98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB1460

 

Introduced , by Rep. Greg Harris

 

SYNOPSIS AS INTRODUCED:
 
New Act
215 ILCS 5/2.5

    Creates the Motor Vehicle Ancillary Products Act. Provides that each ancillary product provider intending to issue or sell ancillary product contracts in the State shall file a registration with the Director of Insurance and designate a person in the State for service of process. Provides that each ancillary product provider shall pay to the Director a fee upon initial registration and every year thereafter. Provides that other than the ancillary product provider registration requirements in the provision requiring ancillary product provider registration, ancillary product providers and related ancillary product contract sellers, administrators, and other persons marketing, selling, offering to sell, or issuing ancillary product contracts are exempt from any licensing requirements of the State to conduct ancillary product contract business. Sets forth provisions concerning ancillary product provider financial requirements; ancillary product contract receipt requirements; disclosures; ancillary protection product warranties; reimbursement insurance policies; ancillary product contract exemption from insurance laws; prohibited acts; record keeping; cancellation of reimbursement insurance policies; obligations of reimbursement insurance policy insurers; enforcement provisions; premium taxes; applicability; and severability. Amends the Illinois Insurance Code to provide that the Code shall not be construed to apply to ancillary product contracts under the Motor Vehicle Ancillary Products Act. Effective January 1, 2014.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning insurance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Motor
5Vehicle Ancillary Products Act.
 
6    Section 5. Scope and purpose.
7    (a) The purpose of this Act is to create a legal framework
8within which motor vehicle ancillary product contracts, as
9defined in this Act, are regulated and may be sold in this
10State. This Act declares that ancillary product contracts are
11not insurance and not otherwise subject to the Illinois
12Insurance Code. This Act adds significant consumer protections
13and eliminates unnecessary administration.
14    (b) The following are exempt from this Act:
15        (1) warranties, indemnity agreements, and guarantees
16    that are not provided incidental to the purchase of an
17    ancillary protection product;
18        (2) maintenance agreements;
19        (3) service contracts as defined in Section 5 of the
20    Service Contract Act;
21        (4) automobile clubs; and
22        (5) GAP waiver agreements.
 

 

 

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1    Section 10. Definitions. In this Act:
2    "Administrator" means the person who is responsible for the
3administration of the ancillary product contracts.
4    "Ancillary product contract" means an ancillary service
5contract or ancillary protection product warranty or both.
6    "Ancillary product holder" means, collectively, both
7contract holders and warranty holders.
8    "Ancillary product provider" means, collectively, both
9providers and warrantors.
10    "Ancillary protection product" means a protective
11chemical, substance, device, system, or service that (i) is
12installed on or applied to a motor vehicle, (ii) is designed to
13prevent loss or damage to a motor vehicle from a specific
14cause, and (iii) includes an ancillary protection product
15warranty. For purposes of this Section, "ancillary protection
16product" includes, but is not limited to, protective chemicals,
17alarm systems, body part marking products, steering locks,
18window etch products, pedal and ignition locks, fuel and
19ignition kill switches, and electronic, radio, and satellite
20tracking devices. "Ancillary protection product" does not
21include fuel additives, oil additives, or other chemical
22products applied to the engine, transmission, or fuel system of
23a motor vehicle.
24    "Ancillary protection product warranty" means a written
25agreement by a warrantor that provides if the ancillary
26protection product fails to prevent loss or damage to a motor

 

 

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1vehicle from a specific cause, that the warrantor will pay to
2or on behalf of the warranty holder specified incidental costs
3as a result of the failure of the ancillary protection product
4to perform pursuant to the terms of the ancillary protection
5product warranty.
6    "Ancillary service contract" means an agreement that is
7effective for a specified duration and paid for by means other
8than the purchase of a motor vehicle to perform any one or more
9of the following services:
10        (1) the repair or replacement of tires or wheels or
11    both on a motor vehicle damaged as a result of coming into
12    contact with road hazards;
13        (2) the removal of dents, dings, or creases on a motor
14    vehicle that can be repaired using the process of paintless
15    dent removal without affecting the existing paint finish
16    and without replacing vehicle body panels, sanding,
17    bonding, or painting;
18        (3) the repair of chips or cracks in or the replacement
19    of motor vehicle windshields as a result of damage caused
20    by road hazards;
21        (4) the replacement of a motor vehicle key or key-fob
22    in the event that the key or key-fob becomes inoperable or
23    is lost or stolen; or
24        (5) other services that may be approved by the
25    Director.
26    An ancillary service contract may not include coverage for

