S-4698

AN ACT Relating to motor vehicle lubricant or chemical treatment product warranties; amending RCW 48.01.050 and 48.96.010; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 48.01.050 and 1990 c 130 s 1 are each amended to read as follows:

"Insurer" as used in this code includes every person engaged in the business of making contracts of insurance, other than a fraternal benefit society. A reciprocal or interinsurance exchange is an "insurer" as used in this code. Two or more hospitals((~~, as defined in RCW 70.39.020(3),~~)) which join and organize as a mutual corporation pursuant to chapter 24.06 RCW for the purpose of insuring or self-insuring against liability claims, including medical liability, through a contributing trust fund shall not be deemed an "insurer" under this code. Two or more local governmental entities((~~, as defined in RCW 48.62.020, which pursuant to RCW 48.62.040, 48.62.035, or any other provision of law~~)) that join together and organize to form an organization for the purpose of jointly self-insuring or self-funding shall not be deemed an "insurer" under this code. Two or more persons engaged in the business of commercial fishing who enter into an arrangement with other such persons for the pooling of funds to pay claims or losses arising out of loss or damage to a vessel or machinery used in the business of commercial fishing and owned by a member of the pool shall not be deemed an "insurer" under this code. A manufacturer of a motor vehicle lubricant or motor vehicle chemical treatment product who, in connection with the sale of such a product, issues an agreement warranting the performance of that product is not an "insurer" under this code; if (1) the manufacturer makes no charge for the agreement separate and apart from the price of the product, and (2) the manufacturer, or an entity having direct or indirect beneficial ownership of at least eighty percent of the common stock of the manufacturer, has consolidated stockholders' equity of at least fifty million dollars as reflected on its most recent form 10-K filed with the federal securities and exchange commission or an audited financial statement prepared in accordance with generally accepted accounting principles and as to which an opinion has been expressed by an independent certified public accountant in good standing with the American institute of certified public accountants and in all states where that accountant is licensed to practice.

Sec. 2. RCW 48.96.010 and 1987 c 99 s 1 are each amended to read as follows:

(1) "Motor vehicle service contract" or "service contract" means a contract or agreement given for consideration over and above the lease or purchase price of a motor vehicle that undertakes to perform or provide repair or replacement service, or indemnification for that service, for the operational or structural failure of a motor vehicle due to a defect in materials or skill of work or normal wear and tear, but does not include mechanical breakdown insurance or a lubricant product warranty.

(2) "Motor vehicle service contract provider" or "provider" means a person who issues, makes, provides, sells, or offers to sell a motor vehicle service contract.

(3) "Mechanical breakdown insurance" means a policy, contract, or agreement that undertakes to perform or provide repair or replacement service, or indemnification for that service, for the operational or structural failure of a motor vehicle due to a defect in materials or skill of work or normal wear and tear, and that is issued by an insurance company authorized to do business in this state.

(4) "Motor vehicle service contract reimbursement insurance policy" or "reimbursement insurance policy" means a policy of insurance providing coverage for all obligations and liabilities incurred by a motor vehicle service contract provider under the terms of motor vehicle service contracts issued by the provider.

(5) "Motor vehicle" means any vehicle subject to registration under chapter 46.16 RCW.

(6) "Service contract holder" means a person who purchases a motor vehicle service contract.

(7) "Lubricant product warranty" means an agreement that warrants the performance of a motor vehicle lubricant or motor vehicle chemical treatment product manufactured by the warrantor, that is issued in connection with the sale of such a product; if (a) the warrantor makes no charge for the agreement separate and apart from the price of the product, and (b) the warrantor, or an entity having direct or indirect beneficial ownership of at least eighty percent of the common stock of the warrantor, has consolidated stockholders' equity of at least fifty million dollars as reflected on its most recent form 10-K filed with the federal securities and exchange commission or an audited financial statement prepared in accordance with generally accepted accounting principles and as to which an opinion has been expressed by an independent certified public accountant in good standing with the American institute of certified public accountants and in all states where such accountant is licensed to practice.

NEW SECTION. Sec. 3. This act applies to purchases made subsequent to the effective date of this act.

NEW SECTION. Sec. 4. The senate committee on financial institutions, insurance and housing shall study the price and cost of lubricant product warranties and motor service contracts under the direction of the chair and report its findings in December 1998.