2005 Nevada Revised Statutes - Chapter 690C — Service Contracts

CHAPTER 690C - SERVICE CONTRACTS

GENERAL PROVISIONS

NRS 690C.010 Definitions.

NRS 690C.020 Administratordefined.

NRS 690C.030 Consumerdefined.

NRS 690C.040 Contractualliability insurance policy defined.

NRS 690C.050 Goodsdefined.

NRS 690C.060 Holderdefined.

NRS 690C.070 Providerdefined.

NRS 690C.080 Servicecontract defined.

NRS 690C.100 Applicability.

NRS 690C.110 Generaltax on premiums not applicable.

NRS 690C.120 Applicabilityof other provisions.

CERTIFICATE OF REGISTRATION

NRS 690C.150 Certificaterequired to issue, sell or offer for sale service contracts.

NRS 690C.160 Applicationfor certificate; fees; renewal.

NRS 690C.170 Contractualliability insurance policy, deposit of security or certain net worth required.

MISCELLANEOUS PROVISIONS

NRS 690C.200 Nameof provider.

NRS 690C.210 Requirementsof contractual liability insurance policy; holder authorized to apply to issuerof policy for performance in certain circumstances.

NRS 690C.220 Requiringpurchase of service contract as condition of loan or purchase of goodsprohibited.

NRS 690C.230 Receiptor written evidence of service contract required; copy of service contractrequired to be furnished to holder within reasonable time.

PROVISIONS OF CONTRACT

NRS 690C.250 Conditionsunder which service contract void and refund required; right of originalpurchaser; provision stating right required; penalty.

NRS 690C.260 Contents;false or misleading statement prohibited.

NRS 690C.270 Groundsfor cancellation; date cancellation effective.

REGULATION AND ENFORCEMENT

NRS 690C.300 Regulationsof Commissioner.

NRS 690C.310 Retentionof records.

NRS 690C.320 Examinationsto enforce provisions of chapter by Commissioner.

NRS 690C.330 Penaltyfor violation of chapter or order or regulation of Commissioner.

_________

GENERAL PROVISIONS

NRS 690C.010 Definitions. As used in this chapter, unless the context otherwiserequires, the words and terms defined in NRS690C.020 to 690C.080, inclusive,have the meanings ascribed to them in those sections.

(Added to NRS by 1999, 3335)

NRS 690C.020 Administratordefined. Administrator means a person who isresponsible for administering a service contract that is issued, sold oroffered for sale by a provider.

(Added to NRS by 1999, 3335)

NRS 690C.030 Consumerdefined. Consumer means a person whopurchases, other than for resale, goods used primarily for personal, family orhousehold purposes and not for business or research purposes.

(Added to NRS by 1999, 3335)

NRS 690C.040 Contractualliability insurance policy defined. Contractualliability insurance policy means a policy of insurance that is issued to aprovider to either:

1. Reimburse the provider under the terms of a servicecontract issued or sold by the provider; or

2. If the provider does not satisfy his obligationunder a service contract, pay on behalf of the provider any money the providerhas an obligation to pay under the service contract.

(Added to NRS by 1999, 3335)

NRS 690C.050 Goodsdefined. Goods means all tangible personalproperty, whether movable at the time of purchase or a fixture, that is usedprimarily for personal, family or household purposes.

(Added to NRS by 1999, 3335)

NRS 690C.060 Holderdefined. Holder means a resident of thisstate who:

1. Purchases a service contract; or

2. Is legally in possession of a service contract andis entitled to enforce the rights of the original purchaser of the servicecontract.

(Added to NRS by 1999, 3335)

NRS 690C.070 Providerdefined. Provider means a person who is obligatedto a holder pursuant to the terms of a service contract to repair, replace orperform maintenance on, or to indemnify the holder for the costs of repairing,replacing or performing maintenance on, goods.

