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[Utah Code Table of Contents]
[TITLE 31a. Table of Contents]
31A-6a-101 Definitions.
(1) "Mechanical breakdown insurance" means a policy, contract, or agreement issued by an insurance company that has complied with either Title 31A, Chapter 5, Domestic Stock and Mutual Insurance Corporations, or Title 31A, Chapter 14, Foreign Insurers, that undertakes to perform or provide repair or replacement service on goods or property, or indemnification for repair or replacement service, for the operational or structural failure of the goods or property due to a defect in materials, workmanship, or normal wear and tear.
(2) "Nonmanufacturers' parts" means replacement parts not made for or by the original manufacturer of the goods commonly referred to as "after market parts."
(3) (a) "Service contract" means a contract or agreement for the repair or maintenance of goods or property, for their operational or structural failure due to a defect in materials, workmanship, or normal wear and tear, with or without additional provision for incidental payment of indemnity under limited circumstances.
(b) "Service contract" does not include mechanical breakdown insurance as defined in Subsection (1).
(4) "Service contract holder" or "contract holder" means a person who purchases a service contract.
(5) "Service contract provider" means a person who issues, makes, provides, administers, sells or offers to sell a service contract, or who is contractually obligated to provide service under a service contract.
(6) "Service contract reimbursement policy" or "reimbursement
insurance policy" means a policy of insurance providing coverage
for all obligations and liabilities incurred by the service
contract provider under the terms of the service contract
issued by the provider.
1992
31A-6a-102 Scope and purposes.
(1) The purposes of this chapter are to:
(a) create a legal framework within which service contracts may be sold in this state;
(b) encourage innovation in the marketing and development of more economical and effective ways of providing services under service contracts, while placing the risk of innovation on the service contract providers rather than on consumers; and
(c) permit and encourage fair and effective competition among different systems of providing and paying for these services.
(2) Service contracts may not be issued, sold, or offered for sale in this state unless the provider has complied with this chapter.
(3) This chapter applies only to a service contract not
otherwise exempted from this title by Section
31A-1-103
.
2001
31A-6a-103 Requirements for doing business.
(1) Service contracts may not be issued, sold, or offered for sale in this state unless the service contract is insured under a service contract reimbursement insurance policy issued by an insurer authorized to do business in this state, or a recognized surplus lines carrier.
(2) (a) Service contracts may not be issued, sold, or offered for sale unless a true and correct copy of the service contract and the provider's reimbursement insurance policy have been filed with the commissioner. Copies of contracts and policies must be filed no less than 30 days prior to the issuance, sale offering for sale, or use of the service contract or reimbursement insurance policy in this state.
(b) Each modification of the terms of any service contract or reimbursement insurance policy must also be filed 30 days prior to its use in this state. Each filing must be accompanied by a filing fee as required under Subsection 31A-3-103 , or the filing shall be rejected.
(c) Persons complying with this chapter are not required to comply with:
(i) Subsections 31A-21-201 (1) and 31A-23a-402 (3); or
(ii) Chapter 19a, Utah Rate Regulation Act.
(3) (a) Premiums collected on service contracts are not subject to premium taxes.
(b) Premiums collected by issuers of reimbursement insurance policies are subject to premium taxes.
(4) Persons marketing, selling, or offering to sell service contracts for service contract providers that comply with this chapter are exempt from the licensing requirements of this title.
(5) Service contract providers complying with this chapter are not required to comply with:
(a) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
(b) Chapter 7, Nonprofit Health Service Insurance Corporations;
(c) Chapter 8, Health Maintenance Organizations and Limited Health Plans;
(d) Chapter 9, Insurance Fraternals;
(e) Chapter 10, Annuities;
(f) Chapter 11, Motor Clubs;
(g) Chapter 12, State Risk Management Fund;
(h) Chapter 13, Employee Welfare Funds and Plans;
(i) Chapter 14, Foreign Insurers;
(j) Chapter 19a, Utah Rate Regulation Act;
(k) Chapter 25, Third Party Administrators; and
(l) Chapter 28, Guaranty Associations.
2003
31A-6a-104 Required disclosures.
(1) All service contract reimbursement insurance policies insuring service contracts issued, sold, or offered for sale in this state must conspicuously state that, upon failure of the provider to perform under the contract, the issuer of the policy shall pay on behalf of the provider any sums the provider is legally obligated to pay or shall provide the service which the provider is legally obligated to perform, according to the provider's contractual obligations under the service contracts issued or sold by the provider.
(2) A service contract may not be issued, sold, or offered for sale in this state unless the contract contains a statement in substantially the following form, "Obligations of the provider under this service contract are guaranteed under a service contract reimbursement insurance policy. Should the provider fail to pay or provide service on any claim within 60 days after proof of loss has been filed, the contract holder is entitled to make a claim directly against the Insurance Company." The contract shall also conspicuously state the name and address and a toll free claims service telephone number of the insurer.
