Enrolled HB 206: Relating to motor vehicle service contracts; exempting motor vehicle service contracts from regulation as insurance; and providing for an effective date.
00Enrolled HB 206 01 Relating to motor vehicle service contracts; exempting motor vehicle service contracts from 02 regulation as insurance; and providing for an effective date. 03 _______________ 04 * Section 1. AS 21.03.021(e) is amended to read: 05 (e) This title does not apply to a service contract offered, issued for delivery, 06 delivered, or renewed in this state. In this subsection, "service contract" 07 (1) means a service contract or agreement for a separate or additional 08 consideration, for a specific duration, to 09 (A) maintain, service, repair, or replace tangible personal 10 property, or to indemnify for repair, replacement, or maintenance, for an 11 operational or structural failure due to a defect in materials or workmanship or 12 normal wear and tear, with or without additional provision for incidental 13 indemnity payments when service, repair, or replacement is not reasonably or 14 commercially feasible;
01 (B) repair, replace, or maintain tangible personal property 02 damaged as a result of power surges or as a result of accidental damage from 03 the handling of property; or 04 (C) repair, replace, or maintain household consumer goods, 05 household appliances, and household systems, including damage resulting 06 from operational or structural failure due to a defect in materials or 07 workmanship or normal wear and tear; 08 (2) does not include 09 (A) mechanical breakdown insurance; 10 (B) a contract that requires an indemnity payment for each 11 [PER] incident, and the payment exceeds the purchase price of the property 12 serviced [; 13 (C) A CONTRACT TO PROVIDE SERVICE ON A MOTOR 14 VEHICLE SUBJECT TO REGISTRATION UNDER AS 28.10.011]; 15 (C) [(D)] a home warranty; in this subparagraph, "home 16 warranty" means a warranty that covers the entire home and does not include a 17 warranty limited to a household system or appliance; or 18 (D) [(E)] portable electronics insurance as defined in 19 AS 21.36.515. 20 * Sec. 2. AS 21.03.021 is amended by adding new subsections to read: 21 (h) A motor vehicle service contract shall be governed by AS 21.61 except as 22 expressly provided in this title. 23 (i) A motor vehicle warranty, motor vehicle maintenance agreement, and 24 motor vehicle service contract offered for sale or sold to a person other than a 25 consumer are not insurance and do not have to comply with any provision of this title. 26 In this subsection, "motor vehicle maintenance agreement" means a contract of limited 27 duration that provides for regular maintenance only. 28 * Sec. 3. AS 21.27.010(h) is amended to read: 29 (h) This chapter does not apply to a person 30 (1) licensed to practice as an attorney at law while the person is acting 31 as an attorney at law; or
01 (2) who sells, solicits, or negotiates a 02 (A) service contract on a motor vehicle subject to registration 03 under AS 28.10.011; or 04 (B) home warranty; in this subparagraph, "home warranty" has 05 the meaning given in AS 21.03.021(e)(2)(C) [AS 21.03.021(e)(2)(D)]. 06 * Sec. 4. AS 21.59.010(b) is amended to read: 07 (b) This chapter does not apply to a person issued a certificate of authority 08 under AS 21.09 or to a person issued a provider license under AS 21.61, but only 09 to the extent the person is offering a motor vehicle service contract in this state. 10 * Sec. 5. AS 21 is amended by adding a new chapter to read: 11 Chapter 61. Motor Vehicle Service Contracts. 12 Sec. 21.61.010. Motor vehicle service contract. (a) A provider may, for 13 separate or additional consideration, enter into a motor vehicle service contract for a 14 specific duration to 15 (1) maintain, service, or repair a motor vehicle for an operational or 16 structural failure due to a defect in materials or workmanship or due to normal wear 17 and tear; 18 (2) indemnify for repair, replacement, or maintenance for an 19 operational or structural failure due to a defect in materials or workmanship or normal 20 wear and tear, with or without additional provisions for incidental payment of 21 indemnity for towing, rental, emergency road service, and road hazard protection; 22 (3) repair or replace tires or wheels on a motor vehicle damaged as a 23 result of coming into contact with road hazards; 24 (4) remove dents, dings, or creases on a motor vehicle that can be 25 repaired using the process of paintless dent removal without affecting the existing 26 paint or finish and without replacing vehicle body panels or requiring sanding, 27 bonding, or painting; 28 (5) repair chips or cracks in or replace motor vehicle windshields as a 29 result of damage caused by road hazards; or 30 (6) replace a motor vehicle key or key fob if the key or key fob 31 becomes inoperable or is lost or stolen.
