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PRINTER'S NO. 1847
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1229
Session of
2020
INTRODUCED BY LAUGHLIN, TARTAGLIONE, PITTMAN, MENSCH,
HUTCHINSON, AUMENT AND HUGHES, JULY 13, 2020
REFERRED TO BANKING AND INSURANCE, JULY 13, 2020
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," in general provisions relating to
insurance companies, associations and exchanges, further
providing for service contract exclusion.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 358 of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921, is amended
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, maintenance
agreement, guaranteed asset protection waiver or vehicle theft
protection product warranty shall not be construed to be the
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business of insurance and shall be exempt from regulation as
insurance.
(b) For purposes of this section, except when the context
clearly indicates otherwise:
"Guaranteed asset protection waiver" means a contractual
agreement in which a creditor agrees for a separate charge to
cancel or waive all or part of amounts due on a borrower's
finance agreement in the event of a total physical damage loss
or unrecovered theft of the motor vehicle, which agreement must
be part of, or a separate addendum to, the finance agreement.
"Incidental costs" means expenses specified in a vehicle
theft protection program warranty that are incurred by the
warranty holder due to the failure of a vehicle theft protection
program to perform as provided in the contract. Incidental costs
may be reimbursed in either a fixed amount specified in the
vehicle theft protection program warranty or by use of a formula
itemizing specific incidental costs incurred by the warranty
holder.
"Maintenance agreement" means a contract of limited duration
that provides for scheduled maintenance only.
"Road hazard" means a hazard that is encountered while
driving a motor vehicle, which may include potholes, rocks, wood
debris, metal parts, glass, plastic, curbs or composite scraps.
"Service contract" means [a] as follows:
(1) 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
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additional provisions for incidental payment of indemnity under
limited circumstances, including, but not limited to, towing,
rental and emergency road service.
(2) The term also includes a contract or agreement that
provides one or more of the following:
(i) The repair or replacement of tires or wheels on a motor
vehicle damaged as a result of coming into contact with road
hazards.
(ii) 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
replacing vehicle body panels, sanding, bonding or painting.
(iii) The repair of chips or cracks in, or the replacement
of, motor vehicle windshields as a result of damage caused by
road hazards.
(iv) 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.
(v) In conjunction with a motor vehicle leased for use, the
repair, replacement or maintenance of property, or
indemnification for repair, replacement or maintenance, due to
excess wear and use, damage for items such as tires, paint
cracks or chips, interior stains, rips or scratches, exterior
dents or scratches, windshield cracks or chips, missing interior
or exterior parts or excess mileage that result in a lease-end
charge, or any other charge for damage that is deemed as excess
wear and use by a lessor under a motor vehicle lease, as long as
the payment does not exceed the purchase price of the vehicle.
(3) Service contracts may provide for the service, repair,
replacement or maintenance of property for damage resulting from
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power surges or accidental damage from handling, provided,
however, that an insurance 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.
"Vehicle theft protection product" means as follows:
(1) A device or system that:
(i) is installed on or applied to a motor vehicle;
(ii) is designed to prevent loss or damage to a motor
vehicle from theft; and
(iii) includes a vehicle theft protection program warranty.
(2) The term does not include fuel additives, oil additives
or other chemical products applied to the engine, transmission
or fuel system or the interior or exterior surfaces of a motor
vehicle.
"Vehicle theft protection product warranty" means a written
agreement by a warrantor that provides upon failure of the
vehicle theft protection product to prevent loss or damage to a
motor vehicle from theft that the warrantor will pay to or on
behalf of the warranty holder specified incidental costs as a
result of the failure of the vehicle theft protection product to
perform pursuant to the terms of the vehicle theft protection
product warranty.
Section 2. This act shall take effect in 60 days.
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