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28th Legislature(2013-2014)

Bill Text 28th Legislature


00 Enrolled HB 206                                                                                                         
01 Relating to motor vehicle service contracts; exempting motor vehicle service contracts from                             
02 regulation as insurance; and providing for an effective date.                                                           
03                           _______________                                                                               
04    * Section 1. AS 21.03.021(e) is amended to read:                                                                   
05            (e)  This title does not apply to a service contract offered, issued for delivery,                           
06       delivered, or renewed in this state. In this subsection, "service contract"                                       
07                 (1)  means a service contract or agreement for a separate or additional                                 
08       consideration, for a specific duration, to                                                                        
09                      (A)  maintain, service, repair, or replace tangible personal                                       
10            property, or to indemnify for repair, replacement, or maintenance, for an                                    
11            operational or structural failure due to a defect in materials or workmanship or                             
12            normal wear and tear, with or without additional provision for incidental                                    
13            indemnity payments when service, repair, or replacement is not reasonably or                                 
14            commercially feasible;                                                                                       
01                      (B)  repair, replace, or maintain tangible personal property                                       
02            damaged as a result of power surges or as a result of accidental damage from                                 
03            the handling of property; or                                                                                 
04                      (C)  repair, replace, or maintain household consumer goods,                                        
05            household appliances, and household systems, including damage resulting                                      
06            from operational or structural failure due to a defect in materials or                                       
07            workmanship or normal wear and tear;                                                                         
08                 (2)  does not include                                                                                   
09                      (A)  mechanical breakdown insurance;                                                               
10                      (B)  a contract that requires an indemnity payment for each                                    
11            [PER] incident, and the payment exceeds the purchase price of the property                               
12            serviced [;                                                                                                  
13                      (C)  A CONTRACT TO PROVIDE SERVICE ON A MOTOR                                                      
14            VEHICLE SUBJECT TO REGISTRATION UNDER AS 28.10.011];                                                         
15                      (C) [(D)]  a home warranty; in this subparagraph, "home                                        
16            warranty" means a warranty that covers the entire home and does not include a                                
17            warranty limited to a household system or appliance; or                                                      
18                      (D) [(E)]  portable electronics insurance as defined in                                        
19            AS 21.36.515.                                                                                                
20    * Sec. 2. AS 21.03.021 is amended by adding new subsections to read:                                               
21            (h)  A motor vehicle service contract shall be governed by AS 21.61 except as                                
22       expressly provided in this title.                                                                                 
23            (i)  A motor vehicle warranty, motor vehicle maintenance agreement, and                                      
24       motor vehicle service contract offered for sale or sold to a person other than a                                  
25       consumer are not insurance and do not have to comply with any provision of this title.                            
26       In this subsection, "motor vehicle maintenance agreement" means a contract of limited                             
27       duration that provides for regular maintenance only.                                                            
28    * Sec. 3. AS 21.27.010(h) is amended to read:                                                                      
29            (h)  This chapter does not apply to a person                                                                 
30                 (1)  licensed to practice as an attorney at law while the person is acting                              
31       as an attorney at law; or                                                                                         
01                 (2)  who sells, solicits, or negotiates a                                                               
02                      (A)  service contract on a motor vehicle subject to registration                                   
03            under AS 28.10.011; or                                                                                       
04                      (B)  home warranty; in this subparagraph, "home warranty" has                                      
05            the meaning given in AS 21.03.021(e)(2)(C) [AS 21.03.021(e)(2)(D)].                                      
06    * Sec. 4. AS 21.59.010(b) is amended to read:                                                                      
07            (b)  This chapter does not apply to a person issued a certificate of authority                               
08       under AS 21.09 or to a person issued a provider license under AS 21.61, but only                              
09       to the extent the person is offering a motor vehicle service contract in this state.                          