(Added to NRS by 1999, 3335)

NRS 690C.080 Servicecontract defined. Service contract means acontract pursuant to which a provider, in exchange for separately statedconsideration, is obligated for a specified period to a holder to repair,replace or perform maintenance on, or indemnify or reimburse the holder for thecosts of repairing, replacing or performing maintenance on, goods that aredescribed in the service contract and which have an operational or structuralfailure as a result of a defect in materials, workmanship or normal wear andtear, including, without limitation:

1. A contract that includes a provision for incidentalpayment of indemnity under limited circumstances, including, withoutlimitation, towing, rental and emergency road service; and

2. A contract that provides for the repair,replacement or maintenance of goods for damages that result from power surgesor accidental damage from handling.

(Added to NRS by 1999, 3336)

NRS 690C.100 Applicability.

1. The provisions of this title do not apply to:

(a) A warranty;

(b) A maintenance agreement;

(c) A service contract provided by a public utility onits transmission device if the service contract is regulated by the PublicUtilities Commission of Nevada;

(d) A service contract sold or offered for sale to aperson who is not a consumer;

(e) A service contract for goods if the purchase priceof the goods is less than $250; or

(f ) A servicecontract issued, sold or offered for sale by a vehicle dealer on vehicles soldby the dealer, if the dealer is licensed pursuant to NRS 482.325 and the service contractobligates either the dealer or the manufacturer of the vehicle, or an affiliateof the dealer or manufacturer, to provide all services under the service contract.

2. The sale of a service contract pursuant to thischapter does not constitute the business of insurance for the purposes of 18U.S.C. 1033 and 1034.

3. As used in this section:

(a) Maintenance agreement means a contract for alimited period that provides only for scheduled maintenance.

(b) Warranty means a warranty provided solely by amanufacturer, importer or seller of goods for which the manufacturer, importeror seller did not receive separate consideration and that:

(1) Is not negotiated or separated from the saleof the goods;

(2) Is incidental to the sale of the goods; and

(3) Guarantees to indemnify the consumer fordefective parts, mechanical or electrical failure, labor or other remedialmeasures required to repair or replace the goods.

(Added to NRS by 1999, 3336)

NRS 690C.110 Generaltax on premiums not applicable. The taximposed pursuant to NRS 680B.027 doesnot apply to any business transacted pursuant to the provisions of thischapter.

(Added to NRS by 1999, 3338)

NRS 690C.120 Applicabilityof other provisions.

1. Except as otherwise provided in this chapter, themarketing, issuance, sale, offering for sale, making, proposing to make andadministration of service contracts are not subject to the provisions of title57 of NRS, except, when applicable, the provisions of:

(a) NRS 679B.020to 679B.152, inclusive;

(b) NRS 679B.159to 679B.300, inclusive;

(c) NRS 679B.310to 679B.370, inclusive;

(d) NRS 679B.600to 679B.690, inclusive;

(e) NRS 685B.090to 685B.190, inclusive;

(f) NRS 686A.010to 686A.095, inclusive;

(g) NRS 686A.160to 686A.187, inclusive; and

(h) NRS 686A.260,686A.270, 686A.280, 686A.300 and 686A.310.

2. A provider, person who sells service contracts,administrator or any other person is not required to obtain a certificate ofauthority from the Commissioner pursuant to chapter680A of NRS to issue, sell, offer for sale or administer service contracts.

(Added to NRS by 1999, 3338)

CERTIFICATE OF REGISTRATION

NRS 690C.150 Certificaterequired to issue, sell or offer for sale service contracts. A provider shall not issue, sell or offer for sale servicecontracts in this state unless he has been issued a certificate of registrationpursuant to this provisions of this chapter.

(Added to NRS by 1999, 3336)

NRS 690C.160 Applicationfor certificate; fees; renewal.