01 (b) A motor vehicle service contract may not include coverage for the repair 02 of damage to or replacement of the interior surfaces of a vehicle or for the repair or 03 replacement of the exterior paint or finish of a vehicle. 04 (c) A motor vehicle service contract marketed, offered for sale, sold, issued, 05 made, or administered in this state must be written, printed, or typed in clear, 06 understandable language, in eight point or larger type, and must include the following: 07 (1) the name and address of the provider and an administrator if 08 different from the provider, the service contract seller, and the service contract holder 09 to the extent that the name of the service contract holder has been furnished by the 10 service contract holder; names and addresses of the parties are not required to be 11 preprinted on the motor vehicle service contract and may be added to the motor 12 vehicle service contract at the time of sale; 13 (2) the provider fee and the terms of the motor vehicle service contract; 14 the provider fee is not required to be preprinted on the service contract and may be 15 negotiated at the time of sale; 16 (3) the applicable deductible amount, if any; 17 (4) a description of the materials and services to be provided and 18 applicable limitations, exceptions, or exclusions, including whether the service 19 contract provides for or excludes consequential damages or preexisting conditions; 20 (5) a description of the obligations and duties of the service contract 21 holder; 22 (6) whether the use of nonoriginal manufacturer's parts is allowed; 23 (7) restrictions on the transferability of the service contract, if 24 applicable; and 25 (8) the terms for return and cancellation of the service contract. 26 Sec. 21.61.020. Exemptions. (a) The following are exempt from this chapter: 27 (1) a motor vehicle warranty or a product warranty under 15 U.S.C. 28 2301 - 2312 (Magnuson-Moss Warranty--Federal Trade Commission Improvement 29 Act), as amended; 30 (2) a motor vehicle maintenance agreement; in this paragraph, "motor 31 vehicle maintenance agreement" means a contract of limited duration that provides
01 only for regular maintenance to a motor vehicle; 02 (3) a motor vehicle service contract sold or offered for sale to a person 03 other than a consumer; 04 (4) a subscriber's contract, as defined by AS 21.59.900, between an 05 automobile service corporation holding a certificate of authority under AS 21.59 and 06 its subscribers that provides for towing, rental car benefits, or emergency road service. 07 (b) A motor vehicle manufacturer's motor vehicle service contract that applies 08 to the motor vehicle manufacturer's product is exempt from AS 21.61.020 - 21.61.060 09 and AS 21.61.080 - 21.61.100. 10 (c) A motor vehicle manufacturer is exempt from AS 21.61.080 and the 11 license requirement in this title. 12 Sec. 21.61.030. Motor vehicle service contract provider; duties. (a) A 13 provider may not market, offer for sale, sell, issue, or make a motor vehicle service 14 contract in this state unless the provider provides to the motor vehicle service contract 15 holder 16 (1) a receipt for, or other written evidence of, the purchase of the 17 motor vehicle service contract; and 18 (2) a copy of the motor vehicle service contract within a reasonable 19 time after the date of purchase. 20 (b) A provider shall, on request, provide a prospective purchaser with a 21 sample copy of the provider's motor vehicle service contract showing terms and 22 conditions. A provider may comply with this subsection by providing the prospective 23 purchaser with a sample copy of the terms and conditions or by directing the 24 prospective purchaser to an Internet website containing a complete sample of the 25 terms and conditions of the proposed motor vehicle service contract. 26 (c) A motor vehicle service contract provider may not use in the provider's 27 name the word "insurance," "casualty," "surety," "mutual," or another word that 28 describes insurance, casualty, or surety business activity, or use a name deceptively 29 similar to the name or description of an insurance or surety corporation or another 30 provider; however, the name of a provider may include the word "guaranty." 31 (d) A provider or the provider's representative may not make, or permit or