10    * Sec. 5. AS 21 is amended by adding a new chapter to read:                                                        
11                 Chapter 61. Motor Vehicle Service Contracts.                                                          
12            Sec. 21.61.010. Motor vehicle service contract. (a) A provider may, for                                    
13       separate or additional consideration, enter into a motor vehicle service contract for a                           
14       specific duration to                                                                                              
15                 (1)  maintain, service, or repair a motor vehicle for an operational or                                 
16       structural failure due to a defect in materials or workmanship or due to normal wear                              
17       and tear;                                                                                                         
18                 (2)  indemnify for repair, replacement, or maintenance for an                                           
19       operational or structural failure due to a defect in materials or workmanship or normal                           
20       wear and tear, with or without additional provisions for incidental payment of                                    
21       indemnity for towing, rental, emergency road service, and road hazard protection;                                 
22                 (3)  repair or replace tires or wheels on a motor vehicle damaged as a                                  
23       result of coming into contact with road hazards;                                                                  
24                 (4)  remove dents, dings, or creases on a motor vehicle that can be                                     
25       repaired using the process of paintless dent removal without affecting the existing                               
26       paint or finish and without replacing vehicle body panels or requiring sanding,                                   
27       bonding, or painting;                                                                                             
28                 (5)  repair chips or cracks in or replace motor vehicle windshields as a                                
29       result of damage caused by road hazards; or                                                                       
30                 (6)  replace a motor vehicle key or key fob if the key or key fob                                       
31       becomes inoperable or is lost or stolen.                                                                          
01            (b)  A motor vehicle service contract may not include coverage for the repair                                
02       of damage to or replacement of the interior surfaces of a vehicle or for the repair or                            
03       replacement of the exterior paint or finish of a vehicle.                                                         
04            (c)  A motor vehicle service contract marketed, offered for sale, sold, issued,                              
05       made, or administered in this state must be written, printed, or typed in clear,                                  
06       understandable language, in eight point or larger type, and must include the following:                           
07                 (1)  the name and address of the provider and an administrator if                                       
08       different from the provider, the service contract seller, and the service contract holder                         
09       to the extent that the name of the service contract holder has been furnished by the                              
10       service contract holder; names and addresses of the parties are not required to be                                
11       preprinted on the motor vehicle service contract and may be added to the motor                                    
12       vehicle service contract at the time of sale;                                                                     
13                 (2)  the provider fee and the terms of the motor vehicle service contract;                              
14       the provider fee is not required to be preprinted on the service contract and may be                              
15       negotiated at the time of sale;                                                                                   
16                 (3)  the applicable deductible amount, if any;                                                          
17                 (4)  a description of the materials and services to be provided and                                     
18       applicable limitations, exceptions, or exclusions, including whether the service                                  
19       contract provides for or excludes consequential damages or preexisting conditions;                                
20                 (5)  a description of the obligations and duties of the service contract                                
21       holder;                                                                                                           
22                 (6)  whether the use of nonoriginal manufacturer's parts is allowed;                                    
23                 (7)  restrictions on the transferability of the service contract, if                                    
24       applicable; and                                                                                                   
25                 (8)  the terms for return and cancellation of the service contract.                                     
26            Sec. 21.61.020. Exemptions. (a) The following are exempt from this chapter:                                
27                 (1)  a motor vehicle warranty or a product warranty under 15 U.S.C.                                     
28       2301 - 2312 (Magnuson-Moss Warranty--Federal Trade Commission Improvement                                         
29       Act), as amended;                                                                                                 
30                 (2)  a motor vehicle maintenance agreement; in this paragraph, "motor                                   
31       vehicle maintenance agreement" means a contract of limited duration that provides                                 
01       only for regular maintenance to a motor vehicle;                                                                  
02                 (3)  a motor vehicle service contract sold or offered for sale to a person                              
03       other than a consumer;                                                                                            
04                 (4)  a subscriber's contract, as defined by AS 21.59.900, between an                                    
05       automobile service corporation holding a certificate of authority under AS 21.59 and                              
06       its subscribers that provides for towing, rental car benefits, or emergency road service.                         