1. A provider who wishes to issue, sell or offer forsale service contracts in this state must submit to the Commissioner:

(a) A registration application on a form prescribed bythe Commissioner;

(b) Proof that he has complied with the requirementsfor security set forth in NRS 690C.170;

(c) A copy of each type of service contract he proposesto issue, sell or offer for sale;

(d) The name, address and telephone number of eachadministrator with whom the provider intends to contract; and

(e) A fee of $1,000.

2. In addition to the fee required by subsection 1, aprovider must pay a fee of $25 for each type of service contract he files withthe Commissioner.

3. A certificate of registration is valid for 1 yearafter the date the Commissioner issues the certificate to the provider. Aprovider may renew his certificate of registration if, before the certificateexpires, he submits to the Commissioner an application on a form prescribed bythe Commissioner and a fee of $1,000.

(Added to NRS by 1999, 3336; A 2001, 2228)

NRS 690C.170 Contractualliability insurance policy, deposit of security or certain net worth required. To be issued a certificate of registration, a providermust comply with one of the following:

1. Purchase a contractual liability insurance policywhich insures the obligations of each service contract the provider issues,sells or offers for sale. The contractual liability insurance policy must beissued by an insurer authorized to transact insurance in this state or pursuantto the provisions of chapter 685A of NRS.

2. Maintain a reserve account and deposit with theCommissioner security as provided in this subsection. The reserve account mustcontain at all times an amount of money equal to at least 40 percent of thegross consideration received by the provider for any unexpired servicecontracts, less any claims paid on those unexpired service contracts. TheCommissioner may examine the reserve account at any time. The provider shallalso deposit with the Commissioner security in an amount that is equal to$25,000 or 5 percent of the gross consideration received by the provider forany unexpired service contracts, less any claims paid on the unexpired servicecontracts, whichever is greater. The security must be:

(a) A surety bond issued by a surety company authorizedto do business in this state;

(b) Securities of the type eligible for depositpursuant to NRS 682B.030;

(c) Cash;

(d) An irrevocable letter of credit issued by afinancial institution approved by the Commissioner; or

(e) In any other form prescribed by the Commissioner.

3. Maintain, or be a subsidiary of a parent companythat maintains, a net worth or stockholders equity of at least $100,000,000.Upon request, a provider shall provide to the Commissioner a copy of the mostrecent Form 10-K report or Form 20-F report filed by the provider or parentcompany of the provider with the Securities and Exchange Commission within theprevious year. If the provider or parent company is not required to file thosereports with the Securities and Exchange Commission, the provider shall provideto the Commissioner a copy of the most recently audited financial statements ofthe provider or parent company. If the net worth or stockholders equity of theparent company of the provider is used to comply with the requirements of thissubsection, the parent company must guarantee to carry out the duties of theprovider under any service contract issued or sold by the provider.

(Added to NRS by 1999, 3337)

MISCELLANEOUS PROVISIONS

NRS 690C.200 Nameof provider.

1. Except as otherwise provided in this section, aprovider shall not include in the name of his business:

(a) The words insurance, casualty, surety,mutual or any other word or term that implies that he is engaged in thebusiness of transacting insurance or is a surety company; or

(b) A name that is deceptively similar to the name ordescription of an insurer or surety company or the name of another provider.

2. A provider may include the word guaranty or asimilar word in the name of his business.

3. This section does not apply to a provider who,before January 1, 2000, includes in the name of his business a name that doesnot comply with the provisions of subsection 1. Such a provider shall includein each service contract he issues, sells or offers for sale a statement thatthe service contract is not a contract of insurance.

(Added to NRS by 1999, 3340)

NRS 690C.210 Requirementsof contractual liability insurance policy; holder authorized to apply to issuerof policy for performance in certain circumstances.

1. A contractual liability insurance policy issued inthis state must provide that the issuer of the policy shall:

(a) Reimburse or pay on behalf of the provider anymoney the provider has a duty to pay under a service contract; or

(b) Otherwise provide for the performance of the dutiesof the provider under a service contract.

