As used in this chapter, unless the
context otherwise requires, the words and terms defined in NRS 690C.020
to 690C.080 , inclusive, have the meanings ascribed to
them in those sections.
(Added to NRS by 1999, 3335 )
“Administrator” means a
person who is responsible for administering a service contract that is
issued, sold or offered for sale by a provider.
(Added to NRS by 1999, 3335 )
“Consumer” means a person who
purchases, other than for resale, goods used primarily for personal,
family or household purposes and not for business or research purposes.
(Added to NRS by 1999, 3335 )
“Contractual liability insurance policy” means a policy of insurance
that is issued to a provider to either:
1. Reimburse the provider under the terms of a service contract
issued or sold by the provider; or
2. If the provider does not satisfy his obligation under a service
contract, pay on behalf of the provider any money the provider has an
obligation to pay under the service contract.
(Added to NRS by 1999, 3335 )
“Goods” means all tangible personal
property, whether movable at the time of purchase or a fixture, that is
used primarily for personal, family or household purposes.
(Added to NRS by 1999, 3335 )
“Holder” means a resident of this
state who:
1. Purchases a service contract; or
2. Is legally in possession of a service contract and is entitled
to enforce the rights of the original purchaser of the service contract.
(Added to NRS by 1999, 3335 )
“Provider” means a person who is
obligated to a holder pursuant to the terms of a service contract to
repair, replace or perform maintenance on, or to indemnify the holder for
the costs of repairing, replacing or performing maintenance on, goods.
(Added to NRS by 1999, 3335 )
“Service contract” means
a contract pursuant to which a provider, in exchange for separately
stated consideration, is obligated for a specified period to a holder to
repair, replace or perform maintenance on, or indemnify or reimburse the
holder for the costs of repairing, replacing or performing maintenance
on, goods that are described in the service contract and which have an
operational or structural failure as a result of a defect in materials,
workmanship or normal wear and tear, including, without limitation:
1. A contract that includes a provision for incidental payment of
indemnity under limited circumstances, including, without limitation,
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 surges or
accidental damage from handling.
(Added to NRS by 1999, 3336 )
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 on its
transmission device if the service contract is regulated by the Public
Utilities Commission of Nevada;
(d) A service contract sold or offered for sale to a person who is
not a consumer;
(e) A service contract for goods if the purchase price of the goods
is less than $250; or
(f ) A service contract issued, sold or offered for sale by a
vehicle dealer on vehicles sold by the dealer, if the dealer is licensed
pursuant to NRS 482.325 and the service
contract obligates either the dealer or the manufacturer of the vehicle,
or an affiliate of the dealer or manufacturer, to provide all services
under the service contract.
2. The sale of a service contract pursuant to this chapter does
not constitute the business of insurance for the purposes of 18 U.S.C. §§
1033 and 1034.
3. As used in this section:
(a) “Maintenance agreement” means a contract for a limited period
that provides only for scheduled maintenance.
(b) “Warranty” means a warranty provided solely by a manufacturer,
importer or seller of goods for which the manufacturer, importer or
seller did not receive separate consideration and that:
(1) Is not negotiated or separated from the sale of the
goods;
(2) Is incidental to the sale of the goods; and
(3) Guarantees to indemnify the consumer for defective
parts, mechanical or electrical failure, labor or other remedial measures
required to repair or replace the goods.
(Added to NRS by 1999, 3336 )
The tax
imposed pursuant to NRS 680B.027 does
not apply to any business transacted pursuant to the provisions of this
chapter.
(Added to NRS by 1999, 3338 )
1. Except as otherwise provided in this chapter, the marketing,
issuance, sale, offering for sale, making, proposing to make and
administration of service contracts are not subject to the provisions of
title 57 of NRS, except, when applicable, the provisions of:
(a) NRS 679B.020 to 679B.152
, inclusive;
(b) NRS 679B.159 to 679B.300
, inclusive;
(c) NRS 679B.310 to 679B.370
, inclusive;
(d) NRS 679B.600 to 679B.690
, inclusive;
(e) NRS 685B.090 to 685B.190
, inclusive;
(f) NRS 686A.010 to 686A.095
, inclusive;
(g) NRS 686A.160 to 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 of authority
from the Commissioner pursuant to chapter 680A of NRS to issue, sell, offer for sale or
administer service contracts.
(Added to NRS by 1999, 3338 )
CERTIFICATE OF REGISTRATION
A provider shall not issue, sell or offer for sale
service contracts in this state unless he has been issued a certificate
of registration pursuant to this provisions of this chapter.
(Added to NRS by 1999, 3336 )
1. A provider who wishes to issue, sell or offer for sale service
contracts in this state must submit to the Commissioner:
(a) A registration application on a form prescribed by the
Commissioner;
(b) Proof that he has complied with the requirements for security
set forth in NRS 690C.170 ;
(c) A copy of each type of service contract he proposes to issue,
sell or offer for sale;
(d) The name, address and telephone number of each administrator
with whom the provider intends to contract; and
(e) A fee of $1,000.
