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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)
S1389
|||| 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