section 141.6 of this title, if the association 's
71114 total liabilities exceed the association 's total
72115 assets as calculated in accordance with generally
73116 accepted accounting principles,
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75144 b. the business of any such association is being
76145 conducted fraudulently, or
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78146 c. the association has knowingly overvalued its assets;
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80147 9. "Insurer" means any property or casualty insurer duly
81148 authorized to transact such business in this state;
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83149 10. "Motor vehicle ancillary service " includes any one or more
84150 of the following services:
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86151 a. repair or replacement of tires and/or wheels on a
87152 motor vehicle damaged as a result of coming into
88153 contact with road hazards,
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90154 b. the removal of dents, dings or creases on a motor
91155 vehicle that can be repaired using the process of
92156 paintless dent removal without affecting the existing
93157 paint finish and without replacement vehicle body
94158 panels, sanding, bonding or painting,
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96159 c. the repair of chips or cracks in or the replacement of
97160 motor vehicle windshields as a result of damage caused
98161 by road hazards,
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100162 d. the replacement of a motor vehicle key or key fob in
101163 the event that the key or key fob becomes inoperable
102164 or is lost or stolen,
103-
104165 e. payment to or services provided under the terms of an
105166 ancillary protection product, or
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106193
107194 f. other services which may be approved by the
108195 Commissioner, if not inconsistent with other
109196 provisions of this act.
110-
111197 A motor vehicle ancillary service does not include repair and/or
112198 replacement of damage to the interior surfaces of a vehicle, or for
113199 repair and/or replacement of damag e to the exterior paint or finish
114200 of a vehicle; however, such coverage may be offered in connection
115201 with the sale of a motor vehicle ancillary protection product as
116202 defined in this section;
117-
118203 11. "Motor vehicle ancillary protection product " or "ancillary
119204 protection product" means a protective chemical substance, device or
120205 system that:
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122206 a. is installed on or applied to a motor vehicle,
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124207 b. is designed to prevent loss or damage to a motor
125208 vehicle from a specific cause, and
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127209 c. includes, within or as an accompanim ent to a service
128210 warranty, a written agreement that provides that, if
129211 the ancillary protection product fails to prevent loss
130212 or damage to a motor vehicle from a specific cause,
131213 the provider will pay to or on behalf of the service
132214 warranty holder specified incidental costs as a result
133215 of the failure of the ancillary protection product to
134-perform pursuant to the terms of the ancillary ENR. H. B. NO. 3761 Page 4
216+perform pursuant to the terms of the ancillary
135217 protection product warranty. The reimbursement of
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136245 incidental cost(s) promised under an ancillary
137246 protection product warranty must be tied to the
138247 purchase of a physical product that is formulated or
139248 designed to make the specified loss or damage from a
140249 specific cause less likely to occur.
141-
142250 For purposes of this section, the term ancillary protection
143251 product shall include, but not be limited to, protective chemicals,
144252 alarm systems, body-part-marking products, steering locks, window -
145253 etch products, pedal and ignition loc ks, fuel and ignition kill
146254 switches and electronic, radio or satellite tracking devices.
147255 Ancillary protection produc t does not include fuel additives, oil
148256 additives or other chemical products applied to the engine,
149257 transmission, or fuel system of a motor vehicle;
150-
151258 12. "Net assets" means the amount by which the total assets of
152259 an association exceed the total liabilities of the association;
153-
154260 13. "Person" includes an individual, company, corporation,
155261 association, insurer, agent and any other legal entity;
156-
157262 14. "Provider fee" means the total consideration received or to
158263 be received including sales commissions, by whatever na me called, by
159264 a service warranty association for, or related to, the issuance and
160265 delivery of a service warranty including any charges designated as
161266 assessments or fees for membership, policy, survey, inspection, or
162267 service or other charges. However, a re pair charge is not a
163268 provider fee unless it exceeds the usual and customary repair fee
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164296 charged by the association, provided the repair is m ade before the
165297 issuance and delivery of the warranty;
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167298 15. "Road hazard" means a hazard that is encountered while
168299 driving a motor vehicle and which may include, but not be limited
169300 to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs
170301 or composite scraps;
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172302 16. "Sales representative " means any person utilized by an
173303 insurer or service warranty association for the purpose of selling
174304 or issuing service warranties;
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176305 17. "Service warranty" means a contract or agreement for a
177306 separately stated consid eration for a specific duration to perform
178307 the repair or replacement of property or indemnification for repair
179-or replacement for the operational or structural failure due to a ENR. H. B. NO. 3761 Page 5
308+or replacement for the operational or structural failure due to a
