A Rhode Island bill designed to “define service contracts and clarify that service contracts are not insurance and not otherwise subject to the insurance code” has been signed into law.
The bill, HB 5674, states, a service contract means “a contract or agreement for a separately stated consideration for any duration to perform the repair, replacement, or maintenance of a consumer product or indemnification for the same, for the operational or structural failure of a consumer product due to a defect in materials, workmanship, accidental damage from handling, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances.”
The bill adds, “… the offering, sale, or issuance of a service contract, vehicle theft protection product warranty, or maintenance agreement shall not be considered insurance or subject to the insurance laws of this state unless made expressly applicable thereto.”
The bill was introduced on February 27 and was referred to the House Corporations Committee. It was signed into law by the governor on July 15 and takes effect on January 1, 2020.
A similar bill, S 458, was also signed into law in Rhode Island.
Click here for the full text of S 458.
Click here for the full text of HB 5674.