2. If a provider fails to perform his duties under aservice contract within 60 days after receiving notice from the holder that thegoods described in the contract are defective, the holder may apply to theissuer of the contractual liability insurance policy for performance of theduties of the provider under the service contract.

(Added to NRS by 1999, 3338)

NRS 690C.220 Requiringpurchase of service contract as condition of loan or purchase of goods prohibited. No person may require the purchase of a service contractas a condition for the approval of a loan or the purchasing of goods.

(Added to NRS by 1999, 3340)

NRS 690C.230 Receiptor written evidence of service contract required; copy of service contractrequired to be furnished to holder within reasonable time.

1. A provider shall provide a receipt for, or otherwritten evidence of, the purchase of a service contract.

2. The provider shall furnish a copy of the servicecontract to the holder within a reasonable time after the contract ispurchased.

(Added to NRS by 1999, 3340)

PROVISIONS OF CONTRACT

NRS 690C.250 Conditionsunder which service contract void and refund required; right of originalpurchaser; provision stating right required; penalty.

1. A service contract is void and a provider shallrefund to the holder the purchase price of the service contract if the holderhas not made a claim under the service contract and the holder returns theservice contract to the provider:

(a) Within 20 days after the date the provider mails acopy of the service contract to the holder;

(b) Within 10 days after the purchaser receives a copyof the service contract if the provider furnishes the holder with the copy atthe time the contract is purchased; or

(c) Within a longer period specified in the servicecontract.

2. The right of a holder to return a service contractpursuant to this section applies only to the original purchaser of the servicecontract.

3. A service contract must include a provision thatclearly states the right of a holder to return a service contract pursuant tothis section.

4. The provider shall refund to the holder thepurchase price of the service contract within 45 days after a service contractis returned pursuant to subsection 1. If the provider fails to refund thepurchase price within that time, the provider shall pay the holder a penalty of10 percent of the purchase price for each 30-day period or portion thereof thatthe refund and any accrued penalties remain unpaid.

(Added to NRS by 1999, 3338)

NRS 690C.260 Contents;false or misleading statement prohibited.

1. A service contract must:

(a) Be written in language that is understandable andprinted in a typeface that is easy to read.

(b) Indicate that it is insured by a contractualliability insurance policy if it is so insured, and include the name andaddress of the issuer of the policy or that it is backed by the full faith andcredit of the provider if the service contract is not insured by a contractualliability insurance policy.

(c) Include the amount of any deductible that theholder is required to pay.

(d) Include the name and address of the provider and,if applicable:

(1) The name and address of the administrator;and

(2) The name of the holder, if provided by theholder.

The namesand addresses of such persons are not required to be preprinted on the servicecontract and may be added to the service contract at the time of the sale.

(e) Include the purchase price of the service contract.The purchase price must be determined pursuant to a schedule of feesestablished by the provider. The purchase price is not required to bepreprinted on the service contract and may be negotiated with the holder andadded to the service contract at the time of sale.

(f ) Include adescription of the goods covered by the service contract.

(g) Specify the duties of the provider and anylimitations, exceptions or exclusions.

(h) If the service contract covers a motor vehicle,indicate whether replacement parts that are not made for or by the originalmanufacturer of the motor vehicle may be used to comply with the terms of theservice contract.

(i) Include any restrictions on transferring orrenewing the service contract.

(j) Include the terms, restrictions or conditions forcancelling the service contract before it expires and the procedure forcancelling the service contract. The conditions for cancelling the servicecontract must include, without limitation, the provisions of NRS 690C.270.

(k) Include the duties of the holder under thecontract, including, without limitation, the duty to protect against damage tothe goods covered by the service contract or to comply with any instructionsincluded in the owners manual for the goods.

(l) Indicate whether the service contract authorizesthe holder to recover consequential damages.

(m) Indicate whether any defect in the goods covered bythe service contract existing on the date the contract is purchased is notcovered under the service contract.

