Industry urges law to regulate motor-vehicle service contracts, align Massachusetts with other states

Tom Kevers, executive director of the Service Contract Industry Council (SCIC), told the Joint Committee on Financial Services that House Bill 1139 and Senate Bill 812 would add motor-vehicle service contracts to Massachusetts’ existing regulatory framework for service contracts covering homes and consumer goods. He said Massachusetts currently lacks a regulatory framework for third-party motor-vehicle service contracts, leaving consumers without the same protections available for other service-contract products in most states.

Kevers described four consumer protections included in the bill: a 20-day full-refund right for cancellations, clear and understandable disclosures of key contract provisions, a requirement that providers demonstrate compliance with one of three financial-assurance options so promises to pay are funded, and a registration requirement with the commissioner of insurance giving the commissioner oversight and enforcement authority. "Adding service contracts to the existing regulatory framework will help enhance consumer choice, advance consumer protections, and align the state with the regulatory treatment in the rest of the country," Kevers said.

SCIC and supporters asked the committee for a favorable report to bring motor-vehicle contracts into the same statutory structure used for homes and consumer goods, citing a National Association of Insurance Commissioners model and years of prior deliberation. The committee heard the testimony and did not vote during the session.