 

 

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1the repair of damage to the interior surfaces of a vehicle or
2for repair of damage to the exterior paint or finish of a
3vehicle; however, such coverage may be offered in connection
4with the sale of an ancillary protection product.
5    "Contract holder" means the person who purchases an
6ancillary service contract, any authorized transferee or
7assignee of the purchaser, or any other person legally assuming
8the purchaser's rights under the ancillary service contract.
9    "Director" means the Director of Insurance.
10    "Incidental costs" means expenses specified in an
11ancillary protection product warranty that are incurred by the
12warranty holder due to the failure of an ancillary protection
13product to perform as provided in the contract. Incidental
14costs may include, without limitation, insurance policy
15deductibles, rental vehicle charges, the difference between
16the actual value of the stolen vehicle at the time of theft and
17the cost of a replacement vehicle, sales taxes, registration
18fees, transaction fees, and mechanical inspection fees.
19Incidental costs may be reimbursed in either a fixed amount
20specified in the ancillary protection product warranty or by
21use of a formula itemizing specific incidental costs incurred
22by the warranty holder.
23    "Motor vehicle" means self-propelled or towed vehicles
24designed for personal or commercial use, including, but not
25limited to, automobiles, trucks, motorcycles, recreational
26vehicles, all-terrain vehicles, snowmobiles, campers, boats,

 

 

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1personal watercraft, and motorcycle, boat, camper, and
2personal watercraft trailers.
3    "Person" means an individual, company, association,
4organization, partnership, business trust, corporation, or any
5other form of legal entity.
6    "Provider" means a person who is contractually obligated to
7a contract holder under the terms of an ancillary service
8contract.
9    "Reimbursement insurance policy" means a policy of
10insurance issued to an ancillary product provider to either
11provide reimbursement to the ancillary product provider under
12the terms of the designated ancillary product contracts issued
13or sold by the provider or, in the event of the provider's
14non-performance, to pay on behalf of the provider all covered
15contractual obligations incurred by the provider under the
16terms of the insured ancillary product contracts.
17    "Road hazard" means a hazard that is encountered while
18driving a motor vehicle and that may include, but not be
19limited to, potholes, rocks, wood debris, metal parts, glass,
20plastic, curbs, or composite scraps.
21    "Warranty holder" means the person who purchases an
22ancillary protection product, any authorized transferee or
23assignee of the purchaser, or any other person legally assuming
24the purchaser's rights under the ancillary product contract.
25    "Warrantor" means a person who is contractually obligated
26to the warranty holder under the terms of the ancillary

 

 

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1protection product warranty.
 
2    Section 15. Ancillary product provider registration
3required.
4    (a) Each ancillary product provider intending to issue or
5sell ancillary product contracts in this State shall file a
6registration with the Director consisting of their name, full
7corporate address, telephone number, and contact person and
8designate a person in this State for service of process. Each
9ancillary product provider shall pay to the Director a fee in
10the amount of $200 upon initial registration and every year
11thereafter. The registration need only be updated by written
12notification to the Director if material changes occur in the
13registration on file.
14    (b) An ancillary product provider may, but is not required
15to, appoint an administrator or other designee to be
16responsible for any or all of the administration of its
17ancillary product contracts and compliance with this Act.
18    (c) Other than the ancillary product provider registration
19requirements in this Section, ancillary product providers and
20related ancillary product contract sellers, administrators,
21and other persons marketing, selling, offering to sell, or
22issuing ancillary product contracts are exempt from any
23licensing requirements of this State in order to conduct
24ancillary product contract business.
 

