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S1402.......................................by COMMERCE AND HUMAN RESOURCES
MOTOR VEHICLE SERVICE CONTRACTS - Amends and repeals existing law to remove
duties and responsibilities of the director of the Department of Insurance
for the review of examinations, receipt of notice of policy cancellations,
and other recordkeeping requirements involving motor vehicle service
contract providers.
02/08 Senate intro - 1st rdg - to printing
02/11 Rpt prt - to Com/HuRes
02/15 Rpt out - rec d/p - to 2nd rdg
02/18 2nd rdg - to 3rd rdg
02/21 3rd rdg - PASSED - 17-10-8
AYES -- Andreason, Boatright, Branch(Bartlett), Bunderson,
Burtenshaw, Cameron, Darrington, Davis, Hill, King-Barrutia, Little,
Lodge, Risch(Risch), Schroeder, Sims, Sorensen, Thorne
NAYS -- Brandt, Dunklin, Geddes, Hawkins, Ingram, Noh, Richardson,
Stegner, Stennett, Wheeler
Absent and excused -- Deide, Frasure, Goedde, Ipsen, Keough, Marley,
Sandy, Williams
Floor Sponsor - Sims
Title apvd - to House
02/22 House intro - 1st rdg - to Bus
03/08 Rpt out - rec d/p - to 2nd rdg
03/11 2nd rdg - to 3rd rdg
Rls susp - PASSED - 60-1-9
AYES -- Aikele, Barraclough, Bedke, Bell, Block, Bolz, Bradford,
Bruneel, Callister, Campbell, Clark, Collins, Crow, Cuddy, Deal,
Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20), Gagner,
Gould, Hadley, Hammond, Henbest, Higgins, Hornbeck, Jaquet, Jones,
Kellogg, Kendell, Kunz, Lake, Loertscher, Martinez, McKague, Meyer,
Montgomery, Mortensen, Moyle, Pearce, Pischner, Pomeroy, Raybould,
Ridinger, Roberts, Robison, Sali, Schaefer, Shepherd, Smith(33),
Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Young, Mr. Speaker
NAYS -- Barrett
Absent and excused -- Bieter, Black, Boe, Harwood, Langford, Mader,
Sellman, Smith(23), Wood
Floor Sponsor - Tilman
Title apvd - to Senate
03/12 To enrol
03/13 Rpt enrol - Pres signed
Sp signed
03/14 To Governor
03/26 Governor signed
Session Law Chapter 299
Effective: 07/01/02
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE SENATE
SENATE BILL NO. 1402
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO MOTOR VEHICLE SERVICE CONTRACTS; AMENDING SECTION 49-2803, IDAHO
3 CODE, TO REMOVE THE DIRECTOR OF THE DEPARTMENT OF INSURANCE FROM THE LIST
4 OF PERSONS WHO ARE REQUIRED TO RECEIVE ADVANCE NOTICE OF CANCELLATION OF A
5 SERVICE CONTRACT LIABILITY INSURANCE POLICY; AMENDING SECTION 49-2807,
6 IDAHO CODE, TO DELETE THE REQUIREMENT FOR REVIEW OF CERTAIN EXAMINATIONS
7 BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE; REPEALING SECTION 49-2808,
8 IDAHO CODE; AND AMENDING SECTION 49-2809, IDAHO CODE, TO PROVIDE THAT PER-
9 SONS MARKETING, SELLING OR OFFERING TO SELL MOTOR VEHICLE SERVICE CON-
10 TRACTS FOR MOTOR VEHICLE SERVICE CONTRACT PROVIDERS AND MOTOR VEHICLE SER-
11 VICE CONTRACT PROVIDERS ARE EXEMPT FROM THE LICENSING REQUIREMENTS OF
12 CHAPTER 10, TITLE 41, IDAHO CODE.
13 Be It Enacted by the Legislature of the State of Idaho:
14 SECTION 1. That Section 49-2803, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 49-2803. SERVICE CONTRACT REIMBURSEMENT POLICY REQUIREMENTS. (1) Manda-
17 tory insurance.
18 (a) No motor vehicle service contract shall be issued, sold, or offered
19 for sale in this state unless the motor vehicle service contract provider
20 is insured under a service contract liability policy issued by an insurer
21 admitted to do business in this state. The policy shall provide that the
22 insurer will pay to, or on behalf of, the motor vehicle service contract
23 provider all sums which the motor vehicle service contract provider is
24 legally obligated to pay according to the motor vehicle service contract
25 provider's contractual obligations under the motor vehicle service con-
26 tracts issued or sold by the motor vehicle service contract provider.
