House Bill 1704 — Service Contracts and Protection Product Guarantees (2022 Regular Session)

Summary

House Bill 1704 (H-1763.1) of the State of Washington, 67th Legislature, 2022 Regular Session, is by Representatives Kirby, Vick, Ryu, and Dufault. It was prefiled 12/27/21, read first time 01/10/22, and referred to the Committee on Consumer Protection & Business. The act relates to the regulation of service contracts and protection product guarantees and amends RCW 48.110.050, 48.110.055, 48.110.060, 48.110.070, 48.110.073, 48.110.075, 48.110.110, and 48.110.140. Providers must show financial responsibility through reimbursement insurance, a funded reserve account with a security deposit, or a net worth of at least one hundred million dollars. Protection product guarantee providers must register with the commissioner, with a two hundred fifty dollar application fee.

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Full text

     H-1763.1

                                HOUSE BILL 1704


     State of Washington       67th Legislature          2022 Regular Session

     By Representatives Kirby, Vick, Ryu, and Dufault

     Prefiled 12/27/21. Read first time 01/10/22.       Referred to Committee
     on Consumer Protection & Business.




 1       AN ACT Relating to the regulation of service contracts and
 2   protection   product   guarantees;   and  amending   RCW 48.110.050,
 3   48.110.055,    48.110.060,    48.110.070,   48.110.073,  48.110.075,
 4   48.110.110, and 48.110.140.


