Subject 120-2-47 RULES AND REGULATIONS FOR VEHICLE AND AUTOMOBILE CLUB SERVICE CONTRACTS
This Regulation is made and promulgated by the Commissioner
of Insurance pursuant to the authority set forth in O.C.G.A. Section
33-7-6.
The purpose of this Regulation is to provide for the
regulation of vehicle service agreements and extended warranty
agreements.
| (1) |
"Commissioner"
means the Commissioner of Insurance. |
| (2) |
"Extended warranty agreement" means a
vehicle service contract. |
| (3) |
"Service contract holder" means a person who purchases or otherwise obtains a
service contract. |
| (4) |
"Vehicle
service contract" or "VSC" means a contract or agreement that undertakes to
perform or provide repair or replacement service, or indemnification for that
service, for the operational or structural failure of a motor vehicle due to a
defect in materials or skill of work or normal wear and tear. |
| (5) |
"Vehicle service contract provider" or
"VSC provider" means a person who issues, makes, provides, sells, or offers to
sell a vehicle service contract. |
| (6) |
"Vehicle service contract reimbursement
insurance policy" or "VSC reimbursement insurance policy" means a policy of
insurance providing coverage for all sums which the provider is legally
obligated to pay for failure to perform under the terms of vehicle service
contracts issued by the provider. |
| (7) |
"Service contract" shall mean a vehicle
service contract (VSC). |
| (8) |
"Person" shall mean any person, firm,
partnership, association or other entity which transacts vehicle service
contract business. |
| (9) |
"Provider"
shall mean a vehicle service contract (VSC) provider. |
| (10) |
"Reimbursement insurance policy" shall
mean a vehicle contract service (VSC) reimbursement insurance policy. |
| (11) |
"Retail Installment Seller" shall have
the same meaning as provided in Code Section
10-1-31. |
| (12) |
"Security Deposit" means amount(s)
posted with the Commissioner's Office to cover provider's legal obligations
under the terms of vehicle service contracts or extended warranty issued by the
retail installment service. |
| (13) |
"Surety Bond" means a bond providing coverage for all sums which the provider
is legally obligated to pay for failure to perform. |
A service contract shall not be issued, sold, or offered for
sale in this State unless the provider of the service contract is a named
insured under a service contract reimbursement insurance policy issued by an
insurer authorized to do business in this state, or by a surplus lines insurer
meeting all of the requirements of O.C.G.A. Section
33-5-21, which has not been
rejected by the Commissioner for such purpose, and which is provided by a
licensed surplus lines broker pursuant to O.C.G.A. § 33-5-20et
seq.
| (1) |
In order to issue, sell, or offer for
sale a service contract in this state:
| (a) |
The service contract must not be unduly restrictive, ambiguous, inequitable,
misleading or unreadable by a person with normal vision; |
| (b) |
The service contract must comply with any
general or specific filing requirement published by the Commissioner; |
| (c) |
The provider's reimbursement insurance
policy must be filed with and accepted by the Commissioner; and |
| (d) |
The rates for the reimbursement insurance
policy must conform to the requirements of O.C.G.A. Title 33 Chapter
9. |
|
| (2) |
In order to
issue, sell, or offer for sale a vehicle service contract in this state:
| (a) |
A true and correct copy of the vehicle
service contract must be filed and accepted by the Commissioner; and |
| (b) |
The rates charged for the vehicle service
contract reimbursement insurance policies must be filed with the Commissioner
by the insurer issuing vehicle service contract reimbursement insurance
policies. |
|
A reimbursement insurance policy shall not be issued, sold,
or offered for sale in this State unless the reimbursement insurance policy
conspicuously states that the issuer of the policy shall pay on behalf of the
provider all sums which the provider is legally obligated to pay for failure to
perform according to the provider's contractual obligations under the service
contracts issued or sold by the provider.
