HB3072 EnrolledLRB100 10497 SMS 20711 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Insurance Code is amended by
5changing Section 155.39 as follows:
6    (215 ILCS 5/155.39)
7    Sec. 155.39. Vehicle protection products.
8    (a) As used in this Section:
9    "Administrator" means a third party other than the
10warrantor who is designated by the warrantor to be responsible
11for the administration of vehicle protection product
13    "Incidental costs" means expenses specified in the vehicle
14protection product warranty incurred by the warranty holder
15related to the failure of the vehicle protection product to
16perform as provided in the warranty. Incidental costs may
17include, without limitation, insurance policy deductibles,
18rental vehicle charges, the difference between the actual value
19of the stolen vehicle at the time of theft and the cost of a
20replacement vehicle, sales taxes, registration fees,
21transaction fees, and mechanical inspection fees.
22    "Vehicle protection product" means a protective chemical,
23substance, vehicle protection device, system, or service that



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1is (i) installed on or applied to a vehicle, and (ii) is
2designed to prevent loss or damage to a vehicle from a specific
3cause, (iii) includes a written warranty by a warrantor that
4provides if the vehicle protection product fails to prevent
5loss or damage to a vehicle from a specific cause, that the
6warranty holder shall be paid specified incidental costs by the
7warrantor as a result of the failure of the vehicle protection
8product to perform pursuant to the terms of the warranty, and
9(iv) the warrantor's liability is covered by a warranty
10reimbursement insurance policy. The term "vehicle protection
11product" shall include, without limitation, protective
12chemicals, alarm systems, body part marking products, steering
13locks, window etch products, pedal and ignition locks, fuel and
14ignition kill switches, and electronic, radio, and satellite
15tracking devices. "Vehicle protection product" does not
16include fuel additives, oil additives, or other chemical
17products applied to the engine, transmission, or fuel system of
18a motor vehicle.
19    "Vehicle protection product warrantor" or "warrantor"
20means a person who is contractually obligated to the warranty
21holder under the terms of a the vehicle protection product
22warranty. "Warrantor" Warrantor does not include an authorized
24    "Vehicle protection product warranty" means a written
25warranty by a vehicle protection product warrantor that (i) is
26included, for no separate and identifiable consideration, with



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1the purchase of a vehicle protection product sold or offered
2for sale in this State and (ii) provides if the vehicle
3protection product fails to prevent loss or damage to a vehicle
4from a specific cause, that the warranty holder shall be paid
5specified incidental costs by the warrantor as a result of the
6failure of the vehicle protection product to perform pursuant
7to the terms of the warranty.
8    "Warranty reimbursement insurance policy" means a policy
9of insurance issued to the vehicle protection product warrantor
10to pay on behalf of the warrantor all covered contractual
11obligations incurred by the warrantor under the terms and
12conditions of the insured vehicle protection product
13warranties sold by the warrantor. The warranty reimbursement
14insurance policy shall be issued by an insurer authorized to do
15business in this State that has filed its policy form with the
17    (a-5) A vehicle protection product warrantor's liabilities
18under a vehicle protection product warranty shall be covered by
19a warranty reimbursement insurance policy.
20    (b) No vehicle protection product warranty sold or offered
21for sale in this State shall be subject to the provisions of
22this Code. Vehicle protection product warranties are express
23warranties and not insurance.
24    Vehicle protection product warrantors and related vehicle
25protection product sellers and warranty administrators
26complying with this Section are not required to comply with and



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1are not subject to any other provision of this Code. The
2vehicle protection products' written warranties are express
3warranties and not insurance.
4    (c) This Section applies to all vehicle protection products
5sold or offered for sale prior to, on, or after the effective
6date of this amendatory Act of the 93rd General Assembly. The
7enactment of this Section does not imply that vehicle
8protection products should have been subject to regulation
9under this Code prior to the enactment of this Section. The
10changes made to this Section by this amendatory Act of the
11100th General Assembly do not imply that vehicle protection
12products and vehicle protection product warranties should have
13been subject to regulation under this Code prior to this
14amendatory Act of the 100th General Assembly.
15(Source: P.A. 95-331, eff. 8-21-07.)
16    Section 10. The Service Contract Act is amended by changing
17Sections 5 and 35 as follows:
18    (215 ILCS 152/5)
19    Sec. 5. Definitions.
20    "Department" means the Department of Insurance.
21    "Director" means the Director of Insurance.
22    "Road hazard" means a hazard that is encountered while
23driving a motor vehicle, including, but not limited to,
24potholes, rocks, wood debris, metal parts, glass, plastic,



