THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY D. WHITE, STACK, WILLIAMS, M. WHITE, PILEGGI, WAUGH, MENSCH AND WARD, APRIL 27, 2010

REFERRED TO BANKING AND INSURANCE, APRIL 27, 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 repair, replacement or maintenance of property or

indemnification for 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. Service contracts may provide for the

repair, replacement or maintenance of property for damage

resulting from power surges or accidental damage from handling.

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