01 cause to be made, a false or misleading statement or deliberately omit a material 02 statement that would be misleading if omitted in a motor vehicle service contract or 03 literature associated with the contract. 04 (e) A person may not require the purchase of a motor vehicle service contract 05 as a condition of a loan or a condition for the sale of a motor vehicle. 06 (f) A provider may appoint an administrator or other designee to administer all 07 or a part of a motor vehicle service contract if the provider and administrator have a 08 written agreement that specifically sets out the duties, functions, powers, authority, 09 and compensation of all parties to the agreement. A provider is liable for the acts of an 10 administrator appointed by the provider to assist with the administration of the 11 provider's motor vehicle service contracts to the extent the acts relate to the provider's 12 motor vehicle service contracts offered in or from this state. 13 (g) A provider or a third party acting on the provider's behalf may not make a 14 false, deceptive, or misleading statement in a solicitation, during telemarketing, or in 15 other advertising, including a statement regarding 16 (1) the provider's affiliation with a motor vehicle manufacturer; 17 (2) information in the provider's possession regarding a motor vehicle 18 owner's current motor vehicle manufacturer's original equipment warranty; 19 (3) the expiration of a motor vehicle owner's current motor vehicle 20 manufacturer's original equipment warranty; or 21 (4) a requirement that a motor vehicle owner register for a new motor 22 vehicle service contract with the provider to maintain coverage under the motor 23 vehicle owner's current motor vehicle service contract or manufacturer's original 24 equipment warranty. 25 Sec. 21.61.040. Provider license; notice to licensee. (a) A provider of a motor 26 vehicle service contract sold in this state shall file an application for a license with the 27 director on a form prescribed by the director and pay a licensing fee to the director in 28 an amount determined by the director. The application shall include the applicant's 29 name, full address, telephone number, a designated compliance officer, the 30 designation of a person in this state for service of process, and a list of all officers and 31 directors of the applicant. Additionally, an applicant shall file a copy of its basic
01 organizational documents, such as articles of incorporation, articles of organization, 02 articles of association, or a partnership agreement. An applicant shall also provide 03 information required by the director to demonstrate compliance with the requirements 04 of AS 21.61.080. The applicant shall declare, subject to penalty of denial, nonrenewal, 05 suspension, or revocation of a license issued by the director, that the statements made 06 in or in connection with the application are true, correct, and complete to the best of 07 the applicant's knowledge and belief. The director may not issue a license except in 08 compliance with this chapter and may not issue a license to a person, or to be 09 exercised by a person, found by the director to be untrustworthy, incompetent, or 10 financially irresponsible, or who has not established to the satisfaction of the director 11 that the person is qualified under this chapter. If the director denies an application for 12 a license, the applicant has the right to request a hearing under AS 21.06.170 - 13 21.06.240. 14 (b) If a change occurs in the information submitted to the director in an 15 application, a provider shall update the information in the application by sending the 16 changes to the director in writing within 30 days after the change. 17 (c) A licensee shall report to the director in writing any administrative action 18 taken against the licensee by a governmental agency of another state or by a 19 governmental agency of another jurisdiction within 30 days after the final disposition 20 of the action. A licensee shall submit to the director the final order and other relevant 21 legal documents in the action. A licensee shall report to the director any criminal 22 prosecution of the licensee within 30 days after the date of filing of the criminal 23 complaint, indictment, or citation in the prosecution. The licensee shall submit to the 24 director a copy of the criminal complaint, calendaring order, and other relevant legal 25 documents in the prosecution. 26 (d) In addition to any other penalty provided by law, a failure to notify the 27 director as required by this section is cause for denial, nonrenewal, suspension, or 28 revocation of a license. 29 Sec. 21.61.050. Provider license renewal, lapse, reinstatement. (a) A 30 provider may renew a license issued under this chapter biennially on a date set by the 31 director if the licensee continues to be qualified under this chapter and, on or before