07            (b)  A motor vehicle manufacturer's motor vehicle service contract that applies                              
08       to the motor vehicle manufacturer's product is exempt from AS 21.61.020 - 21.61.060                               
09       and AS 21.61.080 - 21.61.100.                                                                                     
10            (c)  A motor vehicle manufacturer is exempt from AS 21.61.080 and the                                        
11       license requirement in this title.                                                                              
12            Sec. 21.61.030. Motor vehicle service contract provider; duties. (a) A                                     
13       provider may not market, offer for sale, sell, issue, or make a motor vehicle service                             
14       contract in this state unless the provider provides to the motor vehicle service contract                         
15       holder                                                                                                            
16                 (1)  a receipt for, or other written evidence of, the purchase of the                                   
17       motor vehicle service contract; and                                                                               
18                 (2)  a copy of the motor vehicle service contract within a reasonable                                   
19       time after the date of purchase.                                                                                  
20            (b)  A provider shall, on request, provide a prospective purchaser with a                                    
21       sample copy of the provider's motor vehicle service contract showing terms and                                    
22       conditions. A provider may comply with this subsection by providing the prospective                               
23       purchaser with a sample copy of the terms and conditions or by directing the                                      
24       prospective purchaser to an Internet website containing a complete sample of the                                  
25       terms and conditions of the proposed motor vehicle service contract.                                              
26            (c)  A motor vehicle service contract provider may not use in the provider's                                 
27       name the word "insurance," "casualty," "surety," "mutual," or another word that                                   
28       describes insurance, casualty, or surety business activity, or use a name deceptively                             
29       similar to the name or description of an insurance or surety corporation or another                               
30       provider; however, the name of a provider may include the word "guaranty."                                        
31            (d)  A provider or the provider's representative may not make, or permit or                                  
01       cause to be made, a false or misleading statement or deliberately omit a material                                 
02       statement that would be misleading if omitted in a motor vehicle service contract or                              
03       literature associated with the contract.                                                                          
04            (e)  A person may not require the purchase of a motor vehicle service contract                               
05       as a condition of a loan or a condition for the sale of a motor vehicle.                                          
06            (f)  A provider may appoint an administrator or other designee to administer all                             
07       or a part of a motor vehicle service contract if the provider and administrator have a                            
08       written agreement that specifically sets out the duties, functions, powers, authority,                            
09       and compensation of all parties to the agreement. A provider is liable for the acts of an                         
10       administrator appointed by the provider to assist with the administration of the                                  
11       provider's motor vehicle service contracts to the extent the acts relate to the provider's                        
12       motor vehicle service contracts offered in or from this state.                                                    
13            (g)  A provider or a third party acting on the provider's behalf may not make a                              
14       false, deceptive, or misleading statement in a solicitation, during telemarketing, or in                          
15       other advertising, including a statement regarding                                                                
16                 (1)  the provider's affiliation with a motor vehicle manufacturer;                                      
17                 (2)  information in the provider's possession regarding a motor vehicle                                 
18       owner's current motor vehicle manufacturer's original equipment warranty;                                         
19                 (3)  the expiration of a motor vehicle owner's current motor vehicle                                    
20       manufacturer's original equipment warranty; or                                                                    
21                 (4)  a requirement that a motor vehicle owner register for a new motor                                  
22       vehicle service contract with the provider to maintain coverage under the motor                                   
23       vehicle owner's current motor vehicle service contract or manufacturer's original                                 
24       equipment warranty.                                                                                               
25            Sec. 21.61.040. Provider license; notice to licensee. (a) A provider of a motor                          
26       vehicle service contract sold in this state shall file an application for a license with the                      
27       director on a form prescribed by the director and pay a licensing fee to the director in                          
28       an amount determined by the director. The application shall include the applicant's                               
29       name, full address, telephone number, a designated compliance officer, the                                        
30       designation of a person in this state for service of process, and a list of all officers and                      
