THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BOYD, BEYER, CREIGHTON, DeLUCA, DENLINGER, FAIRCHILD, GINGRICH, GODSHALL, MICOZZIE, O'NEILL, PYLE AND VULAKOVICH, JUNE 24, 2009

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 30, 2010   

AN ACT

Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," further providing for marketing and

administration of service contracts being distinct from the

business of insurance.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of May 17, 1921 (P.L.682, No.284), known

as The Insurance Company Law of 1921, is amended by adding a

section to read:

Section 358.  Service Contract Exclusion.--(a)  The

marketing, sale, offering for sale, issuance, making, proposing

to make and administration of a service contract shall not be

construed to be the business of insurance and shall be exempt

from regulation as insurance.

(b)  "Service contract" means a contract or an agreement for

a separately stated consideration for a specific duration to

perform the service, repair, replacement or maintenance of

property or indemnification for service, repair, replacement or

maintenance, for the operational or structural failure due to a

defect in materials, workmanship or normal wear and tear with or

without additional provisions for incidental payment of

indemnity under limited circumstances, including, but not

limited to, towing, rental and emergency road service, but not

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including mechanical breakdown insurance. Service contracts may

provide for the service, repair, replacement or maintenance of

property for damage resulting from power surges or accidental

damage from handling, provided, however, that an insurance

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company providing coverage or payment for towing, rental,

emergency road service or mechanical breakdown insurance shall

not be considered to be providing a service contract; and

further provided that automobile club coverage or payment of

towing, rental or emergency road service shall not be considered

a service contract and shall not be regulated as insurance.

Section 2.  This act shall take effect in 60 days.