SB2771 EngrossedLRB099 17213 EGJ 41571 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
12warranties.
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, (ii) is designed
2to prevent loss or damage to a vehicle from a specific cause,
3(iii) includes a written warranty by a warrantor that provides
4if the vehicle protection product fails to prevent loss or
5damage to a vehicle from a specific cause, that the warranty
6holder 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 the vehicle protection product.
22Warrantor does not include an authorized insurer.
23    "Warranty reimbursement insurance policy" means a policy
24of insurance issued to the vehicle protection product warrantor
25to pay on behalf of the warrantor all covered contractual
26obligations incurred by the warrantor under the terms and

 

 

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1conditions of the insured vehicle protection product
2warranties sold by the warrantor. The warranty reimbursement
3insurance policy shall be issued by an insurer authorized to do
4business in this State that has filed its policy form with the
5Department.
6    (b) No vehicle protection product sold or offered for sale
7in this State in compliance with this Section shall be subject
8to the provisions of this Code or the Service Contract Act
9unless it is offered as a service contract as defined in
10Section 5 of the Service Contract Act.
11    Vehicle protection product warrantors and related vehicle
12protection product sellers and warranty administrators
13complying with this Section are not required to comply with and
14are not subject to any other provision of this Code or the
15Service Contract Act unless it is offered as a service contract
16as defined in Section 5 of the Service Contract Act. The
17vehicle protection products' written warranties are express
18warranties and not insurance.
19    (c) This Section applies to all vehicle protection products
20sold or offered for sale prior to, on, or after the effective
21date of this amendatory Act of the 93rd General Assembly. The
22enactment of this Section does not imply that vehicle
23protection products should have been subject to regulation
24under this Code prior to the enactment of this Section. The
25changes made to this Section by this amendatory Act of the 99th
26General Assembly do not imply that vehicle protection products

 

 

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1should have been subject to regulation under this Code or the
2Service Contract Act prior to this amendatory Act of the 99th
3General Assembly.
4(Source: P.A. 95-331, eff. 8-21-07.)
 
5    Section 10. The Service Contract Act is amended by changing
6Sections 5 and 35 as follows:
 
7    (215 ILCS 152/5)
8    Sec. 5. Definitions.
9    "Department" means the Department of Insurance.
10    "Director" means the Director of Insurance.
11    "Road hazard" means a hazard that is encountered while
12driving a motor vehicle, including, but not limited to,
13potholes, rocks, wood debris, metal parts, glass, plastic,
14curbs, and composite scraps.
15    "Service contract" means a contract or agreement whereby a
16service contract provider undertakes for a specified period of
17time, for separate and identifiable consideration, to perform
18the repair, replacement, or maintenance, or indemnification
19for such services, of any automobile, system, or consumer
20product in connection with the operational or structural
21failure due to a defect in materials or workmanship, or normal
22wear and tear, with or without additional provision for
23incidental payment or indemnity under limited circumstances,
24for related expenses, including, but not limited to, towing,

 

 

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1rental, and emergency road service. Service contracts may
2provide for:
3        (1) the repair, replacement, or maintenance of such
4    property for damage resulting from power surges and
5    accidental damage from handling;
6        (2) the repair or replacement of tires or wheels, or
7    both, on a motor vehicle damaged as the result of coming
8    into contact with road hazards;
9        (3) the removal of dents, dings, or creases on a motor
10    vehicle that can be repaired using the process of paintless
11    dent removal without affecting the existing paint finish
12    and without replacing vehicle body panels, sanding,
13    bonding, or painting;
14        (4) the repair of chips or cracks in or the replacement
15    of motor vehicle windshields as a result of damage caused
16    by road hazards;
17        (5) the replacement of a motor vehicle key or key-fob
18    in the event that the key or key-fob becomes inoperable or
19    is lost or stolen;
20        (6) the payment of specified incidental costs in the
21    event that a protective chemical, substance, device, or
22    system that (A) is installed on or applied to a motor
23    vehicle and , (B) is designed to prevent loss or damage to
24    a motor vehicle from a specific cause, and (C) includes a
25    written product warranty providing for payment to or on
26    behalf of the warranty holder's incidental costs in the

