GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2015

 

 

SESSION LAW 2015-283

SENATE BILL 195

 

 

AN ACT to provide a legal framework for the sale and regulation of motor vehicle ancillary anti‑theft protection contracts in north Carolina.

 

The General Assembly of North Carolina enacts:

 

SECTION 1.  G.S. 66‑370 reads as rewritten:

"§ 66‑370.  Motor vehicle service agreement companies.

(a)        This section applies to all motor vehicle service agreement companies soliciting business in this State, but it does not apply to maintenance agreements, performance guarantees, warranties, or motor vehicle service agreements made by

(1)        A manufacturer,

(2)        A distributor, or

(3)        A subsidiary or affiliate of a manufacturer or a distributor, where fifty‑one percent (51%) or more of the subsidiary or affiliate is owned directly or indirectly by

a.         The manufacturer,

b.         The distributor, or

c.         The common owner of fifty‑one percent (51%) or more of the manufacturer or distributor

in connection with the sale of motor vehicles. This section does not apply to any motor vehicle dealer licensed to do business in this State (i) whose primary business is the retail sale and service of motor vehicles; (ii) who makes and administers its own service agreements with or without association with a third‑party administrator or who makes its own service agreements in association with a manufacturer, distributor, or their subsidiaries or affiliates; and (iii) whose service agreements cover only vehicles sold by the dealer to its retail customer; provided that the dealer complies with G.S. 66‑372 and G.S. 66‑373. A motor vehicle dealer who sells a motor vehicle service agreement to a consumer, as defined in 15 U.S.C. § 2301(3), is not deemed to have made a written warranty to the consumer with respect to the motor vehicle sold or to have entered into a service contract with the consumer that applies to the motor vehicle, as provided in 15 U.S.C. § 2308(a), if: (i) the motor vehicle dealer acts as a mere agent of a third party in selling the motor vehicle service agreement; and (ii) the motor vehicle dealer would, after the sale of the motor vehicle service agreement, have no further obligation under the motor vehicle service agreement to the consumer to service or repair the vehicle sold to the consumer at or within 90 days before the dealer sold the motor vehicle service agreement to the consumer. An agreement whereby an employer, or a third party contracted by the employer, provides mileage reimbursement and incidental maintenance and repairs to its employees for personal vehicles used for business purposes shall not be considered a motor vehicle service agreement or a contract of insurance.

(b)        The following definitions apply in this section and in G.S. 66‑371, 66‑372, and 66‑373:

(1)        Ancillary anti‑theft protection program. – A device or system that (i) is installed on or applied to a motor vehicle, (ii) is designed to prevent loss or damage to a motor vehicle from theft, and (iii) includes an ancillary anti‑theft protection program warranty. For purposes of this section, the term "ancillary anti‑theft protection program" includes alarm systems, body part marking products, steering locks, window etch products, pedal and ignition locks, fuel and ignition kill switches, and electronic, radio, and satellite tracking devices. "Ancillary anti‑theft protection program" does not include fuel additives, oil additives, or other chemical products applied to the engine, transmission, or fuel system or interior or exterior surfaces of a motor vehicle.

(1a)      Ancillary anti‑theft protection program warranty. – A written agreement by a warrantor that provides if the ancillary anti‑theft protection program fails to prevent loss or damage to a motor vehicle from a theft, that the warrantor will pay to or on behalf of the warranty holder specified incidental costs, as a result of the failure of the ancillary anti‑theft protection program to perform pursuant to the terms of the ancillary anti‑theft protection program warranty. Incidental costs may be reimbursed in either a fixed amount specified in the ancillary anti‑theft protection program warranty or by use of a formula itemizing specific incidental costs incurred by the warranty holder.

(1)(1b) Authorized insurer. – An insurance company authorized to write liability insurance under Articles 7, 16, 21, or 22 of Chapter 58 of the General Statutes.