 5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 6       Sec. 1.   RCW 48.110.050 and 2016 c 224 s 3 are each amended to
 7   read as follows:
 8       (1) Service contracts shall not be issued, sold, or offered for
 9   sale in this state or sold to consumers in this state unless the
10   service contract provider has:
11       (a) Provided a receipt for, or other written evidence of, the
12   purchase of the service contract to the contract holder; and
13       (b) Provided a copy of the service contract to the service
14   contract holder within a reasonable period of time from the date of
15   purchase.
16       (2) In order to either demonstrate its financial responsibility
17   or assure the faithful performance of the service contract provider's
18   obligations to its service contract holders, every service contract
19   provider shall comply with the requirements of one of the following:
20       (a) Insure all service contracts under ((a)) one or more
21   reimbursement insurance ((policy)) policies issued by ((an insurer))
                                     p. 1                             HB 1704
 1   one or more insurers holding a certificate of authority from the
 2   commissioner or a risk retention group, as defined in 15 U.S.C. Sec.
 3   3901(a)(4), as long as that risk retention group is in full
 4   compliance with the federal liability risk retention act of 1986 (15
 5   U.S.C. Sec. 3901 et seq.), is in good standing in its domiciliary
 6   jurisdiction, and is properly registered with the commissioner under
 7   chapter 48.92 RCW. The insurance required by this subsection must
 8   meet the following requirements:
 9       (i) The insurer or risk retention group must, at the time the
10   policy ((is)) or policies are filed with the commissioner, and
11   continuously thereafter, maintain surplus as to policyholders and
12   paid-in capital of at least fifteen million dollars and annually file
13   audited financial statements with the commissioner; and
14       (ii) The commissioner may authorize an insurer or risk retention
15   group that has surplus as to policyholders and paid-in capital of
16   less than fifteen million dollars, but at least equal to ten million
17   dollars, to issue the insurance required by this subsection if the
18   insurer or risk retention group demonstrates to the satisfaction of
19   the commissioner that the company maintains a ratio of direct written
20   premiums, wherever written, to surplus as to policyholders and paid-
21   in capital of not more than three to one;
22       (b)(i) Maintain a funded reserve account for its obligations
23   under its service contracts issued and outstanding in this state. The
24   reserves shall not be less than forty percent of the gross
25   consideration received, less claims paid, on the sale of the service
26   contract for all in-force contracts. The reserve account shall be
27   subject to examination and review by the commissioner; and
28       (ii) Place in trust with the commissioner a financial security
29   deposit, having a value of not less than five percent of the gross
30   consideration received, less claims paid, on the sale of the service
31   contract for all service contracts issued and in force, but not less
32   than twenty-five thousand dollars, consisting of one of the
33   following:
34       (A) A surety bond issued by an insurer holding a certificate of
35   authority from the commissioner;
36       (B) Securities of the type eligible for deposit by authorized
37   insurers in this state;
38       (C) Cash;
39       (D) An irrevocable evergreen letter of credit issued by a
40   qualified financial institution; or
                                     p. 2                          HB 1704
 1       (E) Another form of security prescribed by rule by the
 2   commissioner; or
 3       (c)(i) Maintain, or its parent company maintain, a net worth or
 4   stockholder's equity of at least one hundred million dollars; and
 5       (ii) Upon request, provide the commissioner with a copy of the
 6   service contract provider's or, if using the net worth or
 7   stockholder's equity of its parent company to satisfy the one hundred
 8   million dollar requirement, the service contract provider's parent
 9   company's most recent form 10-K or form 20-F filed with the
10   securities and exchange commission within the last calendar year, or
11   if the company does not file with the securities and exchange
12   commission, a copy of the service contract provider's or, if using
13   the net worth or stockholder's equity of its parent company to
14   satisfy the one hundred million dollar requirement, the service
15   contract provider's parent company's most recent audited financial
16   statements, which shows a net worth of the service contract provider
17   or its parent company of at least one hundred million dollars. If the
18   service contract provider's parent company's form 10-K, form 20-F, or
19   audited financial statements are filed with the commissioner to meet
20   the service contract provider's financial stability requirement, then
21   the parent company shall agree to guarantee the obligations of the
22   service contract provider relating to service contracts sold by the
23   service contract provider in this state. A copy of the guarantee
24   shall be filed with the commissioner. The guarantee shall be
25   irrevocable as long as there is in force in this state any contract
26   or any obligation arising from service contracts guaranteed, unless
27   the parent company has made arrangements approved by the commissioner
28   to satisfy its obligations under the guarantee.
29       (3) Service contracts shall require the service contract provider
30   to permit the service contract holder to return the service contract
31   within twenty days of the date the service contract was mailed to the
32   service contract holder or within ten days of delivery if the service
33   contract is delivered to the service contract holder at the time of
34   sale, or within a longer time period permitted under the service
35   contract. Upon return of the service contract to the service contract
36   provider within the applicable period, if no claim has been made
37   under the service contract prior to the return to the service
38   contract provider, the service contract is void and the service
39   contract provider shall refund to the service contract holder, or
40   credit the account of the service contract holder with the full
                                     p. 3                          HB 1704
1    purchase price of the service contract. The right to void the service
2    contract provided in this subsection is not transferable and shall
3    apply only to the original service contract purchaser. A ten percent
4    penalty per month shall be added to a refund of the purchase price
5    that is not paid or credited within thirty days after return of the
6    service contract to the service contract provider.
7        (4) This section does not apply to service contracts on motor
8    vehicles or to protection product guarantees.