2. In addition to the fee required by subsection 1, a provider
must pay a fee of $25 for each type of service contract he files with the
Commissioner.
3. A certificate of registration is valid for 1 year after the
date the Commissioner issues the certificate to the provider. A provider
may renew his certificate of registration if, before the certificate
expires, he submits to the Commissioner an application on a form
prescribed by the Commissioner and a fee of $1,000.
(Added to NRS by 1999, 3336 ; A 2001, 2228 )
To be issued a certificate of
registration, a provider must comply with one of the following:
1. Purchase a contractual liability insurance policy which insures
the obligations of each service contract the provider issues, sells or
offers for sale. The contractual liability insurance policy must be
issued by an insurer authorized to transact insurance in this state or
pursuant to the provisions of chapter 685A
of NRS.
2. Maintain a reserve account and deposit with the Commissioner
security as provided in this subsection. The reserve account must contain
at all times an amount of money equal to at least 40 percent of the gross
consideration received by the provider for any unexpired service
contracts, less any claims paid on those unexpired service contracts. The
Commissioner may examine the reserve account at any time. The provider
shall also 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 for any unexpired service contracts, less any claims paid on the
unexpired service contracts, whichever is greater. The security must be:
(a) A surety bond issued by a surety company authorized to do
business in this state;
(b) Securities of the type eligible for deposit pursuant to NRS
682B.030 ;
(c) Cash;
(d) An irrevocable letter of credit issued by a financial
institution approved by the Commissioner; or
(e) In any other form prescribed by the Commissioner.
3. Maintain, or be a subsidiary of a parent company that
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
most recent Form 10-K report or Form 20-F report filed by the provider or
parent company of the provider with the Securities and Exchange
Commission within the previous year. If the provider or parent company is
not required to file those reports with the Securities and Exchange
Commission, the provider shall provide to the Commissioner a copy of the
most recently audited financial statements of the provider or parent
company. If the net worth or stockholders’ equity of the parent company
of the provider is used to comply with the requirements of this
subsection, the parent company must guarantee to carry out the duties of
the provider under any service contract issued or sold by the provider.
(Added to NRS by 1999, 3337 )
MISCELLANEOUS PROVISIONS
1. Except as otherwise provided in this section, a provider 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 the business of
transacting insurance or is a surety company; or
(b) A name that is deceptively similar to the name or description
of an insurer or surety company or the name of another provider.
2. A provider may include the word “guaranty” or a similar 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 does not comply
with the provisions of subsection 1. Such a provider shall include in
each service contract he issues, sells or offers for sale a statement
that the service contract is not a contract of insurance.
(Added to NRS by 1999, 3340 )
1. A contractual liability insurance policy issued in this state
must provide that the issuer of the policy shall:
(a) Reimburse or pay on behalf of the provider any money the
provider has a duty to pay under a service contract; or
(b) Otherwise provide for the performance of the duties of the
provider under a service contract.
2. If a provider fails to perform his duties under a service
contract within 60 days after receiving notice from the holder that the
goods described in the contract are defective, the holder may apply to
the issuer of the contractual liability insurance policy for performance
of the duties of the provider under the service contract.
(Added to NRS by 1999, 3338 )
No person may require the
purchase of a service contract as a condition for the approval of a loan
or the purchasing of goods.
(Added to NRS by 1999, 3340 )
1. A provider shall provide a receipt for, or other written
evidence of, the purchase of a service contract.
2. The provider shall furnish a copy of the service contract to
the holder within a reasonable time after the contract is purchased.
(Added to NRS by 1999, 3340 )
PROVISIONS OF CONTRACT
1. A service contract is void and a provider shall refund to the
holder the purchase price of the service contract if the holder has not
made a claim under the service contract and the holder returns the
service contract to the provider:
(a) Within 20 days after the date the provider mails a copy of the
service contract to the holder;
(b) Within 10 days after the purchaser receives a copy of the
service contract if the provider furnishes the holder with the copy at
the time the contract is purchased; or
(c) Within a longer period specified in the service contract.
2. The right of a holder to return a service contract pursuant to
this section applies only to the original purchaser of the service
contract.
3. A service contract must include a provision that clearly states
the right of a holder to return a service contract pursuant to this
section.
4. The provider shall refund to the holder the purchase price of
the service contract within 45 days after a service contract is returned
pursuant to subsection 1. If the provider fails to refund the purchase
price within that time, the provider shall pay the holder a penalty of 10
percent of the purchase price for each 30-day period or portion thereof
that the refund and any accrued penalties remain unpaid.
(Added to NRS by 1999, 3338 )
1. A service contract must:
(a) Be written in language that is understandable and printed in a
typeface that is easy to read.
