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repealed and the following is substituted in lieu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