 9       Sec. 2.   RCW 48.110.055 and 2019 c 16 s 3 are each amended to
10   read as follows:
11       (1) This section applies to protection product guarantee
12   providers.
13       (2) A person must not act as, or offer to act as, or hold himself
14   or herself out to be a protection product guarantee provider in this
15   state, nor may a protection product be sold to a consumer in this
16   state, unless the protection product guarantee provider has:
17       (a) A valid registration as a protection product guarantee
18   provider issued by the commissioner; and
19       (b) Either demonstrated its financial responsibility or assured
20   the faithful performance of the protection product guarantee
21   provider's obligations to its protection product guarantee holders by
22   insuring all protection product guarantees under ((a)) one or more
23   reimbursement insurance ((policy)) policies issued by ((an insurer))
24   one or more insurers holding a certificate of authority from the
25   commissioner or a risk retention group, as defined in 15 U.S.C. Sec.
26   3901(a)(4), as long as that risk retention group is in full
27   compliance with the federal liability risk retention act of 1986 (15
28   U.S.C. Sec. 3901 et seq.), is in good standing in its domiciliary
29   jurisdiction, and properly registered with the commissioner under
30   chapter 48.92 RCW. The insurance required by this subsection must
31   meet the following requirements:
32       (i) The insurer or risk retention group must, at the time the
33   policy ((is)) or policies are filed with the commissioner, and
34   continuously thereafter, maintain surplus as to policyholders and
35   paid-in capital of at least fifteen million dollars and annually file
36   audited financial statements with the commissioner; and
37       (ii) The commissioner may authorize an insurer or risk retention
38   group that has surplus as to policyholders and paid-in capital of
39   less than fifteen million dollars, but at least equal to ten million
                                     p. 4                          HB 1704
 1   dollars, to issue the insurance required by this subsection if the
 2   insurer or risk retention group demonstrates to the satisfaction of
 3   the commissioner that the company maintains a ratio of direct written
 4   premiums, wherever written, to surplus as to policyholders and paid-
 5   in capital of not more than three to one.
 6       (3) Applicants to be a protection product guarantee provider must
 7   make an application to the commissioner upon a form to be furnished
 8   by the commissioner. The application must include or be accompanied
 9   by the following information and documents:
10       (a) The names of the protection product guarantee provider's
11   executive officer or officers directly responsible for the protection
12   product guarantee provider's protection product guarantee business
13   and their biographical affidavits on a form prescribed by the
14   commissioner;
15       (b) The name, address, and telephone number of any administrators
16   designated by the protection product guarantee provider to be
17   responsible for the administration of protection product guarantees
18   in this state;
19       (c) A copy of the protection product guarantee reimbursement
20   insurance policy or policies;
21       (d) A copy of each protection product guarantee the protection
22   product guarantee provider proposes to use in this state;
23       (e) The most recent annual financial statements, if available, or
24   the most recent financial statements certified as accurate by two or
25   more officers of the applicant which prove that the applicant has and
26   maintains a minimum net worth or stockholder's equity of two hundred
27   thousand dollars or more calculated in accordance with RCW 48.110.078
28   and the ability to pay its debts when debts become due; and
29       (f) A nonrefundable application fee of two hundred fifty dollars.
30       (4) Each registered protection product guarantee provider must
31   appoint the commissioner as the protection product guarantee
32   provider's attorney to receive service of legal process issued
33   against the protection product guarantee provider in this state upon
34   causes of action arising within this state. Service upon the
35   commissioner as attorney constitutes effective legal service upon the
36   protection product guarantee provider.
37       (a) With the appointment the protection product guarantee
38   provider must designate the person to whom the commissioner must
39   forward legal process so served upon him or her.


                                     p. 5                          HB 1704
 1       (b) The appointment is irrevocable, binds any successor in
 2   interest or to the assets or liabilities of the protection product
 3   guarantee provider, and remains in effect for as long as there could
 4   be any cause of action against the protection product guarantee
 5   provider arising out of any of the protection product guarantee
 6   provider's contracts or obligations in this state.
 7       (c) The service of process must be accomplished and processed in
 8   the manner prescribed under RCW 48.02.200.
 9       (5) The commissioner may refuse to issue a registration if the
10   commissioner determines that the protection product guarantee
11   provider, or any individual responsible for the conduct of the
12   affairs of the protection product guarantee provider under subsection
13   (3)(a) of this section, is not competent, trustworthy, cannot
14   demonstrate a minimum net worth or stockholder's equity in accordance
15   with the applicable requirements of subsection (3)(e) of this section
16   and the ability to pay its debts when debts become due, or has had a
17   license as a protection product guarantee provider or similar license
18   denied or revoked for cause by any state.
19       (6) A registration issued under this section is valid, unless
20   surrendered, suspended, or revoked by the commissioner, or not
21   renewed for so long as the protection product guarantee provider
22   continues in business in this state and remains in compliance with
23   this chapter. A registration is subject to renewal annually on the
24   first day of July upon application of the protection product
25   guarantee provider and payment of a fee of two hundred fifty dollars.
26   If not so renewed, the registration expires on the June 30th next
27   preceding.
28       (7) A protection product guarantee provider must keep current the
29   information required to be disclosed in its registration under this
30   section by reporting all material changes or additions within thirty
31   days after the end of the month in which the change or addition
32   occurs.