31       directors of the applicant. Additionally, an applicant shall file a copy of its basic                             
01       organizational documents, such as articles of incorporation, articles of organization,                            
02       articles of association, or a partnership agreement. An applicant shall also provide                              
03       information required by the director to demonstrate compliance with the requirements                              
04       of AS 21.61.080. The applicant shall declare, subject to penalty of denial, nonrenewal,                           
05       suspension, or revocation of a license issued by the director, that the statements made                           
06       in or in connection with the application are true, correct, and complete to the best of                           
07       the applicant's knowledge and belief. The director may not issue a license except in                              
08       compliance with this chapter and may not issue a license to a person, or to be                                    
09       exercised by a person, found by the director to be untrustworthy, incompetent, or                                 
10       financially irresponsible, or who has not established to the satisfaction of the director                         
11       that the person is qualified under this chapter. If the director denies an application for                        
12       a license, the applicant has the right to request a hearing under AS 21.06.170 -                                  
13       21.06.240.                                                                                                        
14            (b)  If a change occurs in the information submitted to the director in an                                   
15       application, a provider shall update the information in the application by sending the                            
16       changes to the director in writing within 30 days after the change.                                               
17            (c)  A licensee shall report to the director in writing any administrative action                            
18       taken against the licensee by a governmental agency of another state or by a                                      
19       governmental agency of another jurisdiction within 30 days after the final disposition                            
20       of the action. A licensee shall submit to the director the final order and other relevant                         
21       legal documents in the action. A licensee shall report to the director any criminal                               
22       prosecution of the licensee within 30 days after the date of filing of the criminal                               
23       complaint, indictment, or citation in the prosecution. The licensee shall submit to the                           
24       director a copy of the criminal complaint, calendaring order, and other relevant legal                            
25       documents in the prosecution.                                                                                     
26            (d)  In addition to any other penalty provided by law, a failure to notify the                               
27       director as required by this section is cause for denial, nonrenewal, suspension, or                              
28       revocation of a license.                                                                                          
29            Sec. 21.61.050. Provider license renewal, lapse, reinstatement. (a) A                                      
30       provider may renew a license issued under this chapter biennially on a date set by the                            
31       director if the licensee continues to be qualified under this chapter and, on or before                           
01       the close of business of the renewal date, meets all renewal requirements established                             
02       by regulation, and pays the renewal license fees set by the director. A licensee is                               
03       responsible for knowing the date that a license will lapse and for renewing a license on                          
04       or before that date. The director shall notify the licensee of the impending lapse 30                             
05       days before the lapse  The director may not renew a license except in compliance                                  
06       with this chapter and may not renew the license of a person, or to be exercised by a                              
07       person, found by the director to be untrustworthy, incompetent, or financially                                    
08       irresponsible, or who has not established to the satisfaction of the director that the                            
09       person is qualified under this chapter.                                                                           
10            (b)  If a provider's license is not renewed on or before the lapse date set by the                           
11       director, the license lapses. A licensee may not act as or represent to be a provider                             
12       during the time a license has lapsed. The director may reinstate a lapsed license if the                          
13       person continues to qualify for the license and pays license renewal fees and a delayed                           
14       renewal penalty. Reinstatement does not exempt a person from a penalty provided by                                
15       law for transacting business while unlicensed. A license that has lapsed for two years                            
16       or longer may not be renewed.                                                                                     
17            Sec. 21.61.060. Administrator registration. (a) A person may not act as an                                 
18       administrator of motor vehicle service contracts sold in this state unless the person                             
19       registers with the director by providing the following information:                                               
20                 (1)  the administrator's name, business address, and other information                                  
21       required by the director; and                                                                                     
22                 (2)  the names of the providers for whom the person acts as an                                          
23       administrator.                                                                                                    