180309 defect or failure in materials or workmanship, with or without
181310 additional provision for incidental payment of indemnity under
182311 limited circumstances including, but not limited to, failure due to
183312 normal wear and tear, towing, rental and emergency road service,
184313 road hazard, power surge, and accidental damage from handling or as
185314 otherwise provided for in the contract or agreement. The term
186315 "service warranty" includes a contract or agreement to provide one
187316 or more motor vehicle ancillary service(s) as defined by this
188317 section. However:
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190345 a. maintenance service contracts under the terms of which
191346 there are no provisions for such indemnification are
192347 expressly excluded from this definition,
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194348 b. those contracts issued solely by the manufacturer,
195349 distributor, importer or seller of the product, or any
196350 affiliate or subsidiary of the foregoing entitie s,
197351 whereby such entity has contractual liability
198352 insurance policies in place, from one or more insurers
199353 licensed in the state, which collectively cover one
200354 hundred percent (100%) of the claims exposure on all
201355 contracts written without being predicated on the
202356 failure to perform under such contracts, are expressly
203357 excluded from this definition,
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205358 c. the term "service warranty" does not include service
206359 contracts entered into between consumers and nonprofit
207360 organizations or cooperatives the members of which
208361 consist of condominium associations and condominium
209362 owners, which contracts require the performance of
210363 repairs and maintenance of appliances or maintenance
211364 of the residential property,
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213365 d. the term "service warranty" does not include
214366 warranties, guarantees, extended warranties, extended
215367 guarantees, contract agreements or any other service
216368 contracts issued by a company which pe rforms at least
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217396 seventy percent (70%) of the service work itself and
218397 not through subcontractors, and which has been selling
219398 and honoring such contracts in this state for at least
220399 twenty (20) years,
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222400 e. the term "service warranty" does not include
223401 warranties, guarantees, extended warranties, extended
224-guarantees, contract agreements or any other service ENR. H. B. NO. 3761 Page 6
402+guarantees, contract agreements or any other service
225403 contracts, whether or not such service contracts
226404 otherwise meet the definition of service warranty,
227405 issued by a company which has net assets in excess of
228406 One Hundred Million Dollars ($100,000,000.00). A
229407 service warranty association may use the net assets of
230408 a parent company to qualify under this section if the
231409 net assets of the company issuing the policy total at
232410 least Twenty-five Million Dollars ($25,000,000.0 0) and
233411 the parent company maintains net assets of at least
234412 Seventy-five Million Dollars ($75,000,000.00) not
235413 including the net assets held by the service warranty
236414 associations,
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238415 f. service warranties are not insurance in this state or
239416 otherwise regulated un der the Insurance Code, and
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241417 g. motor service club contracts governed under Article 31
242418 of Title 36 of the Oklahoma Statutes are expressly
243419 excluded from this definition , and
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245447 h. home service contracts and home warranties governed
246448 under Section 6750 et seq. of Title 36 of the Oklahoma
247449 Statutes are expressly excluded from this definition ;
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249450 18. "Service warranty association " or "association" means any
250451 person, other than an authorized insurer, contractually obligated to
251452 a service warranty holder under the terms of a service warranty;
252453 provided, this term shall not mean any person engaged in the
253454 business of erecting or otherwise constructing a new home ;
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255455 19. "Warrantor" means any service warranty association engaged
256456 in the sale of service warranties and deriving not more than fifty
257457 percent (50%) of its gross income from the sale of service
258458 warranties; and
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260459 20. "Warranty seller" means any service warranty association
261460 engaged in the sale of service warranties and deriving more than
262461 fifty percent (50%) of its gross incom e from the sale of service
263462 warranties.
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265463 SECTION 2. This act shall become effective November 1, 2024.
266- ENR. H. B. NO. 3761 Page 7
267- Passed the House of Representatives the 5th day of March, 2024.
268-
269-
270-
271-
272- Presiding Officer of the House
273- of Representatives
274-
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276-Passed the Senate the 24th day of April, 2024.
277-
278-
279-
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281- Presiding Officer of the Senate
282-
283-
284-OFFICE OF THE GOVERNOR
285-Received by the Office of the Governor this ____________________
286-day of ___________________, 20_______, at ______ _ o'clock _______ M.
287-By: _________________________________
288-Approved by the Governor of the State of Oklahoma this _____ ____
289-day of ___________________, 20_______, at _______ o'clock _______ M.
290-
291-
292- _________________________________
293- Governor of the State of Oklahoma
294-
295-OFFICE OF THE SECRETARY OF STATE
296-Received by the Office of the Secretary of State this __________
297-day of ___________________, 20_______, at _______ o'clock _______ M.
298-By: _________________________________
464+COMMITTEE REPORT BY: C OMMITTEE ON JUDICIARY
465+April 9, 2024 - DO PASS