Second Regular Session H.B. 2403
COMMITTEE ON FINANCE
SENATE AMENDMENTS TO H.B. 2403
(Reference to House engrossed bill)
Page 1, between lines 1 and 2, insert:
"Section 1. Section 20-1095, Arizona Revised Statutes, is amended to read:
20-1095. Definitions
In this article, unless the context otherwise requires:
1. "Consumer":
(a) Means a buyer other than for purposes of resale of any consumer product, any person to whom the product is transferred during the duration of an implied or written warranty or service contract applicable to the product and any other person who is entitled by the terms of the warranty or service contract or under applicable federal or state law to enforce against the warrantor or service company the obligations of the warranty or service contract. Consumer also means the
(b) Includes a buyer, owner, lessor, lessee or seller of residential property.
2. "Consumer product" means any tangible personal property that is distributed in commerce, and that is normally used solely for personal, family or household purposes, including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed, and that becomes part of the intended usefulness of real property or that is typically transferred with real property as an integral functioning utility appliance or system.
3. "Home warranty or home protection contract" means a service contract as defined in paragraph 7, subdivision (b), item (i) of this section.
4. "Mechanical reimbursement insurance" means an insurance policy issued to an obligor to either provide reimbursement to the obligor under the terms of the insured service contracts issued or sold by the obligor or, in the event of the obligor's nonperformance, to pay on behalf of the obligor all covered contractual obligations incurred by the obligor under the terms of the insured service contracts issued or sold by the obligor.
5. "Residential property" means a house, townhouse, condominium or other habitable structure that is used principally as a residence.
6. "Service company" or "obligor" means any person that is contractually obligated to the contract holder under the terms of the service contract. Service company does not include a service contract administration administrator or seller if the person is not contractually obligated to the contract holder under the terms of the service contract.
7. "Service contract":
(a) Means a written contract or agreement for a separately stated consideration for any duration to perform, in whole or in part, the repair, replacement or maintenance of a consumer product, or indemnification for repair, replacement or maintenance, for the operational or structural failure of a consumer product due to a defect in materials, workmanship, accidental damage from handling, a power surge or interruption or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances, including towing, rental and emergency road service, and road hazard protection or roof leak.
(b) Includes a contract or agreement that is sold for a separately stated consideration for any duration and that provides for any of the following:
(i) The service, maintenance or repair, including replacement, of all or any part of structural components, appliances, electrical, plumbing, heating, cooling or air conditioning systems of residential property or indemnification for the service, maintenance, repair or replacement.
(ii) The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards including potholes, rocks, wood debris, metal parts, glass, plastic, curbs or composite scraps.
(iii) 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 finish and without replacing vehicle body panels, sanding, bonding or painting.
(iv) The replacement of a motor vehicle key or key fob in the event that if the key or key fob becomes inoperable or is lost or stolen.
(v) Other services or products approved by the director.
8. "Service contract administrator" means a person who is responsible for the administration of the service contracts or the service contracts plan or who is responsible for any submission required under this article.
9. "Warranty" means:
(a) Any written affirmation by a manufacturer or seller of fact or written promise made in connection with the sale of a consumer product that relates to the nature of the material or workmanship and affirms or promises that the material or workmanship is free of defects or will meet a specified level of performance over a specified period of time.
(b) Any undertaking by a manufacturer or seller in writing in connection with the sale of a consumer product to refund, repair, replace or take other remedial action with respect to such a product if the product fails to meet the specifications set forth in the undertaking, which written affirmation, promise or undertaking becomes part of the basis of the bargain for purposes other than resale of such product and if there is no separate identifiable charge to the consumer.
Sec. 2. Section 20-1095.02, Arizona Revised Statutes, is amended to read:
20-1095.02. Exemptions; definition
A. This article, except for section 20‑1095.09, does not apply to the following:
1. Warranties issued by manufacturers, builders or sellers on the actual items, structures or improvements that they manufacture, build or sell.
2. Service contract programs if a motor vehicle manufacturer or motor vehicle dealer has financial responsibility for performance.
3. Warranties and service contracts issued by a corporation other than a manufacturer or seller in connection with consumer products that are distributed by the corporation if the issuing corporation:
(a) Is an affiliate of a consumer products manufacturer.
(b) By March 1 of each year submits to the director an independently audited A financial statement in which at least one officer of the issuing corporation attests and a certified public accountant certifies that the issuing corporation has and maintains a net worth in excess of one hundred million dollars $25,000,000. Any information, documents and copies that are obtained by or disclosed to the director or any other person pursuant to this subdivision are not available for public inspection, except that the director may use this information in any proceeding relating to this article.
4. A service company that issues a service contract to persons other than a consumer.
5. A service company that is in the business of selling or servicing any one of the following, if the service contract only covers the actual item the service company sells:
(a) Appliances or electronic equipment, or both.
(b) Residential heating, cooling or air conditioning systems.
(c) Mechanical equipment, other than motor vehicles or their components.
6. A service company only to the extent that it is in the business of selling or servicing directly, or through other retailers, cell phones and other electronic personal communications devices and accessories.
7. Any person licensed pursuant to title 32, chapter 10, or not required to be licensed because exempt pursuant to section 32‑1121, subsection A, paragraph 13 whose service contract only covers the actual items, structures or improvements that the person installs, constructs or builds.
8. A maintenance agreement of limited duration that provides for scheduled maintenance only and does not include repair or replacement.
B. The director may employ independent examiners pursuant to section 20‑156 to review and analyze the financial statements that are submitted pursuant to subsection A, paragraph 3 of this section.
C. The types of agreements referred to in subsection A of this section are not insurance and are not required to comply with the insurance laws of this state unless a provision is made expressly applicable in this article.
D. For the purposes of this section, "affiliate" means a corporation that is owned or controlled by or is under common control with a manufacturer."
Renumber to conform
Page 1, strike lines 20 through 23, insert:
"(a) The service contract fails to state the extent to which preexisting conditions that were known or that reasonably should have been known by the service company or the person selling the service contract on the service company's behalf.
(b) Prior use or unlawful acts relating to the product. will or will not be covered."
Reletter to conform
Line 31, strike "from" insert "after"
Page 2, line 31, strike "expenses" insert "expense"
Line 38, after "any" insert ", and may include:
(a) Fraudulent or unlawful acts by the contract holder arising out of or relating to the service contract.
(b) The contract holder's use of a covered consumer product in a manner other than as intended by the manufacturer that is likely to increase the likelihood that the consumer product will be damaged or require repairs"
Strike lines 39 through 43, insert:
"12. Service contracts shall disclose whether the contracts cover or exclude preexisting conditions. A service contract may exclude preexisting conditions only if the conditions were either known to the contract holder or would have been known by visual inspection, operation or testing of the covered property."
Line 44, after "E." insert "Service request and application forms,"
Amend title to conform