 

 

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1    event that the product fails to prevent loss or damage as
2    specified; the reimbursement of incidental costs under the
3    warranty must be tied to the purchase of a physical product
4    that is formulated or designed to make the specified loss
5    or damage less likely to occur; however, a protective
6    chemical, substance, device, system, or service that is
7    offered in compliance with and meets the definition of
8    "vehicle protection product" in subsection (a) of Section
9    155.39 of the Illinois Insurance Code shall not be required
10    to comply with this Act; or
11        (7) other services that may be approved by the
12    Director, if not inconsistent with other provisions of this
13    Act.
14Service contracts shall not include:
15        (i) contracts of limited duration that provide for
16    scheduled maintenance only;
17        (ii) fuel additives, oil additives, or other chemical
18    products applied to the engine, transmission, or fuel
19    system of a motor vehicle;
20        (iii) coverage for the repair or replacement, or both,
21    of damage to the interior surfaces of a vehicle, or for
22    repair or replacement, or both, of damage to the exterior
23    paint or finish of a vehicle; however, such coverage may be
24    offered in connection with the sale of a protective
25    chemical, device, or system described in item (6) of this
26    definition.

 

 

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1    "Service contract holder" means the person who purchases a
2service contract or a permitted transferee.
3    "Service contract provider" means a person who is
4contractually obligated to the service contract holder under
5the terms of the service contract. A service contract provider
6does not include an insurer.
7    "Service contract reimbursement insurance policy" means a
8policy of insurance that is issued to the service contract
9provider to provide reimbursement to the service contract
10provider or to pay on behalf of the service contract provider
11all covered contractual obligations incurred by the service
12contract provider under the terms and conditions of the insured
13service contracts issued or sold by the service contract
14provider.
15    "System" means the heating, cooling, plumbing, electrical,
16ventilation, or any other similar system of a home.
17(Source: P.A. 98-222, eff. 1-1-14.)
 
18    (215 ILCS 152/35)
19    Sec. 35. Cancellation and refunds.
20    (a) No service contract may be issued, sold, or offered for
21sale in this State unless the service contract clearly states
22that the service contract holder is allowed to cancel the
23service contract. If the service contract holder elects
24cancellation, the service contract provider may retain a
25cancellation fee not to exceed the lesser of 10% of the service

 

 

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1contract price or $50. The service contract cancellation
2provision must provide that the service contract may be
3cancelled:
4        (1) within 30 days after its purchase if no service has
5    been provided and that a full refund of the service
6    contract consideration, less any cancellation fee stated
7    in the service contract will be paid to the service
8    contract holder; or
9        (2) at any other time and a pro rata refund of the
10    service contract consideration for the unexpired term of
11    the service contract, based on the number of elapsed
12    months, miles, hours, or such other reasonably applicable
13    measure which is clearly disclosed in the service contract,
14    less the value of any service received, and any
15    cancellation fee stated in the service contract will be
16    paid to the service contract holder.
17    (b) In the event that a service contract includes the
18coverage described in paragraph (6) of the definition of
19"service contract" in Section 5 of this Act, the service
20contract provider must refund the service contract purchase
21price in accordance with this Section, but is not required to
22refund the purchase price of the protective chemical,
23substance, device, system, or service; however, the service
24contract provider may elect to refund the purchase price of the
25protective chemical, substance, device, system, or service
26provided that the terms of that refund are clearly stated in

 

 

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1the service contract. The coverage described in paragraph (6)
2of the definition of "service contract" in Section 5 of this
3Act may not be offered as or within a service contract unless
4the service contract clearly states whether or not the service
5contract holder is entitled to a refund of the purchase price
6of the protective chemical, substance, device, system, or
7service and, if applicable, the terms of such refund.
8(Source: P.A. 90-711, eff. 8-7-98.)