33       Sec. 3.   RCW 48.110.060 and 2006 c 274 s 7 are each amended to
34   read as follows:
35       (1) Reimbursement insurance policies insuring service contracts
36   or protection product guarantees issued, sold, or offered for sale in
37   this state or issued or sold to consumers in this state shall state
38   that the insurer that issued the reimbursement insurance policy shall
39   either reimburse ((or)) the provider, or, in the event of
                                     p. 6                          HB 1704
 1   nonperformance by the provider, shall pay on behalf of the service
 2   contract provider or the protection product guarantee provider all
 3   sums the service contract provider or the protection product
 4   guarantee provider is legally obligated to pay, including but not
 5   limited to the refund of the full purchase price of the service
 6   contract to the service contract holder or shall provide the service
 7   which the service contract provider or the protection product
 8   guarantee provider is legally obligated to perform according to the
 9   service   contract   provider's  or   protection   product guarantee
10   provider's contractual obligations under the service contracts or
11   protection product guarantees issued or sold by the service contract
12   provider or the protection product guarantee provider.
13       (2) The reimbursement insurance policy or policies shall either
14   fully insure the obligations of the service contract provider or
15   protection product guarantee provider((, rather than partially
16   insure,)) or insure only in the event of service contract provider or
17   protection product guarantee provider default.
18       (3) The reimbursement insurance policy or policies shall state
19   that the service contract holder or protection product guarantee
20   holder is entitled to apply directly to the reimbursement insurance
21   company for payment or performance due.


22       Sec. 4.   RCW 48.110.070 and 2006 c 274 s 8 are each amended to
23   read as follows:
24       (1) Service contracts marketed, sold, offered for sale, issued,
25   made, proposed to be made, or administered in this state or sold to
26   residents of this state shall be written, printed, or typed in clear,
27   understandable language that is easy to read, and disclose the
28   requirements set forth in this section, as applicable.
29       (2)   Service   contracts  insured   under   ((a)) one   or  more
30   reimbursement     insurance    ((policy))     policies   under    RCW
31   48.110.050(2)(a) and 48.110.060 shall not be issued, sold, or offered
32   for sale in this state or sold to residents of this state unless the
33   service contract conspicuously contains a statement in substantially
34   the following form: "Obligations of the service contract provider
35   under this service contract are insured under a service contract
36   reimbursement insurance policy." The service contract shall also
37   conspicuously state the name and address of ((the)) each issuer of
38   the reimbursement insurance policy or policies and state that the


                                     p. 7                          HB 1704
 1   service contract holder is entitled to apply directly to the
 2   reimbursement insurance company.
 3       (3) Service contracts not insured under ((a)) one or more
 4   reimbursement    insurance     ((policy))     policies   under    RCW
 5   48.110.050(2)(a) and 48.110.060 shall contain a statement in
 6   substantially the following form: "Obligations of the service
 7   contract provider under this contract are backed by the full faith
 8   and credit of the service contract provider."
 9       (4) Service contracts shall state the name and address of the
10   service contract provider and shall identify any administrator if
11   different from the service contract provider, the service contract
12   seller, and the service contract holder to the extent that the name
13   of the service contract holder has been furnished by the service
14   contract holder. The identities of such parties are not required to
15   be preprinted on the service contract and may be added to the service
16   contract at the time of sale.
17       (5) Service contracts shall state the purchase price of the
18   service contract and the terms under which the service contract is
19   sold. The purchase price is not required to be preprinted on the
20   service contract and may be negotiated at the time of sale.
21       (6) Service contracts shall state the procedure to obtain service
22   or to file a claim, including but not limited to the procedures for
23   obtaining prior approval for repair work, the toll-free telephone
24   number if prior approval is necessary for service, and the procedure
25   for obtaining emergency repairs performed outside of normal business
26   hours or provide for twenty-four-hour telephone assistance.
27       (7) Service contracts shall state the existence of any deductible
28   amount, if applicable.
29       (8) Service contracts shall specify the merchandise, parts, and
30   services to be provided and any limitations, exceptions, or
31   exclusions.
32       (9) Service contracts shall state any restrictions governing the
33   transferability of the service contract, if applicable.
34       (10) Service contracts shall state the terms, restrictions, or
35   conditions governing cancellation of the service contract prior to
36   the termination or expiration date of the service contract by either
37   the service contract provider or by the service contract holder,
38   which rights can be no more restrictive than provided in RCW
39   48.110.050(3). The service contract provider of the service contract
40   shall mail a written notice to the service contract holder at the
                                     p. 8                          HB 1704
 1   last known address of the service contract holder contained in the
 2   records of the service contract provider at least twenty-one days
 3   prior to cancellation by the service contract provider. The notice
 4   shall state the effective date of the cancellation and the true and
 5   actual reason for the cancellation.
 6       (11) Service contracts shall set forth the obligations and duties
 7   of the service contract holder, including but not limited to the duty
 8   to protect against any further damage and any requirement to follow
 9   owner's manual instructions.
10       (12) Service contracts shall state whether or not the service
11   contract   provides  for   or   excludes  consequential   damages  or
12   preexisting conditions.
13       (13) Service contracts shall state any exclusions of coverage.
14       (14) Service contracts shall not contain a provision which
15   requires that any civil action brought in connection with the service
16   contract must be brought in the courts of a jurisdiction other than
17   this state. Service contracts that authorize binding arbitration to
18   resolve claims or disputes must allow for arbitration proceedings to
19   be held at a location in closest proximity to the service contract
20   holder's permanent residence.
21       This section does not apply to service       contracts   on   motor
22   vehicles or to protection product guarantees.