24            (b)  A provider that is licensed under this chapter may administer its own                                   
25       motor vehicle service contract program without registering separately as an                                       
26       administrator. However, if a provider administers another provider's motor vehicle                                
27       service contract program, the provider shall register as an administrator under this                              
28       section.                                                                                                        
29            Sec. 21.61.070. Return and cancellation. (a) A motor vehicle service contract                              
30       must allow the service contract holder to cancel the motor vehicle service contract                               
31       within 30 days after the date that the motor vehicle service contract was delivered to                            
01       the service contract holder, within 10 days after the date of delivery if the motor                               
02       vehicle service contract is delivered to the service contract holder at the time of sale,                         
03       or within a longer period, as set out in the motor vehicle service contract. If the service                       
04       contract holder returns the motor vehicle service contract to the provider within the                             
05       applicable time period and a claim has not been made under the motor vehicle service                              
06       contract before the contract is returned to the provider, the motor vehicle service                               
07       contract is void, and the provider shall refund the full amount of the provider fee to the                        
08       service contract holder or credit the account of the service contract holder within 45                            
09       days after the return of the contract to the provider. If the provider does not pay or                            
10       credit a refund owed under this subsection within 45 days after a service contract                                
11       holder returns a motor vehicle service contract, a penalty in the amount of 10 percent                            
12       of the unearned provider fee paid by the service contract holder for each month the                               
13       refund remains unpaid shall be added to the refund. The right to void the motor                                   
14       vehicle service contract provided in this subsection is not transferable and applies only                         
15       to the original service contract holder for a contract under which a claim is not made                            
16       before the contract is returned to the provider.                                                                  
17            (b)  After the time specified in (a) of this section, or if a claim has been made                            
18       under the motor vehicle service contract within that time, a service contract holder                              
19       may cancel the motor vehicle service contract, and the provider shall refund to or                                
20       credit the account of the contract holder the prorated amount of the unearned provider                            
21       fee, less any claims paid, within 45 days after the return of the service contract to the                         
22       provider. If the provider does not pay or credit a refund owed under this subsection                              
23       within 45 days after a service contract holder returns a motor vehicle service contract,                          
24       a penalty in the amount of 10 percent of the unearned provider fee paid by the service                            
25       contract holder for each month the refund remains unpaid shall be added to the refund.                            
26       A provider may charge a reasonable cancellation fee not to exceed 7.5 percent of the                              
27       provider fee paid by the service contract holder.                                                                 
28            (c)  A motor vehicle service contract shall state the terms, restrictions or                                 
29       conditions governing cancellation of the service contract by the provider. A provider                             
30       may only cancel a service contract for                                                                            
31                 (1)  nonpayment of the provider fee;                                                                    
01                 (2)  conviction of the service contract holder of a crime having as one                                 
02       of its necessary elements an act increasing a hazard covered by the service contract;                             
03                 (3)  discovery of fraud or material misrepresentation made by the                                       
04       service contract holder or a representative of the service contract holder in obtaining                           
05       the service contract or by the service contract holder in pursuing a claim under the                              
06       service contract;                                                                                                 
07                 (4)  discovery of a grossly negligent act or omission by the service                                    
08       contract holder that substantially increases the hazards covered by the service contract;                         
09                 (5)  physical changes in the property covered by the service contract                                   
10       that result in the property becoming ineligible for coverage under the contract; or                               
11                 (6)  a substantial breach of duties by the service contract holder related                              
12       to the covered motor vehicle.                                                                                     
13            (d)  The provider of the service contract shall mail a written notice to the                                 
14       service contract holder at the last known address of the service contract holder                                  
15       contained in the records of the provider at least five days before cancellation by the                            
