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09/25/2021 05:14 PM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20190&cosponId=31295
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Senate of Pennsylvania
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted: February 27, 2020 01:21 PM
From: Senator Daniel Laughlin
To: All Senate members
Subject: Legislation Relating to Motor Vehicle Service Contracts and Theft Protection Program Warranties
 

In the near future, I plan to introduce legislation relating to motor vehicle service contracts and theft protection program warranties. These agreements and products, sold primarily by auto dealers, provide financial protection against damage to or theft of motor vehicles.

This legislation will amend the existing service contract statute by clarifying that the following services fall within the scope of the current statutory definition of “service contract”:
  1. Repair or replacement of tires or wheels damaged by road hazards;
  2. Removal of dents or creases repairable by paintless dent removal;
  3. The repair or replacement of motor vehicle windshields as a result of damage caused by road hazards;
  4. Replacement of motor vehicle key-fob if it becomes inoperable or is lost or stolen; and
  5. Excess wear and use coverage on a leased vehicle.
To date, thirty or more states have enacted legislation expressly authorizing some or all of these five products.

The proposed legislation will also expressly authorize the sale of theft protection programs and the issuance of their warranties as non-insurance products, much like service contracts. A “theft protection program” is a device or system installed on or applied to a motor vehicle to prevent loss or damage by theft, or to aide in the recovery of the vehicle in the event of theft. A theft protection program warranty accompanies the program and is an agreement by the warrantor to pay specified costs to the consumer if the program fails to perform as specified. Examples of such programs include alarm systems, VIN etching, steering locks, and GPS tracking devices.

The legislation will also expressly authorize guaranteed asset protection (“GAP”) waiver agreements as non-insurance products. GAP waivers are agreements whereby a creditor agrees, for a separate charge, to waive or cancel amounts due according to a borrower’s finance agreement in the even of total loss or unrecovered theft of a vehicle. These agreements are offered as an addendum to the finance agreement.

In summary, the proposed legislation will provide regulatory certainty for these products as well as consistency for the industry in the treatment of these products from state-to-state.

Please join me in sponsoring this important piece of legislation.



Introduced as SB1229