 

 

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1    Section 20. Ancillary product provider financial
2requirements.
3    (a) In order to ensure the faithful performance of an
4ancillary product provider's obligations to its ancillary
5product holders, each ancillary product provider shall insure
6all ancillary product contracts under a reimbursement
7insurance policy issued by an insurer licensed, registered, or
8otherwise authorized to do business in this State, and the
9insurer shall either:
10        (1) at the time the policy is filed with the Director,
11    and continuously thereafter, (A) maintain surplus as to
12    policyholders and paid-in capital of at least $15,000,000
13    and (B) annually file copies of the insurer's financial
14    statements, its NAIC Annual Statement, and the actuarial
15    certification required by and filed in the insurer's state
16    of domicile; or
17        (2) at the time the policy is filed with the Director,
18    and continuously thereafter, (A) maintain surplus as to
19    policyholders and paid-in capital of less than $15,000,000
20    but at least equal to $10,000,000, (B) demonstrate to the
21    satisfaction of the Director that the company maintains a
22    ratio of net written premiums, where ever written, to
23    surplus as to policyholders and paid-in capital of not
24    greater than 3 to one, and (C) annually file copies of the
25    insurer's audited financial statements, its NAIC Annual
26    Statement, and the actuarial certification required by and

 

 

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1    filed in the insurer's state of domicile.
2    (b) Except for the requirements specified in this Section,
3no other financial security requirements shall be required by
4the Director for ancillary product providers.
 
5    Section 25. Ancillary product contract receipt required.
6    (a) Ancillary product contracts shall not be issued, sold,
7or offered for sale in this State unless the provider provides
8a copy of the ancillary product contract to the contract holder
9within a reasonable period of time from the date of purchase. A
10provider may comply with this subsection (a) by providing the
11consumer with a physical copy of the complete terms and
12conditions of the contract, by directing the consumer to an
13Internet website containing a copy of the complete terms and
14conditions of the contract, or by delivering a copy of the
15complete terms and conditions of the contract via electronic
16mail.
17    (b) An ancillary product provider shall provide a consumer
18with a complete sample copy of the contract terms and
19conditions prior to the time of sale upon a request for the
20same by the consumer. A provider may comply with this
21subsection (b) by providing the consumer with a complete sample
22copy of the terms and conditions or by directing the consumer
23to an Internet website containing a complete sample of the
24terms and conditions of the contract.
 

 

 

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1    Section 30. Required disclosures.
2    (a) Ancillary service contracts marketed, sold, offered
3for sale, issued, made, proposed to be made, or administered in
4this State shall be written, printed, or typed in clear,
5understandable language that is easy to read and shall disclose
6the following requirements, as applicable:
7        (1) the name and address of the provider, and shall
8    identify any administrator if different from the provider,
9    the ancillary service contract seller, and the contract
10    holder to the extent that the name of the contract holder
11    has been furnished by the contract holder; the identities
12    of the parties are not required to be preprinted on the
13    ancillary service contract and may be added to the contract
14    at the time of sale;
15        (2) the total purchase price and the terms under which
16    the contract is sold; the purchase price is not required to
17    be pre-printed on the ancillary service contract and may be
18    negotiated at the time of sale with the contract holder;
19        (3) the existence of any deductible amount, if
20    applicable;
21        (4) the merchandise and services to be provided and any
22    limitations, exceptions, or exclusions;
23        (5) whether the use of non-original manufacturers'
24    parts is allowed;
25        (6) any restrictions governing the transferability of
26    the contract, if applicable;

 

 

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1        (7) the terms, restrictions, or conditions governing
2    cancellation of the contract prior to the termination or
3    expiration date of the ancillary service contract by either
4    the provider or the contract holder;
5        (8) all of the obligations and duties of the contract
6    holder, such as the duty to protect against any further
7    damage and any service requirements to follow as provided
8    in the owner's manual, supplement, or guide; and
9        (9) whether or not the contract provides for or
10    excludes consequential damages or preexisting conditions,
11    if applicable.
12    (b) An ancillary service contract that is insured by a
13reimbursement insurance policy under Section 20 of this Act
14shall conspicuously state all of the following:
15        (1) "This contract is not insurance and is not subject
16    to the insurance laws of this State.";
17        (2) that the obligations of the provider are insured
18    under a reimbursement insurance policy;
19        (3) that if a provider fails to perform or make payment
20    due under the terms of the contract within 60 days after
21    the contract holder requests performance or payment
22    pursuant to the terms of the contract, the contract holder
23    may request performance or payment directly from the
24    provider's reimbursement insurance policy insurer,
25    including any obligation in the contract by which the
26    provider must refund the contract holder upon cancellation