| (1) |
A service contract shall not be issued,
sold or offered for sale in this State unless the contract conspicuously states
that the obligations of the provider to the service contract holder are
guaranteed under a service contract reimbursement policy, and unless the
contract conspicuously states the name and address of the insurer of the
reimbursement policy. |
| (2) |
Every
service contract shall be written in clear, understandable language and shall
be printed or typed in easy-to-read type, size, and style, and shall not be
issued, sold, or offered for sale in this State unless the contract:
| (a) |
Conspicuously states that the obligations
of the provider to the service contract holder are guaranteed under a service
contract reimbursement policy; |
| (b) |
Conspicuously states the name and address of the issuer of the reimbursement
policy; |
| (c) |
Conspicuously states
the name, address and telephone number of the provider(s); |
| (d) |
Conspicuously states the name, address
and telephone number of the administrator, if any; |
| (e) |
Identifies the provider, the seller and
the service contract holder; |
| (f) |
Sets forth the total purchase price, if any, and the terms under which it is to
be paid; |
| (g) |
Sets forth the
procedure for making a claim, or request for benefits including a telephone
number; |
| (h) |
Conspicuously states
the existence of a deductible amount, if any; |
| (i) |
Specifies the merchandise or services, or
both, to be provided and the limitations, exceptions or exclusions; |
| (j) |
Sets forth the conditions on which
substitution will be allowed; |
| (k) |
Conspicuously sets forth all of the obligations and duties of the service
contract holder (such as the duty to protect against any further damage to the
vehicle, the obligation to notify the provider in advance of any repair, etc.),
if any; |
| (l) |
Sets forth any terms,
restrictions, or conditions governing transferability of the service contract,
if any; |
| (m) |
Conspicuously sets
forth the term or duration of the contract; and |
| (n) |
Contains the provisions required under
O.C.G.A. § 33-7-6. |
|
| (1) |
Unless licensed as an insurance company, a service contract provider shall not
use in its name, contracts, or literature, any of the words "insurance,"
"casualty," "surety," "mutual," or any other words descriptive of the
insurance, casualty, or surety business or deceptively similar to the name or
description of any insurance or surety corporation, or any other service
contract provider. |
| (2) |
A service
contract provider shall not, without the written consent of the purchaser,
knowingly charge a purchaser for duplication of coverage or duties required by
state or federal law, a warranty expressly issued by a manufacturer or seller
of a product or any implied warranty enforceable against the lessor, seller, or
manufacturer of a product. |
| (3) |
A
service contract provider shall not make, permit, or cause any false or
misleading statements, either oral or written, in connection with the sale,
offer to sell, or advertisement of a service contract. |
| (4) |
A service contract provider shall not
permit or cause the omission of any material statement in connection with the
sale, offer to sell, or advertisement of a service contract, which under the
circumstances should have been made in order to make the statements that were
made not misleading. |
| (5) |
A service
contract provider shall not make, permit, or cause any false or misleading
statements, either oral or written, about the benefits or services available
under the service contract. |
| (6) |
A
service contract provider shall not make, permit, or cause any statement or
practice which has the effect of creating or maintaining a fraud. |
| (7) |
A service contract provider is prohibited
from making, publishing, disseminating, circulating, or placing before the
public, or causing, directly or indirectly, to be made, published,
disseminated, circulated, or placed before the public in a newspaper, magazine
or other publication, or in the form of a notice, circular, pamphlet, letter or
poster, or over any radio or television station or in any other way, an
advertisement, announcement, or statement containing any assertion,
representation, or statement with respect to the service contract industry or
with respect to any service contract provider which is untrue, deceptive, or
misleading. |
| (8) |
A bank, savings and
loan association, insurance company, other lending institution, or insurance
producer shall not require the purchase of a service contract as a condition of
a loan or insurance. |
| (9) |
A service
contract provider is prohibited from making publishing, disseminating, or
circulating, directly or indirectly, or aiding, abetting, or encouraging the
making, publishing, disseminating, or circulating of any oral or written
statement or any pamphlet, circular, article, or literature which is false, or
maliciously critical of or derogatory to the financial condition of any person,
and which is calculated to injure such person. |
| (10) |
A service contract provider is
prohibited from entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion or intimidation resulting in or
tending to result in unreasonable restraint of, or monopoly in the service
contract industry. |
| (11) |
A service
contract provider is prohibited from knowingly filing with any supervisory or
other public official, or knowingly making, publishing, disseminating,
circulating, or delivering to any person, or placing before the public, or
knowingly causing directly or indirectly, to be made, published, disseminated,
circulated, delivered to any person, or placed before the public, any false
material statement of fact as to the financial condition of a person. |
| (12) |
A service contract provider is
prohibited from knowingly making any false entry of a material fact in any
book, report, or statement of any person or knowingly omitting to make a true
entry of any material fact pertaining to the business of such person in any
book, report or statement of such person. |
| (13) |
A service contract provider shall not
invoke any arbitration provision contained in the service contract. |
| (14) |
No provider or insurance producer shall
finance the consideration due from the sale of a service contract with a
premium finance company. |
| (1) |
All service
contract providers shall keep accurate accounts, books, and records concerning
transactions regulated under this Chapter. |
| (2) |
A service contract provider's accounts,
books, and records shall include
| (a) |
Copies
of all service contracts; |
| (b) |
The
name and address of each service contract holder; and |
| (c) |
The dates, amounts, and descriptions of
all receipts, claims and expenditures. |
|
| (3) |
A service contract provider shall retain
all required accounts, books, and records pertaining to each service contract
holder for at least two (2) years, unless a longer period is required by
statute or regulation, after the specified period of coverage has expired. 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. |
| (4) |
Service contract providers shall make all
accounts, books, and records concerning transactions regulated under this
Regulation available to the Commissioner for the purpose of
examination. |
| (1) |
The issuer of a reimbursement insurance
policy or surety bond shall not cancel such policy or bond until a notice of
cancellation in accordance with O.C.G.A. Section
33-24-47 has been mailed or
delivered to the Commissioner at the following address:
Office of Commissioner of Insurance
604 West Tower, Floyd Building
#2 Martin Luther King, Jr. Drive
Atlanta, Georgia 30334
and to each insured provider, including but not limited to
automobile dealers and third party administrators.