23       Sec. 5. RCW 48.110.073 and 2006 c 274 s 20 are each amended to
24   read as follows:
25       (1) If the service contract provider or protection product
26   guarantee provider is using (([the])) one or more reimbursement
27   insurance ((policy)) policies to satisfy the requirements of RCW
28   48.110.050(2)(a), 48.110.055(2)(b), or 48.110.075(2)(a), then ((the))
29   each reimbursement insurance policy shall be filed with and approved
30   by the commissioner in accordance with and pursuant to the
31   requirements of chapter 48.18 RCW.
32       (2) All service contracts forms covering motor vehicles must be
33   filed with and approved by the commissioner prior to the service
34   contract forms being used, issued, delivered, sold, or marketed in
35   this state or to residents of this state.
36       (3) All service contracts forms covering motor vehicles being
37   used, issued, delivered, sold, or marketed in this state or to
38   residents of this state by motor vehicle manufacturers or import
39   distributors or wholly owned subsidiaries thereof must be filed with
                                     p. 9                          HB 1704
 1   the commissioner for approval within sixty days after the motor
 2   vehicle manufacturer or import distributor or wholly owned subsidiary
 3   thereof begins using the service contracts forms.
 4       (4) The commissioner shall disapprove any motor vehicle service
 5   contract form if:
 6       (a) The form is in any respect in violation of, or does not
 7   comply with, this chapter or any applicable order or regulation of
 8   the commissioner issued under this chapter;
 9       (b) The form contains or incorporates by reference any
10   inconsistent, ambiguous, or misleading clauses, or exceptions and
11   conditions;
12       (c) The form has any title, heading, or other indication of its
13   provisions that is misleading; or
14       (d) The purchase of the contract is being solicited by deceptive
15   advertising.


16       Sec. 6. RCW 48.110.075 and 2006 c 274 s 18 are each amended to
17   read as follows:
18       (1) This section applies to service contracts on motor vehicles.
19       (2) Service contracts shall not be issued, sold, or offered for
20   sale in this state or sold to consumers in this state unless:
21       (a) The service contract provider has either demonstrated its
22   financial responsibility or assured the faithful performance of the
23   service contract provider's obligations to its service contract
24   holders by insuring all service contracts under ((a)) one or more
25   reimbursement insurance ((policy)) policies issued by ((an insurer))
26   one or more insurers holding a certificate of authority from the
27   commissioner or a risk retention group, as defined in 15 U.S.C. Sec.
28   3901(a)(4), as long as that risk retention group is in full
29   compliance with the federal liability risk retention act of 1986 (15
30   U.S.C. Sec. 3901 et seq.), is in good standing in its domiciliary
31   jurisdiction, and properly registered with the commissioner under
32   chapter 48.92 RCW. The insurance required by this subsection must
33   meet the following requirements:
34       (i) The insurer or risk retention group must, at the time the
35   policy ((is)) or policies are filed with the commissioner, and
36   continuously thereafter, maintain surplus as to policyholders and
37   paid-in capital of at least fifteen million dollars and annually file
38   audited financial statements with the commissioner; and