 

 

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1    of a contract; and
2        (4) the name, address, and telephone number of the
3    provider's reimbursement insurance policy insurer.
4    (c) Ancillary service contracts shall require the provider
5to permit the contract holder to return the contract within 30
6days after the date the contract was mailed to the holder or
7within 30 days after delivery if the contract is delivered to
8the contract holder at the time of sale or within a longer time
9period permitted under the contract. Upon return of the
10ancillary service contract to the provider within the
11applicable time period, if no claim has been made under the
12contract prior to its return to the provider, the contract is
13void and the provider shall refund to the contract holder, or
14credit the account of the contract holder, with the full
15purchase price of the ancillary service contract. The right to
16void the ancillary product service provided in this subsection
17(c) is not transferable and shall apply only to the original
18contract purchaser, and only if no claim has been made prior to
19its return to the provider. A 10% penalty per month shall be
20added to a refund that is not paid or credited within 45 days
21after the return of the ancillary service contract to the
22provider.
23    (d) Subsequent to the time period specified in subsection
24(c) or if a claim has been made under the contract within that
25time period, an ancillary service contract holder may cancel
26the contract and the provider shall refund to the contract

 

 

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1holder 100% of the unearned pro rata provider fee, less any
2claims paid. A reasonable administrative fee may be charged by
3the provider not to exceed 10% of the purchase price paid by
4the contract holder.
5    (e) The provider shall mail a written notice to the
6contract holder at the last known address of the contract
7holder contained in the records of the provider at least 5 days
8prior to cancellation by the provider. Prior notice is not
9required if the reason for cancellation is nonpayment of the
10provider fee, a material misrepresentation by the contract
11holder to the provider, a substantial breach of duties by the
12contract holder relating to the covered product or its use, or
13a request to cancel by the contract holder. The notice shall
14state the effective date of the cancellation and the reason for
15the cancellation. If an ancillary service contract is cancelled
16by the provider for a reason other than nonpayment of the
17provider fee, the provider shall refund to the contract holder
18100% of the unearned pro rata provider fee, less any claims
19paid. A reasonable administrative fee may be charged by the
20provider not to exceed 10% of the price paid by the contract
21holder.
 
22    Section 35. Ancillary protection product warranty.
23    (a) Ancillary protection product warranties offered,
24issued, made, proposed to be made, or administered in this
25State shall be written, printed, or typed in clear,

 

 

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1understandable language that is easy to read, and shall
2disclose the following requirements, as applicable:
3        (1) the name and address of the warrantor, the seller
4    of the ancillary protection product, and the warranty
5    holder;
6        (2) the total purchase price of the ancillary
7    protection product and the terms under which it is to be
8    paid; however, the purchase price is not required to be
9    preprinted on the ancillary protection product warranty
10    and may be negotiated with the consumer at the time of
11    sale;
12        (3) the procedure for making a claim, including a
13    telephone number for the warrantor or administrator
14    responsible for processing the claim;
15        (4) the payments or performance to be provided under
16    the warranty, including payments for incidental costs, the
17    manner of calculation or determination of payments or
18    performance, and any limitations, exceptions or
19    exclusions; incidental costs may be reimbursed under the
20    provisions of the warranty in either a fixed amount
21    specified in the warranty or sales agreement or by the use
22    of a formula itemizing specific incidental costs incurred
23    by the warranty holder;
24        (5) the obligations and duties of the warranty holder,
25    such as the duty to protect against any further damage to
26    the vehicle, the obligation to notify the warrantor in

 

 