16       provider. The notice shall state the effective date of the cancellation and the reason for                        
17       the cancellation. Prior notice is not required if the reason for cancellation is                                  
18       nonpayment of the provider fee or fraud or a material misrepresentation by the service                            
19       contract holder in obtaining the service contract or by the service contract holder in                            
20       pursuing a claim under the service contract. If the provider cancels the service                                  
21       contract, the provider shall refund or credit to the account of the contract holder the                           
22       prorated amount of the unearned provider fee, less any claims paid, within 45 days                                
23       after the return of the service contract to the provider. If the provider does not pay or                         
24       credit a refund owed under this subsection within 45 days after the provider cancels                              
25       the motor vehicle service contract, a penalty in the amount of 10 percent of the                                  
26       unearned provider fee paid by the service contract holder for each month the refund                               
27       remains unpaid shall be added to the refund.                                                                      
28            Sec. 21.61.080. Provider's financial responsibility. (a) To ensure the faithful                            
29       performance of a provider's obligations to its service contract holders, a provider shall                         
30       either                                                                                                            
31                 (1)  obtain from an insurer or risk retention group authorized to transact                              
01       the business of insurance in the state insurance that either reimburses the provider for                          
02       obligations arising from a provider's motor vehicle service contract issued in the state                          
03       or, if the provider fails to perform its obligations under a motor vehicle service                                
04       contract issued in the state, pays to the service contract holder the provider's covered                          
05       contractual obligations under the terms of the service contract on behalf of the                                  
06       provider; a provider insurer issuing a policy under this paragraph must satisfy one of                            
07       the following:                                                                                                    
08                      (A)  maintain surplus as to policyholders and paid-in capital of                                   
09            at least $15,000,000 and annually file with the director copies of the provider's                            
10            financial statements, its annual statement to the National Association of                                    
11            Insurance Commissioners, and the statement of actuarial opinion and opinion                                  
12            summary required by and filed in the provider's state of domicile; or                                        
13                      (B)  maintain surplus as to policyholders and paid-in capital at                                   
14            least equal to $10,000,000, but not more than $15,000,000, and demonstrate to                                
15            the satisfaction of the director that the company maintains a ratio of net written                           
16            premiums, wherever written, to surplus as to policyholders and paid-in capital                               
17            of not greater than 3 to 1 and annually files with the director copies of the                                
18            provider's audited financial statements, its annual statement to the National                                
19            Association of Insurance Commissioners, and the statement of actuarial                                       
20            opinion and opinion summary required by and filed in the provider's state of                                 
21            domicile; or                                                                                                 
22                 (2)  maintain, solely or together with the parent company, a net worth                                  
23       or stockholders' equity of $100,000,000 and, upon request by the director, provide the                            
24       director with a copy of the provider's or the parent company's most recent annual                                 
25       report filed with the United States Securities and Exchange Commission within the                                 
26       last calendar year or, if the company does not file with the United States Securities and                         
27       Exchange Commission, a copy of the company's audited financial statements, which                                  
28       show a net worth of the provider or its parent company of at least $100,000,000; if the                           
29       parent company's annual report or financial statements are filed to meet the provider's                           
30       financial stability requirement, then the parent company shall agree to guarantee the                             
31       obligations of the provider relating to motor vehicle service contracts sold by the                               
01       provider in this state.                                                                                           
02            (b)  A motor vehicle service contract provider that has obtained insurance                                   
03       under this section shall state the name and address of the provider and include a                                 
04       statement in substantially the following form: "Performance or payment of the                                     
05       obligations of the provider under this service contract are insured." If the provider has                         
06       not obtained insurance under this section, the service contract shall contain a statement                         
07       in substantially the following form: "Obligations of the provider under this service                              
08       contract are not insured and are guaranteed only by the assets of the provider."                                  
