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S1389.......................................by COMMERCE AND HUMAN RESOURCES SERVICE CONTRACTS - Adds to existing law to provide that service contracts are subject to regulation by the Consumer Protection Act, not the Department of Insurance. 02/09 Senate intro - 1st rdg - to printing 02/10 Rpt prt - to Com/HuRes 02/25 Rpt out - rec d/p - to 2nd rdg 02/28 2nd rdg - to 3rd rdg 03/02 3rd rdg - PASSED - 35-0-0 AYES -- Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron, Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee, McLaughlin, Noh, Parry, Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner, Stennett, Thorne, Wheeler, Whitworth, Williams NAYS -- None Absent and excused -- None Floor Sponsor - McLaughlin Title apvd - to House 03/03 House intro - 1st rdg - to Bus 03/22 Rpt out - rec d/p - to 2nd rdg 03/23 2nd rdg - to 3rd rdg 04/03 3rd rdg - PASSED - 64-0-6 AYES -- Alltus, Barraclough(Barraclough), Barrett, Bell, Bieter, Black, Boe, Bruneel, Callister, Campbell, Chase, Cheirrett, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes, Hadley, Hammond, Hansen(23), Henbest, Hornbeck, Jaquet, Jones, Judd, Kellogg, Kempton, Kendell, Kunz, Lake, Loertscher(Loertscher), Mader, Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pischner, Pomeroy, Reynolds, Ridinger, Ringo, Robison, Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stoicheff, Stone, Taylor, Tilman, Trail, Wood, Zimmermann NAYS -- None Absent and excused -- Clark, Gould, Hansen(29), Linford, Wheeler, Mr Speaker Floor Sponsor - Alltus Title apvd - to Senate 04/04 To enrol - rpt enrol - Pres signed 04/05 Sp signed 04/06 To Governor 04/12 Governor signed Session Law Chapter 249 Effective: 04/12/00 (Also applies to all cases pending on effective date)
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature Second Regular Session - 2000 IN THE SENATE SENATE BILL NO. 1389 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO SERVICE CONTRACTS; AMENDING CHAPTER 1, TITLE 41, IDAHO CODE, BY 3 THE ADDITION OF A NEW SECTION 41-114A, IDAHO CODE, TO DEFINE TERMS, TO 4 PROVIDE THAT SERVICE CONTRACTS ARE NOT SUBJECT TO TITLE 41, IDAHO CODE, 5 AND TO PROVIDE THAT SERVICE CONTRACTS ARE SUBJECT TO THE IDAHO CONSUMER 6 PROTECTION ACT; DECLARING AN EMERGENCY AND PROVIDING FOR APPLICATION. 7 Be It Enacted by the Legislature of the State of Idaho: 8 SECTION 1. That Chapter 1, Title 41, Idaho Code, be, and the same is 9 hereby amended by the addition thereto of a NEW SECTION, to be known and des- 10 ignated as Section 41-114A, Idaho Code, and to read as follows: 11 41-114A. SERVICE CONTRACTS. (1) The term "service contract," as used in 12 this section, means a contract or agreement for a separately stated consider- 13 ation for a specific duration to perform the repair, replacement or mainte- 14 nance of property or to reimburse, in whole or in part, the owner of such 15 property for the repair, replacement or maintenance of property if an opera- 16 tional or structural failure is due to a defect in materials or manufacturing 17 or to normal wear and tear. A service contract may contain a provision for 18 incidental payment under such contract where service, repair or replacement is 19 not feasible or economical. 20 (2) The marketing, sale, offering for sale, issuance, making, proposing 21 to make, and administration of a service contract is exempt from the provi- 22 sions of title 41, Idaho Code. 23 (3) Service contracts shall be subject to the provisions of the Idaho 24 consumer protection act, chapter 6, title 48, Idaho Code. 25 SECTION 2. An emergency existing therefor, which emergency is hereby 26 declared to exist, this act shall be in full force and effect on and after its 27 passage and approval, and shall be applicable to all proceedings pending 28 before the Department of Insurance or the courts of this state on the effec- 29 tive date of this act.
STATEMENT OF PURPOSE RS 09862 This legislation clarifies the distinction between contracts providing coverage for damage or loss to property due to unforeseen casualty or "acts of god" and service contracts providing for the repair, replacement, or maintenance of property due to normal wear and tear or failure due to inherent defects in the property. The current definition of "insurance" has been interpreted by some staff members within the Department of Insurance to include any contract providing a future benefit upon the happening of a contingent risk. Although probably not intended by the legislature, such a definition would include all maintenance contracts providing repair for breakdowns occasioned by ordinary wear and tear or breakdowns due to functional failure. The staff interpretation would require all companies providing maintenance contracts on personal property not sold by them to qualify as an insurance company. This would occur notwithstanding the Department of Insurance staff acknowledgement that no consumer complaints have been made with reference to performance of such contracts. This legislation clarifies the state policy with reference to repair and maintenance contracts offered by such companies as Sears, J.C. Penney's, American Express, or American Home Shield, as well as those offered by companies providing service and repair contracts for heavy construction and farm equipment within the state. It would apply to all matters now pending before the Department. Such contracts would be clearly defined as exempt from regulation as insurance by the Department of Insurance. Companies offering such contracts would be subject to the Idaho Consumer Protection Act. FISCAL IMPACT There is no fiscal impact to the state, other than the positive impact of non-regulation, and the cost thereof. CONTACT: Bill Roden American Home Shield Tel: 208-336-7930 STATEMENT OF PURPOSE/ FISCAL NOTE S 1389