01 the close of business of the renewal date, meets all renewal requirements established 02 by regulation, and pays the renewal license fees set by the director. A licensee is 03 responsible for knowing the date that a license will lapse and for renewing a license on 04 or before that date. The director shall notify the licensee of the impending lapse 30 05 days before the lapse The director may not renew a license except in compliance 06 with this chapter and may not renew the license of a person, or to be exercised by a 07 person, found by the director to be untrustworthy, incompetent, or financially 08 irresponsible, or who has not established to the satisfaction of the director that the 09 person is qualified under this chapter. 10 (b) If a provider's license is not renewed on or before the lapse date set by the 11 director, the license lapses. A licensee may not act as or represent to be a provider 12 during the time a license has lapsed. The director may reinstate a lapsed license if the 13 person continues to qualify for the license and pays license renewal fees and a delayed 14 renewal penalty. Reinstatement does not exempt a person from a penalty provided by 15 law for transacting business while unlicensed. A license that has lapsed for two years 16 or longer may not be renewed. 17 Sec. 21.61.060. Administrator registration. (a) A person may not act as an 18 administrator of motor vehicle service contracts sold in this state unless the person 19 registers with the director by providing the following information: 20 (1) the administrator's name, business address, and other information 21 required by the director; and 22 (2) the names of the providers for whom the person acts as an 23 administrator. 24 (b) A provider that is licensed under this chapter may administer its own 25 motor vehicle service contract program without registering separately as an 26 administrator. However, if a provider administers another provider's motor vehicle 27 service contract program, the provider shall register as an administrator under this 28 section. 29 Sec. 21.61.070. Return and cancellation. (a) A motor vehicle service contract 30 must allow the service contract holder to cancel the motor vehicle service contract 31 within 30 days after the date that the motor vehicle service contract was delivered to
01 the service contract holder, within 10 days after the date of delivery if the motor 02 vehicle service contract is delivered to the service contract holder at the time of sale, 03 or within a longer period, as set out in the motor vehicle service contract. If the service 04 contract holder returns the motor vehicle service contract to the provider within the 05 applicable time period and a claim has not been made under the motor vehicle service 06 contract before the contract is returned to the provider, the motor vehicle service 07 contract is void, and the provider shall refund the full amount of the provider fee to the 08 service contract holder or credit the account of the service contract holder within 45 09 days after the return of the contract to the provider. If the provider does not pay or 10 credit a refund owed under this subsection within 45 days after a service contract 11 holder returns a motor vehicle service contract, a penalty in the amount of 10 percent 12 of the unearned provider fee paid by the service contract holder for each month the 13 refund remains unpaid shall be added to the refund. The right to void the motor 14 vehicle service contract provided in this subsection is not transferable and applies only 15 to the original service contract holder for a contract under which a claim is not made 16 before the contract is returned to the provider. 17 (b) After the time specified in (a) of this section, or if a claim has been made 18 under the motor vehicle service contract within that time, a service contract holder 19 may cancel the motor vehicle service contract, and the provider shall refund to or 20 credit the account of the contract holder the prorated amount of the unearned provider 21 fee, less any claims paid, within 45 days after the return of the service contract to the 22 provider. If the provider does not pay or credit a refund owed under this subsection 23 within 45 days after a service contract holder returns a motor vehicle service contract, 24 a penalty in the amount of 10 percent of the unearned provider fee paid by the service 25 contract holder for each month the refund remains unpaid shall be added to the refund. 26 A provider may charge a reasonable cancellation fee not to exceed 7.5 percent of the 27 provider fee paid by the service contract holder. 28 (c) A motor vehicle service contract shall state the terms, restrictions or 29 conditions governing cancellation of the service contract by the provider. A provider 30 may only cancel a service contract for 31 (1) nonpayment of the provider fee;
