2019 -- H 5674

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LC001686

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO COMMERCIAL LAW--GENERAL REGULATORY PROVISIONS --

SERVICE CONTRACTS

     

     Introduced By: Representatives Jacquard, Chippendale, and Kennedy

     Date Introduced: February 27, 2019

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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     SECTION 1. Title 6 of the General Laws entitled "COMMERCIAL LAW - GENERAL

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REGULATORY PROVISIONS" is hereby amended by adding thereto the following chapter:

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CHAPTER 56

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SERVICE CONTRACTS

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     6-56-1. Definitions.

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     For purposes of this section, the following terms shall have the following meanings:

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     (1) "Consumer product" means any tangible personal property that is distributed in

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commerce and is normally used for personal, family, or household purposes, including a motor

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vehicle, and any tangible personal property intended to be attached to or installed in any real

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property without regard to whether it is so attached or installed.

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     (2) "Incidental costs" means expenses specified in a vehicle theft protection program

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warranty that are incurred by the warranty holder due to the failure of a vehicle theft protection

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program to perform as provided in the contract. Incidental costs may be reimbursed in either a

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fixed amount specified in the vehicle theft protection program warranty or by use of a formula

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itemizing specific incidental costs incurred by the warranty holder.

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     (3) "Maintenance agreement" means a contract of limited duration that provides for

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scheduled maintenance only.

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     (4) "Road hazard" means a hazard that is encountered while driving a motor vehicle and

 

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which may include, but not be limited to, potholes, rocks, wood debris, metal parts, glass, plastic,

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curbs, or composite scraps.

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     (5) "Service contract" means a contract or agreement for a separately stated consideration

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for any duration to perform the repair, replacement or maintenance of a consumer product or

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indemnification for the same, for the operational or structural failure of a consumer product due

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to a defect in materials, workmanship, accidental damage from handling, or normal wear and tear,

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with or without additional provisions for incidental payment of indemnity under limited

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circumstances, including, but not limited to, towing, rental and emergency road service and road

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hazard protection. Service contracts may provide for the repair, replacement, or maintenance of a

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consumer product for damage resulting from power surges or interruption. "Service contract" also

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includes a contract or agreement sold for a separately stated consideration for a specific duration

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that provides for any of the following:

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     (i) The repair or replacement or indemnification for the repair or replacement of a motor

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vehicle for the operational or structural failure of one or more parts or systems of the motor

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vehicle brought about by the failure of an additive product to perform as represented;

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     (ii) The repair or replacement of tires or wheels on a motor vehicle damaged as a result of

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coming into contact with road hazards;

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     (iii) The removal of dents, dings, or creases on a motor vehicle that can be repaired using

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the process of paintless dent removal without affecting the existing paint finish and without

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replacing vehicle body panels, sanding, bonding, or painting;

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     (iv) The repair of chips or cracks in or the replacement of motor vehicle windshields as a

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result of damage caused by road hazards;

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     (v) The replacement of a motor vehicle key or key fob in the event that the key or key fob

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becomes inoperable or is lost or stolen; or

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     (vi) Other services or products which may be approved by the director of the department

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of business regulation.

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     (6) "Vehicle theft protection product" means a device or system that:

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     (i) Is installed on or applied to a motor vehicle;

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     (ii) Is designed to prevent loss or damage to a motor vehicle from theft; and

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     (iii) Includes a vehicle theft protection program warranty. Vehicle theft protection

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product does not include fuel additives, oil additives, or other chemical products applied to the

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engine, transmission, or fuel system, or interior or exterior surfaces of a motor vehicle.

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     (7) "Vehicle theft protection product warranty" means a written agreement by a warrantor

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that provides if the vehicle theft protection product fails to prevent loss or damage to a motor

 

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vehicle from theft, that the warrantor will pay to or on behalf of the warranty holder specified

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incidental costs as a result of the failure of the vehicle theft protection product to perform

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pursuant to the terms of the vehicle theft protection product warranty.

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     6-56-2. Service contracts.

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     The offering, sale, or issuance of a service contract, vehicle theft protection product

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warranty, or maintenance agreement shall not be considered insurance or subject to the insurance

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laws of this state unless made expressly applicable thereto.

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     SECTION 2. This act shall take effect on January 1, 2020.

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LC001686

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO COMMERCIAL LAW--GENERAL REGULATORY PROVISIONS --

SERVICE CONTRACTS

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     This act would define service contracts and clarify that service contracts are not insurance

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and not otherwise subject to the insurance code.

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     This act would take effect on January 1, 2020.

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