SB 991 - This act modifies the current law pertaining to service contracts.
The first part of the act deals with motor vehicle extended service contracts and changes language that has been moved from Chapter 407 to Chapter 379, RSMo. The act prohibits anyone who is not a licensed motor or boat dealer from selling a motor vehicle extended service contract to a consumer. To that end, no such dealer may act as a fronting company for a third party who offers service contracts. The act lays out penalties for anyone violating the provisions of the act.
The second half of the act prohibits any person from issuing or selling a product service agreement without first registering with the department of insurance and paying a fee for such registration. The act details the compliance responsibilities for any provider who has registered with the department. In order to ensure that a provider will fulfill a product service agreement, the provider must either establish a funded reserve or obtain a reimbursement insurance policy that satisfies the provider's obligation if it is unable to do so. Any provider fees shall not be subject to premium taxes and any person selling such agreements are exempt from other state licensing laws provided they meet all the requirements of the act.
Communication requirements for all service agreements sold in the state are described in the act, conveying information on the terms of the agreement, any restrictions attached to the agreement, and the obligations of the agreement holder. The act prohibits any misleading advertising pertaining to the sale of product service agreements.
The act directs any provider of a product service agreement to keep and maintain accurate records on all such transactions and to retain all such records for at least three years after the agreement coverage has expired. The records of any registered provider of product service agreements shall be made available to the department of insurance upon request from the director.
The act prohibits any insurer who has issued a reimbursement insurance policy from terminating a policy until notice of such termination has been communicated to the director. The act maintains the right of an insurer who issued such a policy to seek indemnification against a provider who was obligated to pay and did not.
The act lays out penalties for anyone violating the provisions of the act.
The act lays out circumstances whereby the provisions of the act shall not apply, including but not limited to warranties, maintenance agreements, and service agreements sold to nonresidents.
The provisions of the act become effective January 1, 2007.