01 (2) conviction of the service contract holder of a crime having as one 02 of its necessary elements an act increasing a hazard covered by the service contract; 03 (3) discovery of fraud or material misrepresentation made by the 04 service contract holder or a representative of the service contract holder in obtaining 05 the service contract or by the service contract holder in pursuing a claim under the 06 service contract; 07 (4) discovery of a grossly negligent act or omission by the service 08 contract holder that substantially increases the hazards covered by the service contract; 09 (5) physical changes in the property covered by the service contract 10 that result in the property becoming ineligible for coverage under the contract; or 11 (6) a substantial breach of duties by the service contract holder related 12 to the covered motor vehicle. 13 (d) The provider of the service contract shall mail a written notice to the 14 service contract holder at the last known address of the service contract holder 15 contained in the records of the provider at least five days before cancellation by the 16 provider. The notice shall state the effective date of the cancellation and the reason for 17 the cancellation. Prior notice is not required if the reason for cancellation is 18 nonpayment of the provider fee or fraud or a material misrepresentation by the service 19 contract holder in obtaining the service contract or by the service contract holder in 20 pursuing a claim under the service contract. If the provider cancels the service 21 contract, the provider shall refund or credit to the account of the contract holder the 22 prorated amount of the unearned provider fee, less any claims paid, within 45 days 23 after the return of the service contract to the provider. If the provider does not pay or 24 credit a refund owed under this subsection within 45 days after the provider cancels 25 the motor vehicle service contract, a penalty in the amount of 10 percent of the 26 unearned provider fee paid by the service contract holder for each month the refund 27 remains unpaid shall be added to the refund. 28 Sec. 21.61.080. Provider's financial responsibility. (a) To ensure the faithful 29 performance of a provider's obligations to its service contract holders, a provider shall 30 either 31 (1) obtain from an insurer or risk retention group authorized to transact
01 the business of insurance in the state insurance that either reimburses the provider for 02 obligations arising from a provider's motor vehicle service contract issued in the state 03 or, if the provider fails to perform its obligations under a motor vehicle service 04 contract issued in the state, pays to the service contract holder the provider's covered 05 contractual obligations under the terms of the service contract on behalf of the 06 provider; a provider insurer issuing a policy under this paragraph must satisfy one of 07 the following: 08 (A) maintain surplus as to policyholders and paid-in capital of 09 at least $15,000,000 and annually file with the director copies of the provider's 10 financial statements, its annual statement to the National Association of 11 Insurance Commissioners, and the statement of actuarial opinion and opinion 12 summary required by and filed in the provider's state of domicile; or 13 (B) maintain surplus as to policyholders and paid-in capital at 14 least equal to $10,000,000, but not more than $15,000,000, and demonstrate to 15 the satisfaction of the director that the company maintains a ratio of net written 16 premiums, wherever written, to surplus as to policyholders and paid-in capital 17 of not greater than 3 to 1 and annually files with the director copies of the 18 provider's audited financial statements, its annual statement to the National 19 Association of Insurance Commissioners, and the statement of actuarial 20 opinion and opinion summary required by and filed in the provider's state of 21 domicile; or 22 (2) maintain, solely or together with the parent company, a net worth 23 or stockholders' equity of $100,000,000 and, upon request by the director, provide the 24 director with a copy of the provider's or the parent company's most recent annual 25 report filed with the United States Securities and Exchange Commission within the 26 last calendar year or, if the company does not file with the United States Securities and 27 Exchange Commission, a copy of the company's audited financial statements, which 28 show a net worth of the provider or its parent company of at least $100,000,000; if the 29 parent company's annual report or financial statements are filed to meet the provider's 30 financial stability requirement, then the parent company shall agree to guarantee the 31 obligations of the provider relating to motor vehicle service contracts sold by the