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1    advance of any repair, or other similar requirements, if
2    any;
3        (6) any terms, restrictions, or conditions governing
4    transferability and cancellation of the warranty, if any;
5    and
6        (7) a disclosure that reads substantially as follows:
7    "This agreement is a product warranty and is not
8    insurance.".
9    (b) An ancillary protection product warranty that is
10insured by a reimbursement insurance policy under Section 20 of
11this Act shall conspicuously state all of the following:
12        (1) "This contract is not insurance and is not subject
13    to the insurance laws of this State.";
14        (2) that the obligations of the warrantor are insured
15    under a reimbursement insurance policy;
16        (3) that if a warrantor fails to perform or make
17    payment due under the terms of the warranty within 60 days
18    after the warranty holder requests performance or payment
19    pursuant to the terms of the warranty, the warranty holder
20    may request performance or payment directly from the
21    warrantor's reimbursement insurance policy insurer; and
22        (4) the name, address, and telephone number of the
23    warrantor's reimbursement insurance policy insurer.
24    (c) A warrantor may only cancel an ancillary protection
25product warranty if the warranty holder does any of the
26following:

 

 

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1        (1) Fails to pay for the ancillary protection product.
2        (2) Makes a material misrepresentation to the seller of
3    the ancillary protection product or to the warrantor.
4        (3) Commits fraud related to the purchase of the
5    ancillary protection product, registration of the
6    ancillary protection product warranty, or a claim made
7    under the ancillary protection product warranty.
8        (4) Substantially breaches the warranty holder's
9    duties under the warranty.
10        (5) Fails to make required payments on the vehicle such
11    that the vehicle is repossessed.
12        (6) Damages the vehicle such that the vehicle is deemed
13    a total loss.
14    (d) A warrantor canceling an ancillary protection product
15warranty shall mail written notice of cancellation to the
16warranty holder at the last address of the warranty holder in
17the warrantor's records at least 30 days prior to the effective
18date of the cancellation. The notice shall state the effective
19date of the cancellation and the reason for cancellation.
 
20    Section 40. Required disclosures; reimbursement insurance
21policy. A reimbursement insurance policy that is required to be
22issued under this Act shall contain:
23        (1) a statement that if an ancillary product provider
24    fails to perform or make payment due under the terms of the
25    ancillary product contract within 60 days after the

 

 

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1    ancillary product holder requests performance or payment
2    pursuant to the terms of the ancillary product contract,
3    the ancillary product holder may request performance or
4    payment directly from the ancillary product provider's
5    reimbursement insurance policy insurer, including any
6    obligation in the ancillary product contract by which the
7    ancillary product provider must refund the contract holder
8    upon cancellation of an ancillary product contract; and
9        (2) a statement that in the event of cancellation of
10    the ancillary product provider's reimbursement insurance
11    policy, insurance coverage shall continue for all
12    ancillary product holders whose ancillary product
13    contracts were issued by the ancillary product provider and
14    reported to the insurer for coverage during the term of the
15    reimbursement insurance policy.
 
16    Section 45. Ancillary product contract; not insurance. The
17marketing, sale, offering for sale, issuance, making,
18proposing to make, and administration of ancillary product
19contracts by ancillary product providers and related ancillary
20product contract sellers, administrators, and other persons
21shall be exempt from all provisions of this State's insurance
22laws other than this Act.
 
23    Section 50. Prohibited acts.
24    (a) An ancillary product provider shall not use in its name

 

 

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1the words "insurance", "casualty", "surety", "mutual", or any
2other words descriptive of the insurance, casualty, or surety
3business or a name deceptively similar to the name or
4description of any insurance or surety corporation or to the
5name of any other ancillary product provider. The word
6"guaranty" or a similar word may be used by an ancillary
7product provider. This Section shall not apply to a company
8that was using any of the prohibited language in its name prior
9to the effective date of this Act.
10    (b) An ancillary product provider or its representative
11shall not, in its contracts, warranties, or literature, make,
12permit, or cause to be made any false or misleading statement
13or deliberately omit any material statement that would be
14considered misleading if omitted.
15    (c) A person, such as a bank, savings and loan association,
16lending institution, manufacturer, or seller of any product,
17shall not require the purchase of an ancillary product contract
18as a condition of a loan or a condition for the sale of any
19motor vehicle or other property.
20    (d) An ancillary product provider or its representative
21shall not, directly or indirectly, represent in any manner,
22whether by written solicitation or telemarketing, a false,
23deceptive, or misleading statement with respect to:
24        (1) the ancillary product provider's affiliation with
25    a motor vehicle manufacturer;
26        (2) the ancillary product provider's possession of

 

 

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1    information regarding a motor vehicle owner's current
2    motor vehicle manufacturer's original equipment warranty;
3        (3) the expiration of a motor vehicle owner's current
4    motor vehicle manufacturer's original equipment warranty;
5    or
6        (4) a requirement that a motor vehicle owner register
7    for a new ancillary product contract with an ancillary
8    product provider in order to maintain coverage under the
9    motor vehicle owner's current ancillary product contract
10    or manufacturer's original equipment warranty.
 