                                     p. 10                         HB 1704
 1       (ii) The commissioner may authorize an insurer or risk retention
 2   group that has surplus as to policyholders and paid-in capital of
 3   less than fifteen million dollars, but at least equal to ten million
 4   dollars, to issue the insurance required by this subsection if the
 5   insurer or risk retention group demonstrates to the satisfaction of
 6   the commissioner that the company maintains a ratio of direct written
 7   premiums, wherever written, to surplus as to policyholders and paid-
 8   in capital of not more than three to one;
 9       (b)   The  service   contract   conspicuously  states  that   the
10   obligations of the provider to the service contract holder are
11   guaranteed under the reimbursement insurance policy or policies, the
12   name and address of the issuer or insurers of the reimbursement
13   insurance policy or policies, the applicable policy ((number))
14   numbers, and the means by which a service contract holder may file a
15   claim under the policy or policies;
16       (c) The service contract conspicuously and unambiguously states
17   the name and address of the service contract provider and identifies
18   any administrator if different from the service contract provider,
19   the service contract seller, and the service contract holder. The
20   identity of the service contract seller and the service contract
21   holder are not required to be preprinted on the service contract and
22   may be added to the service contract at the time of sale;
23       (d) The service contract states the purchase price of the service
24   contract and the terms under which the service contract is sold. The
25   purchase price is not required to be preprinted on the service
26   contract and may be negotiated at the time of sale;
27       (e) The contract contains a conspicuous statement that has been
28   initialed by the service contract holder and discloses:
29       (i) Any material conditions that the service contract holder must
30   meet to maintain coverage under the contract including, but not
31   limited to, any maintenance schedule to which the service contract
32   holder must adhere, any requirement placed on the service contract
33   holder for documenting repair or maintenance work, any duty to
34   protect against any further damage, and any procedure to which the
35   service contract holder must adhere for filing claims;
36       (ii) The work and parts covered by the contract;
37       (iii) Any time or mileage limitations;
38       (iv) That the implied warranty of merchantability on the motor
39   vehicle is not waived if the contract has been purchased within
40   ninety days of the purchase date of the motor vehicle from a provider
                                     p. 11                         HB 1704
 1   or service contract seller who also sold the motor vehicle covered by
 2   the contract;
 3       (v) Any exclusions of coverage; and
 4       (vi) The contract holder's right to return the contract for a
 5   refund, which right can be no more restrictive than provided for in
 6   subsection (4) of this section;
 7       (f) The service contract states the procedure to obtain service
 8   or to file a claim, including but not limited to the procedures for
 9   obtaining prior approval for repair work, the toll-free telephone
10   number if prior approval is necessary for service, and the procedure
11   for obtaining emergency repairs performed outside of normal business
12   hours or for obtaining twenty-four-hour telephone assistance;
13       (g) The service contract states the existence of any deductible
14   amount, if applicable;
15       (h) The service contract states any restrictions governing the
16   transferability of the service contract, if applicable; and
17       (i) The service contract states whether or not the service
18   contract   provides  for   or   excludes  consequential   damages  or
19   preexisting conditions.
20       (3) Service contracts shall not contain a provision which
21   requires that any civil action brought in connection with the service
22   contract must be brought in the courts of a jurisdiction other than
23   this state. Service contracts that authorize binding arbitration to
24   resolve claims or disputes must allow for arbitration proceedings to
25   be held at a location in closest proximity to the service contract
26   holder's permanent residence.
27       (4)(a) At a minimum, every provider shall permit the service
28   contract holder to return the contract within thirty days of its
29   purchase if no claim has been made under the contract, and shall
30   refund to the holder the full purchase price of the contract unless
31   the service contract holder returns the contract ten or more days
32   after its purchase, in which case the provider may charge a
33   cancellation fee not exceeding twenty-five dollars.
34       (b) If no claim has been made and a contract holder returns the
35   contract after thirty days, the provider shall refund the purchase
36   price pro rata based upon either elapsed time or mileage computed
37   from the date the contract was purchased and the mileage on that
38   date, less a cancellation fee not exceeding twenty-five dollars.