27 (b) All service contract liability policies insuring motor vehicle ser-
28 vice contracts issued, sold or offered for sale in this state must con-
29 spicuously state that, upon failure of the motor vehicle service contract
30 provider to perform under the contract, the issuer of the policy shall pay
31 on behalf of the provider any sums which the provider is legally obligated
32 to perform, according to the provider's contractual obligations under the
33 motor vehicle service contracts issued or sold by the provider.
34 (2) Reserves. The reserve to be maintained on service contract liability
35 policies issued:
36 (a) Covering new vehicles shall be one which generates an unearned pre-
37 mium reserve not less than the unearned premium reserve which is generated
38 by applying the "reverse sum of the digits" earnings method to each policy
39 issued;
40 (b) Covering used vehicles shall be a reserve of not less than the
41 unearned premium reserve which is generated by the "straight line" or
42 "prorated" earnings method; or
43 (c) Shall be by such other methods as are certified annually by a compe-
2
1 tent actuary who is a member of the American society of actuaries.
2 (3) Premiums. Premiums are defined as those funds paid by or on behalf of
3 the motor vehicle service contract provider to the liability insurance policy
4 issuer for such risks covered under such liability insurance policy. Such pre-
5 miums or the method of developing such premiums shall be filed with the direc-
6 tor of the department of insurance for approval.
7 (4) Cancellation of service contract liability insurance policy. The
8 issuer of a service contract liability policy may not cancel the policy until
9 a thirty (30) days' advance notice of cancellation has been mailed or deliv-
10 ered to the director of the department of insurance and to each motor vehicle
11 service contract provider. The cancellation of a service contract liability
12 policy shall not reduce the insurer's responsibility for motor vehicle service
13 contracts issued by motor vehicle service contract providers prior to the date
14 of the cancellation.
15 SECTION 2. That Section 49-2807, Idaho Code, be, and the same is hereby
16 amended to read as follows:
17 49-2807. RECORDKEEPING REQUIREMENTS. All motor vehicle service contract
18 providers shall keep accurate accounts, books and records concerning transac-
19 tions regulated under the provisions of this act. A motor vehicle service con-
20 tract provider's accounts, books and records shall include:
21 (1) Copies of all motor vehicle service contracts issued;
22 (2) The name and address of each motor vehicle service contract holder;
23 and
24 (3) Claim files.
25 All motor vehicle service contract providers shall retain all records per-
26 taining to each motor vehicle service contract holder for at least three (3)
27 years after the specified period of coverage has expired. It shall be the
28 responsibility of the insurer issuing the liability policy to make an examina-
29 tion at least every two (2) years of each motor vehicle service contract pro-
30 vider which they insure to assure that each provider is in compliance with the
31 recordkeeping requirements. Copies of these examinations shall be subject to
32 review by the director of the department of insurance.
33 SECTION 3. That Section 49-2808, Idaho Code, be, and the same is hereby
34 repealed.
35 SECTION 4. That Section 49-2809, Idaho Code, be, and the same is hereby
36 amended to read as follows:
37 49-2809. LICENSING. Persons marketing, selling or offering to sell motor
38 vehicle service contracts for motor vehicle service contract providers and
39 motor vehicle service contract providers that comply with this act are exempt
40 from the licensing requirements of chapter 10, title 41, Idaho Code. Motor
41 vehicle service contracts issued by the motor vehicle manufacturer, importer,
42 distributor, or by a wholly owned affiliate of the motor vehicle manufacturer
43 which is not an insurance company, shall not be subject to regulation under
44 title 41, Idaho Code.
STATEMENT OF PURPOSE
RS 11897
Relating to automobile service contracts, this legislation
removes a requirement for certain filings with the Department of
Insurance. In 1993, the Legislature adopted the Idaho Motor Vehicle
Service Contract Act to clarify the law regarding the application
of the Idaho Insurance Code to motor vehicle service contracts. The
1993 law contained certain filing requirements with the Department
of Insurance, but provided that the Department of Insurance did not
regulate vehicle service contracts. In 2000, the Legislature enacted
Section 41-ll4A, Idaho Code, which exempts service contracts from
regulation under the Insurance Code. This legislation removes the
filing requirements and eliminates the inconsistency between the
Insurance Code and the motor vehicle statutes. As a result, all
service contracts will be treated in the same manner under Section
41-114A of the Idaho Code.
FISCAL IMPACT
There is no significant fiscal impact on the State of Idaho
or local government. Although there will be a reduction of work and
the associated costs in the Department of Insurance, the savings
will be minimal. Because the Department is funded solely through
dedicated funs (fees), there will be no impact on the General Fund.
Contact
Name: Senator Kathy Sims
Phone: 332-1335
STATEMENT OF PURPOSE/FISCAL NOTE S 1402