11    Section 55. Record-keeping requirements.
12    (a) The following provisions shall apply concerning books
13and records:
14        (1) An ancillary product provider shall keep accurate
15    accounts, books, and records concerning transactions
16    regulated under this Act.
17        (2) The ancillary product provider's accounts, books,
18    and records shall include the following:
19            (A) copies of each type of ancillary product
20        contract sold or issued;
21            (B) the name and address of each ancillary product
22        holder to the extent that the name and address have
23        been furnished by the ancillary product holder;
24            (C) a list of the locations where ancillary product
25        contracts are issued, marketed, sold, or offered for

 

 

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1        sale; and
2            (D) written claims files, which shall contain at
3        least the dates and description of claims related to
4        the ancillary product contracts.
5        (3) Except as provided in subsection (b) of this
6    Section, the ancillary product provider shall retain all
7    records required to be maintained by this Section for at
8    least one year after the specified period of coverage has
9    expired.
10        (4) The records required under this Section may be, but
11    are not required to be, maintained on a computer disk or
12    other record keeping technology. If the records are
13    maintained in other than hard copy, the records shall be
14    capable of duplication to legible hard copy at the request
15    of the Director.
16    (b) An ancillary product provider discontinuing business
17in this State shall maintain its records until it furnishes the
18Director satisfactory proof that it has discharged all
19obligations to ancillary product holders in this State.
 
20    Section 60. Cancellation of reimbursement insurance
21policy. As applicable, an insurer that issued a reimbursement
22insurance policy required under this Act shall not terminate
23the policy until a notice of termination in accordance with
24Section 143.16 of the Illinois Insurance Code has been mailed
25or delivered to the Director. The termination of a

 

 

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1reimbursement insurance policy shall not reduce the issuer's
2responsibility for ancillary product contracts issued by
3insured ancillary product providers prior to the date of the
4termination.
 
5    Section 65. Obligation of reimbursement insurance policy
6insurers.
7    (a) Insurers issuing reimbursement insurance to ancillary
8product providers are deemed to have received the premiums for
9such insurance upon the payment of ancillary product provider
10fees by consumers for ancillary product contracts issued by the
11insured ancillary product providers.
12    (b) This Act shall not prevent or limit the right of an
13insurer that issued a reimbursement insurance policy to seek
14indemnification or subrogation against an ancillary product
15provider if the insurer pays or is obligated to pay the
16ancillary product holder sums that the ancillary product
17provider was obligated to pay pursuant to the provisions of the
18ancillary product contract.
 
19    Section 70. Enforcement provisions.
20    (a) The Director may conduct examinations of ancillary
21product providers, administrators, insurers, or other persons
22to enforce the provisions of this Act and protect ancillary
23product holders in this State. Upon request of the Director,
24the ancillary product provider shall make available to the

 

 

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1Director all accounts, books, and records concerning ancillary
2product contracts sold or issued by the ancillary product
3provider that are necessary to enable the Director to
4reasonably determine compliance or noncompliance with this
5Act.
6    (b) The Director may take action that is necessary or
7appropriate to enforce the provisions of this Act and the
8Director's rules and orders, and to protect ancillary product
9holders in this State. The following provisions shall apply:
10        (1) If an ancillary product provider has violated this
11    Act or the Director's rules or orders, then the Director
12    may issue an order directed to that ancillary product
13    provider to cease and desist from committing violations of
14    this Act or the Director's rules or orders; may issue an
15    order prohibiting an ancillary product provider from
16    issuing, selling, or offering for sale ancillary product
17    contracts in violation of this Act; or may issue an order
18    imposing a civil penalty on that ancillary product
19    provider, or any combination of the foregoing, as
20    applicable. The following provisions shall apply
21    concerning hearings:
22            (A) a person aggrieved by an order issued under
23        this paragraph (1) may request a hearing before the
24        Director; the hearing request shall be filed with the
25        Director within 20 days after the date the Director's
26        order is effective;