(2)        Distributor. – Defined in G.S. 20‑286(3).

(3)        Licensed insurer. – An insurance company licensed to write liability insurance under Article 7 or 16 of Chapter 58 of the General Statutes.

(4)        Motor vehicle. – Defined in G.S. 20‑4.01(23), but also including mopeds as defined in G.S. 20‑4.01(27)d1.

(4a)      Motor vehicle failure. – The failure of a mechanical or other component part of the motor vehicle arising out of the ownership, operation, or use of the vehicle.

(5)        Motor vehicle service agreement. –

a.         Any contract or agreement (i) indemnifying the motor vehicle service agreement holder against loss caused by failure, arising out of the ownership, operation, or use of a motor vehicle, of a mechanical or other component part of the motor vehiclea motor vehicle failure that is listed in the agreement.agreement or (ii) providing for the repair of a motor vehicle failure that is listed in the agreement.

b.         A motor vehicle service agreement includes a contract or agreement to perform or to indemnify the holder of the motor vehicle service agreement for performance of any of the following services:

1.         The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards.

2.         The removal of dents, dings, or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint or finish and without replacing vehicle body panels, sanding, bonding, or painting.

3.         The repair of chips or cracks in or the replacement of motor vehicle windshields as a result of damage caused by road hazards.

4.         The replacement of a motor vehicle key or key fob in the event that the key or key fob becomes inoperable or is lost or stolen.

5.         Other services which may be approved by the Commissioner of Insurance, if not inconsistent with other provisions of this Article.

c.         The termA motor vehicle service agreement does not mean include a contract or agreement guaranteeing the performance of parts or lubricants manufactured or distributed by the guarantor and sold for use in connection with a motor vehicle where no additional consideration is paid or given to the guarantor for the contract or agreement beyond the price of the parts or lubricants.

(6)        Motor vehicle service agreement company. – Any person that issues motor vehicle service agreements and that is not a licensed insurer.

…."

SECTION 2.  G.S. 58‑1‑15 reads as rewritten:

"§ 58‑1‑15.  Warranties by manufacturers, distributors, or sellers of goods or services.

…

(b)        Any warranty warranty, including ancillary anti‑theft protection program warranties as defined by G.S. 66‑370(b)(1a), made solely by a manufacturer, distributor, or seller of goods or services without charge, or an extended warranty offered as an option and made solely by a manufacturer, distributor, or seller of goods or services for charge, that guarantees indemnity for defective parts, mechanical or electrical breakdown, labor, or any other remedial measure, including replacement of goods or repetition of services, shall not be a contract of insurance under Articles 1 through 64 of this Chapter; however, service agreements on motor vehicles are governed by G.S. 66‑370, 66‑372, and 66‑373. Service agreements on home appliances are governed by G.S. 66‑371, 66‑372, and 66‑373.

(b1)      Service agreements on home appliances or on motor vehicles offered in compliance with Article 43 of Chapter 66 of the General Statutes shall not be contracts of insurance and shall be exempt from all provisions of this Chapter unless otherwise expressly provided.

…."

SECTION 3.  G.S. 66‑372(e)(2) reads as rewritten:

"(2)      With respect to a motor vehicle service agreement as defined in G.S. 66‑370(b)(1),G.S. 66‑370, provide for a right of assignability by the consumer to a subsequent purchaser before expiration of coverage if the subsequent purchaser meets the same criteria for motor vehicle service agreement acceptability as the original purchaser; and"

SECTION 4.  This act becomes effective October 1, 2015.

In the General Assembly read three times and ratified this the 28th day of September, 2015.

 

 

                                                                    s/  Daniel J. Forest

                                                                         President of the Senate

 

 

                                                                    s/  Paul Stam

                                                                         Presiding Officer of the House of Representatives

 

 

                                                                    s/  Pat McCrory

                                                                         Governor

 

 

Approved 8:42 a.m. this 22nd day of October, 2015