(b) Indicate that it is insured by a contractual liability
insurance policy if it is so insured, and include the name and address of
the issuer of the policy or that it is backed by the full faith and
credit of the provider if the service contract is not insured by a
contractual liability insurance policy.
(c) Include the amount of any deductible that the holder 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 the holder.
Ê The names and addresses of such persons are not required to be
preprinted on the service contract 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 fees
established by the provider. The purchase price is not required to be
preprinted on the service contract and may be negotiated with the holder
and added to the service contract at the time of sale.
(f ) Include a description of the goods covered by the service
contract.
(g) Specify the duties of the provider and any limitations,
exceptions or exclusions.
(h) If the service contract covers a motor vehicle, indicate
whether replacement parts that are not made for or by the original
manufacturer of the motor vehicle may be used to comply with the terms of
the service contract.
(i) Include any restrictions on transferring or renewing the
service contract.
(j) Include the terms, restrictions or conditions for cancelling
the service contract before it expires and the procedure for cancelling
the service contract. The conditions for cancelling the service contract
must include, without limitation, the provisions of NRS 690C.270 .
(k) Include the duties of the holder under the contract, including,
without limitation, the duty to protect against damage to the goods
covered by the service contract or to comply with any instructions
included in the owner’s manual for the goods.
(l) Indicate whether the service contract authorizes the holder to
recover consequential damages.
(m) Indicate whether any defect in the goods covered by the service
contract existing on the date the contract is purchased is not covered
under the service contract.
2. A provider shall not allow, make or cause to be made a false or
misleading statement in any of his service contracts or intentionally
omit a material statement that causes a service contract to be
misleading. The Commissioner may require the provider to amend any
service contract that the Commissioner determines is false or misleading.
(Added to NRS by 1999, 3339 )
1. No service contract that has been in effect for at least 70
days may be cancelled by the provider before the expiration of the agreed
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 results in an
increase in the service required under the service contract;
(c) Discovery of fraud or material misrepresentation by the holder
in obtaining the service contract, or in presenting a claim for service
thereunder;
(d) Discovery of:
(1) An act or omission by the holder; or
(2) A violation by the holder of any condition of the
service contract,
Ê which occurred after the effective date of the service contract and
which substantially and materially increases the service required under
the service contract; or
(e) A material change in the nature or extent of the required
service or repair which occurs after the effective date of the service
contract and which causes the required service or repair to be
substantially and materially increased beyond that contemplated at the
time that the service contract was issued or sold.
2. No cancellation of a service contract may become effective
until at least 15 days after the notice of cancellation is mailed to the
holder.
(Added to NRS by 1999, 3340 )
REGULATION AND ENFORCEMENT
The Commissioner may
adopt such regulations as are necessary to carry out the provisions of
this chapter.
(Added to NRS by 1999, 3341 )
1. A provider shall maintain records of the transactions governed
by this chapter. The records of a provider must include:
(a) A copy of each type of service contract that the provider
issues, sells or offers for sale;
(b) The name and address of each holder who possesses a service
contract under which the provider has a duty to perform, to the extent
that the provider knows the name and address of each holder;
(c) A list that includes each location where the provider issues,
sells or offers for sale service contracts; and
(d) The date and a description of each claim made by a holder under
a service contract.
2. Except as otherwise provided in this subsection, a provider
shall retain all records relating to a service contract for at least 1
year after the contract has expired. A provider who intends to
discontinue doing business in this state shall provide the Commissioner
with satisfactory proof that he has discharged his duties to the holders
in this state and shall not destroy his records without the prior
approval of the Commissioner.
3. The records required to be maintained pursuant to this section
may be stored on a computer disc or other storage device for a computer
from which the records can be readily printed.
(Added to NRS by 1999, 3341 )
1. Except as otherwise provided in this subsection, the
Commissioner may conduct examinations to enforce the provisions of this
chapter pursuant to the provisions of NRS 679B.230 to 679B.300 , inclusive, at such times as he deems
necessary. The Commissioner is not required to comply with the
requirement in NRS 679B.230 that
insurers be examined not less frequently than every 5 years in the
enforcement of this chapter.
2. A provider shall, upon the request of the Commissioner, make
available to the Commissioner for inspection any accounts, books and
records concerning any service contract issued, sold or offered for sale
by the provider which are reasonably necessary to enable the Commissioner
to determine whether the provider is in compliance with the provisions of
this chapter.
(Added to NRS by 1999, 3341 )
A person who violates any provision of this
chapter or an order or regulation of the Commissioner issued or adopted
pursuant thereto may be assessed a civil penalty by the Commissioner of
not more than $500 for each act or violation, not to exceed an aggregate
amount of $10,000 for violations of a similar nature. For the purposes of
this section, violations shall be deemed to be of a similar nature if the
violations consist of the same or similar conduct, regardless of the
number of times the conduct occurred.
(Added to NRS by 1999, 3341 )
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