 

 

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1            (B) if a hearing is requested, an order issued by
2        the Director under this Section shall be suspended from
3        the original effective date of the order until
4        completion of the hearing and final decision of the
5        Director; and
6            (C) at the hearing, the burden shall be on the
7        Director to show why the order issued pursuant to this
8        paragraph (1) is justified; the provisions of Article
9        XXIV of the Illinois Insurance Code shall apply to a
10        hearing requested under this Section.
11        (2) The Director may bring an action in any court of
12    competent jurisdiction for an injunction or other
13    appropriate relief to enjoin threatened or existing
14    violations of this Act or of the Director's rules or
15    orders. An action filed under this paragraph (2) may also
16    seek restitution on behalf of persons aggrieved by a
17    violation of this Act or rules or orders of the Director.
18        (3) A person who is found to have violated this Act or
19    rules or orders of the Director may be assessed a civil
20    penalty in an amount determined by the Director of not more
21    than $500 per violation and no more than $10,000 in the
22    aggregate for all violations of a similar nature. For
23    purposes of this Section, violations shall be of a similar
24    nature if the violation consists of the same or similar
25    course of conduct, action, or practice, irrespective of the
26    number of times the act, conduct, or practice that is

 

 

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1    determined to be a violation of this Act occurred.
2    (c) This Act does not create a separate civil cause of
3action.
 
4    Section 75. Premium taxes.
5    (a) Ancillary product provider fees collected on ancillary
6product contracts shall not be subject to premium taxes.
7    (b) Premiums for reimbursement insurance policies shall be
8subject to applicable premium taxes.
 
9    Section 80. Applicability. This Act applies to all
10ancillary product contracts issued, sold, or offered for sale
11on or after January 1, 2014. The failure of any person to
12comply with this Act prior to January 1, 2014, shall not be
13admissible in any court proceeding, administrative proceeding,
14arbitration, or alternative dispute resolution proceeding and
15may not otherwise be used to prove that the action of any
16person or the affected ancillary product contract was unlawful
17or otherwise improper. The adoption of this Act does not imply
18that an ancillary product contract was insurance prior to
19January 1, 2014. The penalty provisions of this chapter do not
20apply to any violation of this Act relating to or in connection
21with the sale or failure to disclose in a retail installment
22contract or lease, or contract or agreement that provides for
23payments under an ancillary product contract as long as the
24sale of such product, contract, or agreement was otherwise

 

 

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1disclosed to the purchaser in writing at the time of the
2purchase or lease. In the event of a violation for which the
3penalty provisions of this Act do not apply, the court shall
4award actual damages and costs, including reasonable
5attorney's fees. Nothing in this Section shall be construed to
6require the application of the penalty provisions where this
7Section is not applicable.
8    A person engaged in the ancillary product contract
9business, as an ancillary product provider or otherwise, in
10this State on or before the effective date of this Act, who
11registers as an ancillary product provider pursuant to this Act
12within 30 days after the Director makes the registration form
13available, may continue to engage in business as an ancillary
14product provider in this State until final agency action is
15taken by the Director regarding the registration and all rights
16to administrative judicial review have been exhausted or
17expired.
 
18    Section 90. The Illinois Insurance Code is amended by
19changing Section 2.5 as follows:
 
20    (215 ILCS 5/2.5)
21    Sec. 2.5. Exemption. This Code shall not be construed to
22apply to the administration of the Drycleaner Environmental
23Response Trust Fund under the Drycleaner Environmental
24Response Trust Fund Act or ancillary product contracts under

 

 

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1the Motor Vehicle Ancillary Products Act.
2(Source: P.A. 90-502, eff. 8-19-97.)
 
3    Section 97. Severability. The provisions of this Act are
4severable under Section 1.31 of the Statute on Statutes.
 
5    Section 99. Effective date. This Act takes effect January
61, 2014.