Senate Bill No. 489
(By Senator Helmick and Ross)
[Introduced February 15, 2000; referred to the
Committee on Banking and Insurance.]
A BILL to amend and reenact section two, article four, chapter
thirty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to the exemption of
warranties, service contracts and maintenance agreements
from regulation under the insurance laws.
Be it enacted by the Legislature of West Virginia:
That section two, article four, chapter thirty-three of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 4. GENERAL PROVISIONS.
§33-4-2. Application of chapter to particular types of insurers.
(a) No provision of this chapter shall apply to:
(a) (1) Hospital service corporations and medical service
corporations except as stated in article twenty-four of this
(b) (2) Fraternal benefit societies except as stated in
article twenty-three of this chapter;
(c) (3) Farmers' mutual fire insurance companies except as
stated in article twenty-two of this chapter;
(5) Service contracts;
(6) Maintenance agreements.
(b) For the purposes of this article:
(1) "Holder" means a resident of this state who either
purchases a service agreement or is legally in possession of a
service contract and is entitled to enforce the rights of the
original purchaser of the service contract.
(2) "Maintenance agreement" means a contract for a limited
period that provides only for scheduled maintenance.
(3) "Provider" means a person who is obligated to a holder
pursuant to the terms of a service contract to repair, replace or
perform maintenance on or to indemnify the holder for the costs
of repairing, replacing or performing maintenance on goods.
(4) "Service contract" means an agreement entered into for
a separately stated consideration and for a specified term under
which a provider agrees to repair, replace or maintain a product
or provide indemnification for the repair, replacement or
maintenance of a product for operational or structural failure
caused by a defect in materials or workmanship or by normal wear.
A service contract may additionally provide for incidental
payment or indemnity under limited circumstances including
towing, rental and emergency road service or for the repair or
replacement of a product for damage resulting from power surges
or accidental damage incurred in handling the product.
(5) "Warranty" means in relation to a product or service an
undertaking that guarantees indemnity for defective parts,
mechanical or electrical breakdown, labor costs or other remedial
measures, such as repair or replacement of the product or
repetition of services and that is made solely by the
manufacturer, importer or seller of the product or services made
without payment of additional consideration, not negotiated or
separated from the sale of the product or service and incidental
to the sale of the product or service.
NOTE: The purpose of this bill is to clarify that warranties
and service contracts are not insurance transactions and are not
subject to insurance laws.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.