|
| (2) |
The cancellation of a reimbursement
insurance policy or surety bond shall not reduce the issuer's responsibility
for vehicle service contracts issued by providers prior to the date of
cancellation. |
| (1) |
The Commissioner may receive and process
each complaint made against any service contract provider which alleges certain
acts or practices which may constitute one or more violations of this Chapter.
Any member of the public, or any federal, state, or local official, may file a
complaint with the Commissioner. Complaints may be received from sources
outside the State of Georgia and processed in the same manner as those
originating in Georgia. |
| (2) |
Complaints may be mailed or delivered to the following address:
Office of Commissioner of Insurance
716 West Tower, Floyd Building
#2 Martin Luther King, Jr. Drive
Atlanta, Georgia 30334
|
| (3) |
All complaints shall be made in writing
and shall fully identify the complainant by name and address. If required by
the Commissioner, complaints shall be made on forms prescribed and provided by
the Office of Commissioner of Insurance. |
| (4) |
Oral or telephone communications may not
be considered or processed as complaints. However, any member of the staff of
the Office of Commissioner of Insurance may file a complaint based upon
information and belief, in reliance upon oral, telephone, or written
communications received by the Office of Commissioner of Insurance. |
| (1) |
This Regulation
is not applicable to vehicle service contracts or extended warranty agreements,
if the vehicle service contract or extended warranty is made by the automobile
vehicle manufacturer or otherwise excluded from property insurance as defined
by O.C.G.A. § 33-7-6(b)(1). |
| (2) |
Code Section
33-7-6(b)(1) is
not applicable to vehicle service contracts or extended warranty agreements if
such contract or agreement has a term not exceeding nine months, has been
approved by the Commissioner before its use, and is issued by a retail
installment seller in conjunction with the sale of a vehicle. Moreover, such
retail installment seller must:
| (a) |
Maintain
or have a parent company which maintains a net worth or stockholders' equity of
a least $50 million, provided the parent company guarantees the obligations of
the retail installment seller arising from vehicle service contracts or
extended warranty agreements issued by the retail installment seller. |
| (b) |
Comply with the exemption application
requirements prescribed by the Commissioner including but not limited to the
provision of names, addresses, FEIN numbers, affiliates, and corporate
officers. |
| (c) |
Files with the
Commissioner, a copy of its form 10-K or form 20-F disclosure statements, or if
it does not file such statements with the United States Securities and Exchange
Commission a copy or its audited financial statement on a GAAP basis. If the
retail installment seller's financial statements are consolidated with those of
its parent company, then the retail installment seller may comply with this
provision by filing the statements of its parent company. The statement shall
be filed with the Commissioner 30 days prior to the retail installment sellers
initial offering or delivering of a service contract or extended warranty
agreement and thereafter the statement shall be filed with the Commissioner
annually; and |
| (d) |
Upon the request
of the Commissioner posts a security deposit or surety bond guaranteeing the
retail installment sellers obligations in accordance with the terms of vehicle
service contracts or extended warranty agreements issued by the retail
installment seller in an amount not to exceed $250,000. |
|
| (3) |
This Regulation is not applicable to
insurance policies issued by an authorized insurer providing service contract
benefits to its insured. |
If any provision of this Chapter or the application thereof
to any person or circumstance is held invalid by a court of competent
jurisdiction, the remainder of the Chapter or the applicability of such
provision to other persons or circumstances shall not be
affected.
