Minnesota Session Laws - 1984, Regular Session

  

                         Laws of Minnesota 1984 

                        CHAPTER 568-S.F.No. 1859
           An act relating to commerce; requiring insurance for 
          motor vehicle service contracts; requiring motor 
          vehicle service contract providers to file certain 
          forms; prohibiting the issuance of motor vehicle 
          service contracts in certain circumstances; 
          authorizing the commissioner of commerce to adopt 
          rules; proposing new law coded in Minnesota Statutes, 
          chapter 65B. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [65B.29] [MOTOR VEHICLE SERVICE CONTRACTS.] 
    Subdivision 1.  [DEFINITIONS.] For the purposes of this 
section, the following terms have the meanings given them:  
    (1) "Motor vehicle service contract" or "service contract" 
means a contract or agreement given for consideration over and 
above the lease or purchase price of a motor vehicle that 
undertakes to perform or provide repair or replacement service, 
or indemnification for that service, for the operational or 
structural failure of a motor vehicle due to defect in materials 
or workmanship or normal wear and tear, but does not include 
mechanical breakdown insurance.  
    (2) "Motor vehicle service contract provider" or "provider" 
means a person who issues, makes, provides, sells, or offers to 
sell a motor vehicle service contract.  
    (3) "Commissioner" means the commissioner of commerce.  
    (4) "Department" means the department of commerce.  
    (5) "Mechanical breakdown insurance" means a policy, 
contract, or agreement that undertakes to perform or provide 
repair or replacement service, or indemnification for that 
service, for the operational or structural failure of a motor 
vehicle due to defect in materials or workmanship or normal wear 
and tear, and that is issued by an insurance company authorized 

to do business in this state.  
    (6) "Motor vehicle service contract reimbursement insurance 
policy" or "reimbursement insurance policy" means a policy of 
insurance providing coverage for all obligations and liabilities 
incurred by a motor vehicle service contract provider under the 
terms of motor vehicle service contracts issued by the provider. 
    (7) "Motor vehicle" means any self-propelled vehicle not 
operated exclusively upon railroad tracks and any vehicle 
propelled or drawn by a self-propelled vehicle but does not 
include snowmobiles and manufactured homes.  
    (8) "Service contract holder" means a person who purchases 
a motor vehicle service contract.  
    (9) "Motor vehicle service contract administrator" means a 
person who provides administrative services to motor vehicle 
service contract providers, including but not limited to: 
issuing a motor vehicle service contract; reviewing or settling 
losses arising under the contract; providing or recommending the 
written contract or form for a contract; providing or 
recommending advertising or promotional materials.  
    Subd. 2.  [INSURANCE REQUIRED.] No motor vehicle service 
contract may be issued, sold, or offered for sale in this state 
unless the provider of the service contract is insured under a 
motor vehicle service contract reimbursement insurance policy 
issued by an insurer authorized to do business in this state.  
    Subd. 3.  [FILING REQUIREMENTS.] No motor vehicle service 
contract may be issued, sold, or offered for sale in this state 
unless a true and correct copy of the service contract and the 
provider's reimbursement insurance policy have been filed with 
the commissioner.  
    Subd. 4.  [DISCLOSURE TO PROVIDER.] No motor vehicle 
service contract reimbursement insurance policy may be issued, 
sold, or offered for sale in this state unless the reimbursement 
insurance policy conspicuously states that the issuer of the 
policy will pay on behalf of the provider all sums which the 
provider is legally obligated to pay in the performance of its 
contractual obligations under the motor vehicle service 
contracts issued or sold by the provider.  
    Subd. 5.  [DISCLOSURE TO SERVICE CONTRACT HOLDERS.] No 
motor vehicle service contract may be issued, sold, or offered 
for sale in this state unless the contract conspicuously states 
that the obligations of the provider to the service contract 
holder are guaranteed under the service contract reimbursement 
policy, and unless the contract conspicuously states the name 
and address of the issuer of the reimbursement policy.  
    Subd. 6.  [COMMISSIONER MAY PROHIBIT CERTAIN SALES.] The 
commissioner must, upon giving a ten-day notice to a motor 
vehicle service contract provider, issue an order instructing 
the provider to cease and desist from selling or offering for 
sale motor vehicle service contracts if the commissioner 
determines that the provider has failed to comply with a 
provision of this section.  The commissioner must, upon giving a 
ten-day notice to an insurance company, issue an order 
instructing the insurer to cease and desist from selling or 
offering for sale motor vehicle service contract reimbursement 
insurance policies if the commissioner determines that the 
insurer has failed to comply with a provision of this section.  
    Subd. 7.  [RULES.] The commissioner may adopt rules in the 
manner prescribed by chapter 14 to administer and enforce the 
provisions of this section and to establish minimum standards 
for disclosure of motor vehicle service contract coverage 
limitations and exclusions.  
   Subd. 8.  [INAPPLICABLE.] This section does not apply to 
motor vehicle service contracts issued by a motor vehicle 
manufacturer, distributor or importer.  
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1, subdivision 7, is effective the day following 
final enactment.  Service contract providers and issuers of 
reimbursement policies shall have until January 1, 1985, to 
comply with section 1, subdivisions 4 and 5. 
    Approved April 26, 1984