                                     p. 12                         HB 1704
 1       (c) A ten percent penalty shall be added to any refund that is
 2   not paid within thirty days of return of the contract to the
 3   provider.
 4       (d) If a contract holder returns the contract under this
 5   subsection, the contract is void from the beginning and the parties
 6   are in the same position as if no contract had been issued.
 7       (e) If a service contract holder returns the contract in
 8   accordance with this section, the insurer or insurers issuing the
 9   reimbursement insurance policy or policies covering the contract
10   shall refund to the provider the full premium by the provider for the
11   contract if canceled within thirty days or a pro rata refund if
12   canceled after thirty days.
13       (5) A service contract provider shall not deny a claim for
14   coverage based upon the service contract holder's failure to properly
15   maintain the vehicle, unless the failure to maintain the vehicle
16   involved the failed part or parts.
17       (6) A contract provider has only sixty days from the date of the
18   sale of the service contract to the holder to determine whether or
19   not the vehicle qualifies under the provider's program for that
20   vehicle. After sixty days the vehicle qualifies for the service
21   contract that was issued and the service contract provider may not
22   cancel the contract and is fully obligated under the terms of the
23   contract sold to the service contract holder.


24       Sec. 7. RCW 48.110.110 and 2006 c 274 s 12 are each amended to
25   read as follows:
26       (1) Service contract providers or protection product guarantee
27   providers are considered to be the agent of ((the)) each insurer
28   which issued the reimbursement insurance policy or policies for
29   purposes of obligating the insurer to service contract holders or
30   protection product guarantee holders in accordance with the service
31   contract or protection product guarantee holders and this chapter.
32   Payment of the provider fee by the consumer to the service contract
33   seller, service contract provider, or administrator or payment of
34   consideration for the protection product to the protection product
35   seller constitutes payment by the consumer to the service contract
36   provider or protection product guarantee provider and to ((the)) each
37   insurer which issued the reimbursement insurance policy or policies.
38   In cases where a service contract provider or protection product
39   guarantee provider is acting as an administrator and enlists other
                                     p. 13                         HB 1704
 1   service contract providers or protection product guarantee providers,
 2   the service contract provider or protection product guarantee
 3   provider acting as the administrator shall notify ((the)) each
 4   insurer of the existence and identities of the other service contract
 5   providers or protection product guarantee providers.
 6       (2) This chapter does not prevent or limit the right of an
 7   insurer which issued a reimbursement insurance policy to seek
 8   indemnification or subrogation against a service contract provider or
 9   protection product guarantee provider if the issuer pays or is
10   obligated to pay the service contract holder or protection product
11   guarantee holder sums that the service contract provider or
12   protection product guarantee provider was obligated to pay under the
13   provisions of the service contract or protection product guarantee.


14       Sec. 8. RCW 48.110.140 and 2006 c 274 s 15 are each amended to
15   read as follows:
16       The legislature finds that the practices covered by this chapter
17   are matters vitally affecting the public interest for the purpose of
18   applying the consumer protection act, chapter 19.86 RCW. Violations
19   of this chapter are not reasonable in relation to the development and
20   preservation of business. A violation of this chapter is an unfair or
21   deceptive act or practice in the conduct of trade or commerce and an
22   unfair method of competition, as specifically contemplated by RCW
23   19.86.020, and is a violation of the consumer protection act, chapter
24   19.86 RCW. Any service contract holder or protection product
25   guarantee holder injured as a result of a violation of a provision of
26   this chapter shall be entitled to maintain an action pursuant to
27   chapter 19.86 RCW against the service contract provider or protection
28   product guarantee provider and ((the)) each insurer issuing the
29   applicable   service   contract  or   protection   product  guarantee
30   reimbursement insurance policy or policies and shall be entitled to
31   all of the rights and remedies afforded by that chapter.

                                  --- END ---




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