09            (c)  If the provider fails to provide a covered service under the terms of the                               
10       motor vehicle service contract within 30 days after the service contract holder notifies                          
11       the provider of the claim, the service contract holder is entitled to apply directly to the                       
12       insurer for payment of the provider's obligation.                                                                 
13            Sec. 21.61.090. Records. (a) The provider shall keep accurate accounts, books,                             
14       and records related to the sale of motor vehicle service contracts, including                                     
15                 (1)  copies of each type of motor vehicle service contract sold;                                        
16                 (2)  the name and address of each service contract holder to the extent                                 
17       that the name and address have been furnished by the service contract holder;                                     
18                 (3)  the locations where motor vehicle service contracts are marketed,                                  
19       sold, or offered for sale; and                                                                                    
20                 (4)  claim files describing claims related to the motor vehicle service                                 
21       contracts.                                                                                                        
22            (b)  The provider shall retain all records required by this section for at least                             
23       five years after a motor vehicle service contract has expired.                                                    
24            (c)  Records required to be maintained under this section may be maintained                                  
25       electronically.                                                                                                   
26            (d)  A provider shall reply in writing within 10 working days to a records                                   
27       inquiry of the director. The director may inspect or request summary or detailed copies                           
28       of records for examination by the division. Accounting and financial records inspected                            
29       or examined under this section are confidential when in the possession of the division,                           
30       but may be used by the director in a proceeding against the licensee.                                             
31            (e)  A provider discontinuing business in this state shall maintain records as                               
01       required by this section until the provider's obligations to all service contract holders                         
02       in this state have been discharged.                                                                               
03            Sec. 21.61.100. Examination, investigations, enforcement, and penalties.                                   
04       (a) The director may conduct investigations or examinations of a provider,                                        
05       administrator, insurer, or other person to enforce the provisions of this chapter and to                          
06       protect service contract holders in this state in accordance with AS 21.06.                                       
07            (b)  The director may take necessary or appropriate action to enforce this title,                            
08       to the extent applicable, and protect service contract holders in this state, including the                       
09       issuance of a cease and desist order, if the director determines that a person has                                
10       violated a provision of this title, to the extent applicable to the person. A person                              
11       aggrieved by the cease and desist order may request a hearing under AS 21.06.170 -                                
12       21.06.240.                                                                                                        
13            (c)  Without prior hearing, the director may order summary suspension of the                                 
14       license of a provider if the director finds that protection of the public requires                                
15       emergency action and incorporates this finding in an order. The suspension is effective                           
16       on the date specified in the order or upon mailing by first class mail to the provider's                          
17       business address on record with the division, whichever is later. If the provider                                 
18       requests a hearing, the director shall conduct a hearing on the suspension within a                               
19       reasonable time but not later than 20 days after the effective date of the summary                                
20       suspension unless the person whose license is suspended requests a later date. At the                             
21       hearing, the director shall determine whether the suspension should be continued or                               
22       withdrawn, and, if proper notice is given, may determine whether the license should                               
23       be revoked. The director shall issue a decision within 30 days after the conclusion of                            
24       the hearing. A suspension or revocation under this section must be based on one or                                
25       more grounds in AS 21.27.410 or a finding that one or more of the circumstances in                                
26       (d) of this section continue to exist. The summary suspension continues until the                                 
27       decision is issued. AS 21.06.190 and AS 44.64.030 do not apply to this subsection.                                