2. A provider shall not allow, make or cause to bemade a false or misleading statement in any of his service contracts orintentionally omit a material statement that causes a service contract to bemisleading. The Commissioner may require the provider to amend any servicecontract that the Commissioner determines is false or misleading.

(Added to NRS by 1999, 3339)

NRS 690C.270 Groundsfor cancellation; date cancellation effective.

1. No service contract that has been in effect for atleast 70 days may be cancelled by the provider before the expiration of theagreed term or 1 year after the effective date of the service contract,whichever occurs first, except on any of the following grounds:

(a) Failure by the holder to pay an amount when due;

(b) Conviction of the holder of a crime which resultsin an increase in the service required under the service contract;

(c) Discovery of fraud or material misrepresentation bythe holder in obtaining the service contract, or in presenting a claim forservice thereunder;

(d) Discovery of:

(1) An act or omission by the holder; or

(2) A violation by the holder of any conditionof the service contract,

whichoccurred after the effective date of the service contract and which substantiallyand materially increases the service required under the service contract; or

(e) A material change in the nature or extent of therequired service or repair which occurs after the effective date of the servicecontract and which causes the required service or repair to be substantiallyand materially increased beyond that contemplated at the time that the servicecontract was issued or sold.

2. No cancellation of a service contract may becomeeffective until at least 15 days after the notice of cancellation is mailed tothe holder.

(Added to NRS by 1999, 3340)

REGULATION AND ENFORCEMENT

NRS 690C.300 Regulationsof Commissioner. The Commissioner may adoptsuch regulations as are necessary to carry out the provisions of this chapter.

(Added to NRS by 1999, 3341)

NRS 690C.310 Retentionof records.

1. A provider shall maintain records of thetransactions governed by this chapter. The records of a provider must include:

(a) A copy of each type of service contract that theprovider issues, sells or offers for sale;

(b) The name and address of each holder who possesses aservice contract under which the provider has a duty to perform, to the extentthat the provider knows the name and address of each holder;

(c) A list that includes each location where theprovider issues, sells or offers for sale service contracts; and

(d) The date and a description of each claim made by aholder under a service contract.

2. Except as otherwise provided in this subsection, aprovider shall retain all records relating to a service contract for at least 1year after the contract has expired. A provider who intends to discontinuedoing business in this state shall provide the Commissioner with satisfactoryproof that he has discharged his duties to the holders in this state and shallnot destroy his records without the prior approval of the Commissioner.

3. The records required to be maintained pursuant tothis section may be stored on a computer disc or other storage device for acomputer from which the records can be readily printed.

(Added to NRS by 1999, 3341)

NRS 690C.320 Examinationsto enforce provisions of chapter by Commissioner.

1. Except as otherwise provided in this subsection,the Commissioner may conduct examinations to enforce the provisions of thischapter pursuant to the provisions of NRS679B.230 to 679B.300, inclusive,at such times as he deems necessary. The Commissioner is not required to complywith the requirement in NRS 679B.230that insurers be examined not less frequently than every 5 years in theenforcement of this chapter.

2. A provider shall, upon the request of theCommissioner, make available to the Commissioner for inspection any accounts,books and records concerning any service contract issued, sold or offered forsale by the provider which are reasonably necessary to enable the Commissionerto determine whether the provider is in compliance with the provisions of thischapter.

(Added to NRS by 1999, 3341)

NRS 690C.330 Penaltyfor violation of chapter or order or regulation of Commissioner. A person who violates any provision of this chapter or anorder or regulation of the Commissioner issued or adopted pursuant thereto maybe assessed a civil penalty by the Commissioner of not more than $500 for eachact or violation, not to exceed an aggregate amount of $10,000 for violationsof a similar nature. For the purposes of this section, violations shall bedeemed to be of a similar nature if the violations consist of the same orsimilar conduct, regardless of the number of times the conduct occurred.

(Added to NRS by 1999, 3341)

 

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