FINAL BILL REPORT

SSB 5779

                                   C 99 L 87

BYSenate Committee on Financial Institutions (originally sponsored by Senators Vognild, Bender, Sellar, Wojahn, McCaslin, Metcalf, Rasmussen, Zimmerman and Garrett)

Regulating vehicle mechanical breakdown insurers.

Senate Committee on Financial Institutions

House Committe on Financial Institutions & Insurance

SYNOPSIS AS ENACTED

BACKGROUND:

It is unlawful to engage in the business of insurance in this state without complying with Washington laws.  However, it is often difficult to determine whether a particular transaction constitutes an insurance contract.  Currently, vehicle warranties issued by either a manufacturer or a dealer in connection with a specific sale, for parts and workmanship, are not contracts for insurance.

Many dealers offer warranties developed and administered by third parties.  So long as these third party administrators do not commingle funds they receive from one dealer with those received from another, they do not qualify as insurers.  Therefore, they are not subject to the jurisdiction of the Commissioner and operate uninhibited by Washington's insurance code.

SUMMARY:

No motor vehicle service contract may be sold or offered in this state unless the provider of the service contract has a reimbursement insurance policy issued by an authorized insurer.

The service contract must contain a conspicuous statement indicating the obligations of the provider and the existence of the reimbursement policy.  Information must be provided to the service contract holder explaining the means by which a claim may be filed under the reimbursement policy.

A specific cause of action under the Consumer Protection Act is established.

VOTES ON FINAL PASSAGE:

      Senate    44     1

      House 92   0 (House amended)

      Senate    46     1 (Senate concurred)

EFFECTIVE:July 26, 1987