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1curbs, and composite scraps.
2    "Service contract" means a contract or agreement whereby a
3service contract provider undertakes for a specified period of
4time, for separate and identifiable consideration, to perform
5the repair, replacement, or maintenance, or indemnification
6for such services, of any automobile, system, or consumer
7product in connection with the operational or structural
8failure due to a defect in materials or workmanship, or normal
9wear and tear, with or without additional provision for
10incidental payment or indemnity under limited circumstances,
11for related expenses, including, but not limited to, towing,
12rental, and emergency road service. Service contracts may
13provide for:
14        (1) the repair, replacement, or maintenance of such
15    property for damage resulting from power surges and
16    accidental damage from handling;
17        (2) the repair or replacement of tires or wheels, or
18    both, on a motor vehicle damaged as the result of coming
19    into contact with road hazards;
20        (3) the removal of dents, dings, or creases on a motor
21    vehicle that can be repaired using the process of paintless
22    dent removal without affecting the existing paint finish
23    and without replacing vehicle body panels, sanding,
24    bonding, or painting;
25        (4) the repair of chips or cracks in or the replacement
26    of motor vehicle windshields as a result of damage caused



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1    by road hazards;
2        (5) the replacement of a motor vehicle key or key-fob
3    in the event that the key or key-fob becomes inoperable or
4    is lost or stolen;
5        (6) the payment of specified incidental costs in the
6    event that a vehicle protection product a protective
7    chemical, substance, device, or system that (A) is
8    installed on or applied to a motor vehicle, (B) is designed
9    to prevent loss or damage to a motor vehicle from a
10    specific cause, and (C) includes a written product warranty
11    providing for payment to or on behalf of the warranty
12    holder's incidental costs in the event that the product
13    fails to prevent loss or damage as specified; the
14    reimbursement of incidental costs under the warranty must
15    be tied to the purchase of a physical product that is
16    formulated or designed to make the specified loss or damage
17    less likely to occur; or
18        (7) other services that may be approved by the
19    Director, if not inconsistent with other provisions of this
20    Act.
21Service contracts shall not include:
22        (i) contracts of limited duration that provide for
23    scheduled maintenance only;
24        (ii) fuel additives, oil additives, or other chemical
25    products applied to the engine, transmission, or fuel
26    system of a motor vehicle;



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1        (iii) coverage for the repair or replacement, or both,
2    of damage to the interior surfaces of a vehicle, or for
3    repair or replacement, or both, of damage to the exterior
4    paint or finish of a vehicle; however, such coverage may be
5    offered in connection with the sale of a vehicle protection
6    product; and
7        (iv) a vehicle product protection warranty included,
8    for no separate and identifiable consideration, with the
9    purchase of a vehicle protection product protective
10    chemical, device, or system described in item (6) of this
11    definition.
12    "Service contract holder" means the person who purchases a
13service contract or a permitted transferee.
14    "Service contract provider" means a person who is
15contractually obligated to the service contract holder under
16the terms of the service contract. A service contract provider
17does not include an insurer.
18    "Service contract reimbursement insurance policy" means a
19policy of insurance that is issued to the service contract
20provider to provide reimbursement to the service contract
21provider or to pay on behalf of the service contract provider
22all covered contractual obligations incurred by the service
23contract provider under the terms and conditions of the insured
24service contracts issued or sold by the service contract
26    "System" means the heating, cooling, plumbing, electrical,



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1ventilation, or any other similar system of a home.
2    "Vehicle protection product" has the same meaning as that
3term is defined in subsection (a) of Section 155.39 of the
4Illinois Insurance Code.
5    "Vehicle protection product warranty" has the same meaning
6as that term is defined in subsection (a) of Section 155.39 of
7the Illinois Insurance Code.
8(Source: P.A. 98-222, eff. 1-1-14.)
9    (215 ILCS 152/35)
10    Sec. 35. Cancellation and refunds.
11    (a) No service contract may be issued, sold, or offered for
12sale in this State unless the service contract clearly states
13that the service contract holder is allowed to cancel the
14service contract. If the service contract holder elects
15cancellation, the service contract provider may retain a
16cancellation fee not to exceed the lesser of 10% of the service
17contract price or $50. The service contract cancellation
18provision must provide that the service contract may be
20    (1) within 30 days after its purchase if no service has
21been provided and that a full refund of the service contract
22consideration, less any cancellation fee stated in the service
23contract will be paid to the service contract holder; or
24    (2) at any other time and a pro rata refund of the service
25contract consideration for the unexpired term of the service



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1contract, based on the number of elapsed months, miles, hours,
2or such other reasonably applicable measure which is clearly
3disclosed in the service contract, less the value of any
4service received, and any cancellation fee stated in the
5service contract will be paid to the service contract holder.
6    (b) In the event of the cancellation of a service contract
7that includes the coverage described in paragraph (6) of the
8definition of "service contract" in Section 5 of this Act, the
9service contract provider is not required to, but may, refund
10the purchase price of the vehicle protection product. The
11coverage described in paragraph (6) of the definition of
12"service contract" in Section 5 of this Act may not be offered
13as or within a service contract unless the service contract
14clearly states whether the service contract holder is entitled
15to a refund of the purchase price of the vehicle protection
16product and, if applicable, the terms of such refund.
17(Source: P.A. 90-711, eff. 8-7-98.)