01 provider in this state. 02 (b) A motor vehicle service contract provider that has obtained insurance 03 under this section shall state the name and address of the provider and include a 04 statement in substantially the following form: "Performance or payment of the 05 obligations of the provider under this service contract are insured." If the provider has 06 not obtained insurance under this section, the service contract shall contain a statement 07 in substantially the following form: "Obligations of the provider under this service 08 contract are not insured and are guaranteed only by the assets of the provider." 09 (c) If the provider fails to provide a covered service under the terms of the 10 motor vehicle service contract within 30 days after the service contract holder notifies 11 the provider of the claim, the service contract holder is entitled to apply directly to the 12 insurer for payment of the provider's obligation. 13 Sec. 21.61.090. Records. (a) The provider shall keep accurate accounts, books, 14 and records related to the sale of motor vehicle service contracts, including 15 (1) copies of each type of motor vehicle service contract sold; 16 (2) the name and address of each service contract holder to the extent 17 that the name and address have been furnished by the service contract holder; 18 (3) the locations where motor vehicle service contracts are marketed, 19 sold, or offered for sale; and 20 (4) claim files describing claims related to the motor vehicle service 21 contracts. 22 (b) The provider shall retain all records required by this section for at least 23 five years after a motor vehicle service contract has expired. 24 (c) Records required to be maintained under this section may be maintained 25 electronically. 26 (d) A provider shall reply in writing within 10 working days to a records 27 inquiry of the director. The director may inspect or request summary or detailed copies 28 of records for examination by the division. Accounting and financial records inspected 29 or examined under this section are confidential when in the possession of the division, 30 but may be used by the director in a proceeding against the licensee. 31 (e) A provider discontinuing business in this state shall maintain records as
01 required by this section until the provider's obligations to all service contract holders 02 in this state have been discharged. 03 Sec. 21.61.100. Examination, investigations, enforcement, and penalties. 04 (a) The director may conduct investigations or examinations of a provider, 05 administrator, insurer, or other person to enforce the provisions of this chapter and to 06 protect service contract holders in this state in accordance with AS 21.06. 07 (b) The director may take necessary or appropriate action to enforce this title, 08 to the extent applicable, and protect service contract holders in this state, including the 09 issuance of a cease and desist order, if the director determines that a person has 10 violated a provision of this title, to the extent applicable to the person. A person 11 aggrieved by the cease and desist order may request a hearing under AS 21.06.170 - 12 21.06.240. 13 (c) Without prior hearing, the director may order summary suspension of the 14 license of a provider if the director finds that protection of the public requires 15 emergency action and incorporates this finding in an order. The suspension is effective 16 on the date specified in the order or upon mailing by first class mail to the provider's 17 business address on record with the division, whichever is later. If the provider 18 requests a hearing, the director shall conduct a hearing on the suspension within a 19 reasonable time but not later than 20 days after the effective date of the summary 20 suspension unless the person whose license is suspended requests a later date. At the 21 hearing, the director shall determine whether the suspension should be continued or 22 withdrawn, and, if proper notice is given, may determine whether the license should 23 be revoked. The director shall issue a decision within 30 days after the conclusion of 24 the hearing. A suspension or revocation under this section must be based on one or 25 more grounds in AS 21.27.410 or a finding that one or more of the circumstances in 26 (d) of this section continue to exist. The summary suspension continues until the 27 decision is issued. AS 21.06.190 and AS 44.64.030 do not apply to this subsection. 28 (d) The director shall order summary suspension of the license of a provider if 29 one or more of the following circumstances exist: 30 (1) the provider is insolvent or impaired; 31 (2) a proceeding for bankruptcy, receivership, conservatorship, or
