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Senate Bill Report — HB 1704, Regulating Service Contracts and Protection Product Guarantees

Summary

A Senate Bill Report on HB 1704, as of February 21, 2022, an act relating to the regulation of service contracts and protection product guarantees, with Representatives Kirby, Vick, Ryu and Dufault listed as sponsors. The bill allows service contract providers and protection product guarantee providers to use more than one reimbursement insurance policy to cover their obligations and liabilities. The background section states that service contract providers may show financial responsibility by insuring with a reimbursement insurance policy or risk retention group, by keeping a reserve account along with a security deposit, or by maintaining or having a parent company with a maintained net worth of $100 million. The report lists the fiscal note as available.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Issuer
Congressional materials
Document type
Report
Date
2022-02-22
Case
2022 02 22 A29904 D243818 Bill Report 1704 Sba Bfst 22

Cite this document

“Senate Bill Report — HB 1704, Regulating Service Contracts and Protection Product Guarantees.” Original at app.leg.wa.gov, dated 2022-02-22. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-02-22-2022-02-22-a29904-d243818-bill-report-1704-sba-bfst-22/, SHA-256 d2155a4516f784fffd352132b5b47c2f727ef73f72c405ecedaa4a4fabca5356.

Full text

                            SENATE BILL REPORT
                                  HB 1704

                                     As of February 21, 2022

Title: An act relating to the regulation of service contracts and protection product guarantees.

Brief Description: Regulating service contracts and protection product guarantees.

Sponsors: Representatives Kirby, Vick, Ryu and Dufault.

Brief History: Passed House: 2/14/22, 97-0.
     Committee Activity: Business, Financial Services & Trade: 2/22/22.


                                     Brief Summary of Bill
           • Allows service contract providers and protection product guarantee
             providers to use more than one reimbursement insurance policy to cover
             their obligations and liabilities.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Providing Proof of Financial Responsibility for Service Contracts and
     Protection Product Guarantees on Consumer Goods and Motor Vehicles. Service
     Contracts. Service contracts are agreements entered into to either provide, or compensate
     for, a certain repair, replacement, or maintenance of property when there is an issue due to a
     defect in materials, workmanship, or normal wear and tear.

     To show financial responsibility to the state, service contract providers may choose one of
     the following options to ensure obligations and liabilities are paid:
         • insure contracts with a reimbursement insurance policy or through a risk retention
            group;
         • maintain a reserve account along with a security deposit, held by the Office of the
            Insurance Commissioner (OIC); or



     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                         HB 1704
         • maintain or have a parent company with a maintained net worth of $100 million.

     Protection Product Guarantees. Protection product guarantees are written agreements to
     repair or replace a product upon failure of the product to perform under the terms of the
     guarantee. Protection product guarantee providers must insure contracts with a
     reimbursement insurance policy or through a risk retention group to show financial
     responsibility, in addition to other financial requirements.

     Both service contracts and protection product guarantees are regulated by OIC.

     Reimbursement Insurance Policies for Service Contract and Protection Product Guarantee
     Providers. Reimbursement insurance policies that insure service contracts and protection
     product guarantees must reimburse or pay on behalf of the provider all sums the provider is
     legally obligated to pay. Reimbursement policies must fully insure, rather than partially
     insure, the obligations of the service contract provider or protection product providers.
     These insurance policies may also be called commercial liability insurance products, or
     CLIPs.

     Summary of Bill: Service contract providers and protection product guarantee providers
     may use more than one reimbursement insurance policy to cover their obligations and
     liabilities.

     Appropriation: None.

     Fiscal Note: Available.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.




Senate Bill Report                            -2-                                        HB 1704

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2022-02-22_a29904_d243818_bill-report-1704-sba-bfst-22.pdf
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2022-02-22_a29904_d243818_bill-report-1704-sba-bfst-22.pdf
Original
app.leg.wa.gov
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