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Industry seeks law to allow third‑party motor‑vehicle service contracts and consumer protections
Summary
The Service Contract Industry Council told the Joint Committee on Financial Services that Massachusetts currently treats vehicle service contracts as insurance and lacks a regulatory framework; the bill under consideration would extend existing consumer protections applied to home and consumer goods to motor‑vehicle service contracts.
The Service Contract Industry Council urged the Joint Committee on Financial Services to pass legislation that would create a regulatory framework for motor‑vehicle service contracts in Massachusetts, arguing the lack of a clear law limits consumer choice and market competition.
"Consequently, your constituents don't have access to third party vehicle service contracts to protect their vehicles because Massachusetts unlike any other state in the country deems such products to be insurance," Tom Kevers, executive director of the Service Contract Industry Council, testified. He said the bill would apply the same consumer protections that currently govern service contracts for homes and consumer goods to motor vehicles.
Kevers outlined four consumer protections the bill would add: a 20‑day full‑refund right for buyer's remorse, clear contract disclosures, financial‑assurance requirements for providers, and registration and oversight by the commissioner of insurance. He argued those measures would expand consumer choice while ensuring funds would be available when consumers make a claim.
The bill did not receive a committee vote during the hearing; the witness requested a favorable report to align Massachusetts with other states and to permit more third‑party vehicle service‑contract options for consumers.