28            (d)  The director shall order summary suspension of the license of a provider if                             
29       one or more of the following circumstances exist:                                                                 
30                 (1)  the provider is insolvent or impaired;                                                             
31                 (2)  a proceeding for bankruptcy, receivership, conservatorship, or                                     
01       rehabilitation, or another delinquency proceeding regarding the provider has been                                 
02       commenced in any state or by a governmental agency of another jurisdiction;                                       
03                 (3)  the provider is in an unsound condition, or is in a condition or                                   
04       using methods or practices that render its further sale of service contracts in the state                         
05       injurious to service contract holders or the public.                                                              
06            (e)  A person found to have violated this chapter may be assessed a civil                                    
07       penalty in an amount determined by the director not to exceed $2,500 for each                                     
08       violation or, if the director determines that the person knowingly violated the                                   
09       provisions of this chapter, $5,000 for each violation. Penalties for violations may not                           
10       exceed $50,000 in the aggregate for violations of a similar nature, except where the                              
11       person knowingly violated the provisions of this chapter. In this subsection,                                     
12                 (1)  "knowingly" has the meaning given in AS 11.81.900;                                                 
13                 (2)  "violation of a similar nature" means a violation consisting of the                                
14       same or a similar course of conduct, action, or practice as another violation,                                    
15       notwithstanding the number of times the act, conduct, or practice occurred.                                       
16            (f)  A service contract holder may bring an action in a court of competent                                   
17       jurisdiction for damages, injunctive relief, restitution, or other appropriate relief for a                       
18       threatened or existing violation relating to the motor vehicle service contract.                                  
19            (g)  The director may adopt regulations necessary for the implementation and                                 
20       enforcement of this chapter.                                                                                      
21            Sec. 21.61.900. Definitions. In this chapter,                                                              
22                 (1)  "administrator" means a person who is responsible for the                                          
23       administration of a motor vehicle service contract or the motor vehicle service contract                          
24       plan;                                                                                                           
25                 (2)  "motor vehicle" means a motor vehicle subject to registration under                                
26       AS 28.10.011;                                                                                                     
27                 (3)  "motor vehicle manufacturer" means a person that                                                   
28                      (A)  manufactures or produces motor vehicles and sells motor                                       
29            vehicles under the person's own name or label;                                                               
30                      (B)  is a subsidiary of a person who manufactures or produces                                      
31            motor vehicles;                                                                                              
01                      (C)  is a corporation that owns 100 percent of the person that                                     
02            manufactures motor vehicles;                                                                                 
03                      (D)  sells motor vehicles under the trade name or label of a                                       
04            person that manufactures or produces motor vehicles;                                                         
05                      (E)  manufactures and sells motor vehicles under the trade name                                    
06            or label of another person that manufactures or produces motor vehicles; or                                  
07                      (F)  under a written contract, licenses the use of its trade name                                  
08            or label to another person that manufactures motor vehicles and sells motor                                  
09            vehicles under the licensor's trade name or label;                                                           
10                 (4)  "nonoriginal manufacturer's parts" means replacement parts or                                      
11       "after market" parts not made for or by the original manufacturer of the motor vehicle;                           
12                 (5)  "provider" means a person that is contractually obligated to provide                               
13       motor vehicle services to a service contract holder under the terms of a motor vehicle                            
14       service contract;                                                                                                 
15                 (6)  "provider fee" means the consideration paid for a motor vehicle                                    
16       service contract;                                                                                                 
17                 (7)  "road hazard" means obstacles in the road, including potholes,                                     
18       rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps;                                      
19                 (8)  "service contract holder" means a person who is the purchaser or                                   
20       holder of a motor vehicle service contract;                                                                       
21                 (9)  "warranty" means a warranty made solely by the manufacturer,                                       
22       importer, or seller of a motor vehicle without consideration, that is not negotiated or                           
23       separated from the sale of the motor vehicle and is incidental to the sale of the motor                           
24       vehicle, and that guarantees indemnity for defective parts, mechanical or electrical                              
25       breakdown, and labor or other remedial measures, such as repair or replacement of the                             
26       motor vehicle or repetition of services.                                                                        
27    * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to                          
28 read:                                                                                                                   
29       TRANSITION. AS 21.61.030(c), enacted by sec. 5 of this Act, does not apply to a                                   
30 person using words prohibited by that subsection in the person's name before the effective                              
31 date of this Act. However, a person using the prohibited language in the person's name shall                            
01 include in all motor vehicle service contracts a statement in substantially the following form:                         
02 "This agreement is not an insurance contract."                                                                          
03    * Sec. 7. This Act takes effect January 1, 2015.                                                                   
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