01 rehabilitation, or another delinquency proceeding regarding the provider has been 02 commenced in any state or by a governmental agency of another jurisdiction; 03 (3) the provider is in an unsound condition, or is in a condition or 04 using methods or practices that render its further sale of service contracts in the state 05 injurious to service contract holders or the public. 06 (e) A person found to have violated this chapter may be assessed a civil 07 penalty in an amount determined by the director not to exceed $2,500 for each 08 violation or, if the director determines that the person knowingly violated the 09 provisions of this chapter, $5,000 for each violation. Penalties for violations may not 10 exceed $50,000 in the aggregate for violations of a similar nature, except where the 11 person knowingly violated the provisions of this chapter. In this subsection, 12 (1) "knowingly" has the meaning given in AS 11.81.900; 13 (2) "violation of a similar nature" means a violation consisting of the 14 same or a similar course of conduct, action, or practice as another violation, 15 notwithstanding the number of times the act, conduct, or practice occurred. 16 (f) A service contract holder may bring an action in a court of competent 17 jurisdiction for damages, injunctive relief, restitution, or other appropriate relief for a 18 threatened or existing violation relating to the motor vehicle service contract. 19 (g) The director may adopt regulations necessary for the implementation and 20 enforcement of this chapter. 21 Sec. 21.61.900. Definitions. In this chapter, 22 (1) "administrator" means a person who is responsible for the 23 administration of a motor vehicle service contract or the motor vehicle service contract 24 plan; 25 (2) "motor vehicle" means a motor vehicle subject to registration under 26 AS 28.10.011; 27 (3) "motor vehicle manufacturer" means a person that 28 (A) manufactures or produces motor vehicles and sells motor 29 vehicles under the person's own name or label; 30 (B) is a subsidiary of a person who manufactures or produces 31 motor vehicles;
01 (C) is a corporation that owns 100 percent of the person that 02 manufactures motor vehicles; 03 (D) sells motor vehicles under the trade name or label of a 04 person that manufactures or produces motor vehicles; 05 (E) manufactures and sells motor vehicles under the trade name 06 or label of another person that manufactures or produces motor vehicles; or 07 (F) under a written contract, licenses the use of its trade name 08 or label to another person that manufactures motor vehicles and sells motor 09 vehicles under the licensor's trade name or label; 10 (4) "nonoriginal manufacturer's parts" means replacement parts or 11 "after market" parts not made for or by the original manufacturer of the motor vehicle; 12 (5) "provider" means a person that is contractually obligated to provide 13 motor vehicle services to a service contract holder under the terms of a motor vehicle 14 service contract; 15 (6) "provider fee" means the consideration paid for a motor vehicle 16 service contract; 17 (7) "road hazard" means obstacles in the road, including potholes, 18 rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps; 19 (8) "service contract holder" means a person who is the purchaser or 20 holder of a motor vehicle service contract; 21 (9) "warranty" means a warranty made solely by the manufacturer, 22 importer, or seller of a motor vehicle without consideration, that is not negotiated or 23 separated from the sale of the motor vehicle and is incidental to the sale of the motor 24 vehicle, and that guarantees indemnity for defective parts, mechanical or electrical 25 breakdown, and labor or other remedial measures, such as repair or replacement of the 26 motor vehicle or repetition of services. 27 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 TRANSITION. AS 21.61.030(c), enacted by sec. 5 of this Act, does not apply to a 30 person using words prohibited by that subsection in the person's name before the effective 31 date of this Act. However, a person using the prohibited language in the person's name shall
01 include in all motor vehicle service contracts a statement in substantially the following form: 02 "This agreement is not an insurance contract." 03 * Sec. 7. This Act takes effect January 1, 2015.