(3) The contract must identify the provider, the seller, and the service contract holder.
(4) The contract must conspicuously state the total purchase price and the terms under which it is to be paid.
(5) If prior approval of repair work is required, the contract must conspicuously state the procedure for obtaining prior approval and for making a claim, including a toll free telephone number for claim service and a procedure for obtaining reimbursement for emergency repairs performed outside of normal business hours.
(6) The contract must conspicuously state the existence of any deductible amount.
(7) The contract must specify the merchandise, services to be provided and any limitations, exceptions, or exclusions. Any preexisting conditions clause must specifically state which preexisting conditions are excluded from coverage.
(8) The contract must state the conditions upon which the use of nonmanufacturers' parts will be allowed. Conditions stated must comply with applicable state and federal laws.
(9) The contract must state any terms, restrictions, or conditions governing the transferability of the service contract.
(10) The contract must state the terms, restrictions, or conditions governing cancellation of the contract by either the contract holder or provider, and must satisfy the provisions of Sections 31A-21-303 through 31A-21-305 .
(11) A service contract or reimbursement insurance policy
may not be issued, sold, or offered for sale in this state
unless the contract contains a statement in substantially
the following form, "Coverage afforded under this contract
is not guaranteed by the Property and Casualty Guaranty Association."
1992
31A-6a-105 Prohibited acts.
(1) Except as provided in Subsection 31A-6a-104 (2), a service contract provider may not use in its name, contracts, or literature:
(a) any of the words insurance, casualty, surety, mutual, or any other words descriptive of the insurance, casualty, or surety business; or
(b) a name deceptively similar to the name or description of any insurance or surety corporation, or any other service contract provider.
(2) A service contract provider or his representative may not make, permit, or cause to be made any false or misleading statement, or deliberately omit any material statement that would be considered misleading if omitted, in connection with the sale, offer to sell, or advertisement of a service contract.
(3) A bank, savings and loan association, insurance company,
or other lending institution may not require the purchase
of a service contract as a condition of a loan.
1992
31A-6a-106 Recordkeeping requirements.
(1) (a) All service contract providers shall keep accurate accounts, books, and records concerning transactions regulated under this chapter.
(b) A service contract provider's accounts, books, and records shall include:
(i) copies of all service contracts issued;
(ii) the name and address of each service contract holder; and
(iii) claims files.
(c) Service contract providers shall retain all records pertaining to each service contract holder for at least three years after the specified period of coverage has expired.
(2) A provider discontinuing business in this state shall maintain its records until it furnishes the commissioner satisfactory proof that it has discharged all obligations to contract holders in this state.
(3) Service contract providers shall make all accounts,
books, and records concerning transactions regulated under
this chapter or other pertinent chapters available to the
commissioner for the purpose of examination as provided in
Sections
31A-2-203
and
31A-2-204
.
1992
31A-6a-107 Cancellation of reimbursement insurance.
The issuer of a reimbursement insurance policy may not
cancel the policy until a notice of cancellation in accordance
with Section
31A-21-303
,
31A-21-304
, or
31A-21-305
has been mailed or delivered to the commissioner
and to each insured provider. The cancellation of a reimbursement
policy may not reduce the issuer's responsibility for service
contracts issued by providers prior to the date of the cancellation.
1997
31A-6a-108 Obligation of reimbursement insurance issuers.
Providers under this chapter are considered to be the
agent of the issuer of the reimbursement insurance for purposes
of Section
31A-23a-410
. In cases where a provider is acting as an
administrator and enlists other providers, the provider acting
as the administrator shall notify the issuer of the reimbursement
insurance of the other providers.
2003
31A-6a-109 Enforcement provisions.
Anyone violating of any of the provisions of this chapter
or any rule made pursuant to the grant of rulemaking authority
under this title may be assessed an administrative forfeiture
equal to two times the amount of any profit gained from the
violation. In addition an administrative forfeiture may be
assessed for each violation not to exceed $1,000 per violation.
If the violations are continuing, or are of a serious nature,
or a person's business practices in connection with the solicitation,
sale, offering for sale, or performance under a service contract
subject to this chapter, constitute a danger to the legitimate
interests of consumers or the public, the commissioner may
enjoin the person from soliciting, selling, or offering to
sell service contracts in this state either permanently or
for a stated period of time.
1992
31A-6a-110 Rulemaking.
(1) Pursuant to Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the commissioner may make rules necessary to assist in the enforcement of this chapter.
(2) The commissioner may by rule or order, after a hearing,
exempt certain service contract providers or service contract
providers for a specific class of service contracts that
are not otherwise exempt under Subsection
31A-1-103
(3) from any provision of this title. The commissioner
may order substitute requirements on a finding that a particular
provision of this title is not necessary for the protection
of the public or that the substitute requirement is reasonably
certain to provide equivalent protection to the public.
2001
