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Senate approves overhaul of service-contract regulation, requires reimbursement insurance
Summary
Senate Bill 160 would replace chapter 6 with chapter 6A to regulate service contracts and extended warranties, require reimbursement insurance for contracts over $3,000, and mandate disclosures; the Senate reported the bill out and advanced it to third-reading, 21–0 (8 absent).
Senate Bill 160, intended to regulate service contracts and extended warranties, was presented and advanced by the Utah Senate on Feb. 12, 1992.
The sponsor explained the bill would repeal existing chapter 6 and enact chapter 6A to address consumer protections in the growing market for service contracts. Key provisions require that service contracts or extended warranties issued on purchases costing more than $3,000 be backed by a reimbursement-insurance policy or be ineligible for sale in Utah, and would mandate disclosures on coverage, claims processing, applicable deductibles and other consumer-facing terms. The sponsor said stakeholders including the Utah Insurance Department, the Utah Automobile Dealers Association and the Utah Realtors Association had been involved in drafting the measure, and set an effective start date in April 1993 to allow implementation.
Senator Black asked whether premiums for service contracts and reimbursement insurance were subject to premium taxes; the sponsor and insurance-department adviser clarified that premiums collected on service contracts are not treated as insurance premiums for tax purposes, but premiums on reimbursement insurance policies are subject to premium tax because they fall under statutory definitions of insurance.
The Senate called the question for third reading. Clerks announced a roll-call of 21 ayes, no nays and 8 absent; the bill was reported out favorably and advanced to the third-reading calendar.
