House Bill No. 6887
               House Bill No. 6887

               PUBLIC ACT NO. 97-63


AN ACT CONCERNING EXTENDED WARRANTIES.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  42-260  of  the  general  statutes is
repealed and the following is substituted in  lieu
thereof:
    (a) As used in this section:
    (1)  "Extended  warranty"  means a contract or
agreement for repair  service  of  operational  or
structural failure of a product due to a defect in
materials,  skill   or   workmanship   given   for
consideration over and above the lease or purchase
price of a product.
    (2)   "Extended  warranty  provider"  means  a
person who issues, makes, provides  or  offers  to
provide an extended warranty to a buyer, excluding
a retail seller of an extended  warranty  if  such
seller:  (A)  Is  the  manufacturer of the product
covered under the extended warranty; (B) sells  or
offers   an   extended   warranty  for  a  product
obligating  the   manufacturer,   distributor   or
importer  to  provide  the service of the extended
warranty; or (C) performs at least ninety per cent
of  the repair service provided to buyers pursuant
to extended warranties purchased from such seller.
    (3)  "Buyer"  means  a person who purchases an
extended  warranty  from  an   extended   warranty
provider.
    (4)     "Extended    warranty    reimbursement
insurance policy"  means  a  policy  of  insurance
providing   coverage   for   all  obligations  and
liabilities  incurred  by  an  extended   warranty
provider  under the terms of the extended warranty
sold to a buyer by such provider.
    (b)  An  extended  warranty shall obligate the
extended warranty provider to supply to the  buyer
all  services  and  functional  parts  that may be
necessary to repair the product for  the  duration
of   the   extended  warranty  without  additional
charge, except as otherwise expressly provided.
    (c)  An extended warranty shall contain all of
the following:
    (1)  A clear description and identification of
the product;
    (2)  The [day] DATE when the extended warranty
commences and its duration,  [including]  AND,  IF
THE  EXTENDED  WARRANTY IS FOR LESS THAN ONE YEAR,
THE EXTENDED WARRANTY SHALL  INCLUDE  a  provision
for  the  automatic  extension of [a] THE EXTENDED
warranty while the product is in  the  custody  of
[an]  THE  extended  warranty  provider for repair
under such warranty;
    (3)  A  description  of the limits on transfer
or assignment of  the  extended  warranty  if  the
enforceability  of an extended warranty is limited
to the original buyer or  is  limited  to  persons
other  than  every  consumer  owner of the covered
product during the term of the extended warranty;
    (4)  A  statement  of  the  obligation  of the
extended warranty  provider  including  statements
of:  (A) Any services, parts, components, defects,
malfunctions, conditions, repairs or remedies that
are  excluded  from  the  scope  of  the  extended
warranty; (B) any limits on the obligations of the
extended  warranty  provider;  (C)  any additional
services which the extended warranty provider will
supply;    (D)   whether   the   buyer   has   the
responsibility of any other  obligations  and,  if
so,  the nature and frequency of such obligations,
and the consequences of any noncompliance;
    (5)   A   step-by-step   explanation   of  the
procedure which the buyer shall follow in order to
obtain  performance  of  any  obligation under the
extended warranty including: (A)  The  full  legal
and   business   name  of  the  extended  warranty
provider; (B) the mailing address of the  extended
warranty  provider;  (C)  the  persons or class of
persons that are authorized  to  perform  service;
(D)  the  name  or title and address of any agent,
employee or department of  the  extended  warranty
provider  that  is responsible for the performance
of any  obligations;  (E)  the  method  of  giving
notice  to  the  extended warranty provider of the
need for service; (F) whether in-home  service  is
provided   or,   if  not,  whether  the  costs  of
transporting the product for  service  or  repairs
will  be  paid  by the extended warranty provider;
(G) if the product  must  be  transported  to  the
extended warranty provider, either the place where
the  product  may  be  delivered  for  service  or
repairs  or a toll-free telephone number which the
buyer may call to obtain that information; (H) all
other  steps  which  the buyer must take to obtain
service; and (I) all fees, charges and other costs
that the buyer must pay to obtain service;
    (6)   A   description   of  the  services  the
extended warranty provider will supply  under  the
extended warranty; and
    (7)  A  statement  of  a  right  to cancel the
warranty if the buyer returns the product  or  the
product  is  sold, lost, stolen or destroyed, or a
statement that there is no right to cancel.
    (d)  (1)  An  extended  warranty  shall not be
issued,  sold  or  offered  for  sale  unless  the
extended  warranty  provider  is  insured under an
extended warranty reimbursement  insurance  policy
issued  by an insurer authorized to do business in
this state or the extended warranty  provider  can
demonstrate  that reserves for claims contained in
the provider's financial  statements  are  not  in
excess  of  one-half  of  a provider's audited net
worth. If such reserves are in excess of  one-half
of  a  provider's net worth, the reserves shall be
held  in  trust  by  an  independent  trustee  and
certified annually as adequate by an actuary.
    (2)   The   extended   warranty  reimbursement
insurance policy shall cover the obligations under
the   extended   warranty  sold  by  the  extended
warranty provider during the period of  time  that
such provider's insurance policy is in force.
    (e)   An   extended  warranty  provider  shall
submit to the Insurance Commissioner: (1)  A  copy
of  the  extended  warranty  form  issued  by said
provider;  and  (2)  a  copy  of  said  provider's
extended  warranty  reimbursement insurance policy
form  issued  by  an  insurer  authorized  to   do
business  in  this  state  or a certification by a
certified  public  accountant  attesting  to   the
adequacy  of  the  reserves for claims reported on
said provider's financial statements or  contained
in said provider's trust account.
    (f)  (1)  An  extended  warranty shall contain
the name and address of the insurers insuring  the
obligations  and  liabilities of such warranty and
instructions on how the buyer, or successor to the
buyer's  rights,  of  the product may file a claim
with the insurer if the extended warranty provider
fails  to  perform  according  to the terms of the
extended warranty.
    (2)  An  insurer of an extended warranty shall
not refuse to renew any policy unless such insurer
or   its   agent  shall  send,  by  registered  or
certified  mail  or  by  mail   evidenced   by   a
certificate   of   mailing   or  delivery  to  the
Insurance  Commissioner,  at  least  sixty   days'
advance  notice of its intention not to renew. The
notice of intent not to renew shall  state  or  be
accompanied  by  a statement specifying the reason
for such nonrenewal.
    (g)  The  Insurance Commissioner shall develop
regulations,  in  accordance  with   chapter   54,
implementing  an  arbitration  process  to  settle
disputes arising from extended warranty  contracts
between extended warranty providers and buyers.
    (h)  Nothing  in this section shall apply to a
home warranty contract or  home  warranty  service
agreement,   as   defined   in   section  38a-320,
automobiles or regulated utilities.

Approved May 27, 1997