An Act
Maine Legislature, Session 125, LD 1507
Committee Amendment CA_A_H544 (House)
Amends: 24-A MRSA §3, 24-A MRSA §601

COMMITTEE AMENDMENT "ff" to H.P. 1109, L.D. 
Regarding Service Contracts" 
1507, Bill, "An Act 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 24-A MRS A §3, sub-§§2 and 3, as enacted by PL 1997, c. 592, §9, are 
amended to read: 
2. Road or tourist service contract. A road or tourist service contract, other than a 
contract issued by a licensed insurer, related to the repair, operation and care of 
automobiles or to the protection and assistance of automobile owners or drivers; afl:6 
3. Home service contract. A home service contract whereby, for a set fee and 
specified duration, a person agrees to defray the cost of repair or replacement or provide 
or arrange for the repair or replacement of all or any part of any structural component, 
appliance or system of a home necessitated by wear and tear, deterioration or inherent 
defect or by failure of an inspection to detect the likelihood of any such loss~; and 
Sec. 2. 24-A MRSA §3, sub-§4 is enacted to read: 
4. Service contract. A service contract as defined in section 7102, subsection 11. 
Sec. 3. 24-A MRSA §601, sub-§29 is enacted to read: 
29. Service contract providers and administrators. Service contract provider or 
administrator annual registration fees may not exceed $200. 
Sec. 4. 24-A MRS A c. 89 is enacted to read: 
CHAPTER 89 
SERVICE CONTRACTS 
§7101. Short title; purpose; scope 
1. Short title. This chapter may be known and cited as "the Service Contracts Act." 
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2. Purpose. The pur.pose of this chapter is to create a legal framework within which 
service contracts may be sold in this State. 
3. 
Exclusions. 
The following types of service contracts are exempt from the 
provisions of this Title, including the other provisions of this chapter: 
A. Warranties; 
B. Maintenance agreements; 
C. 
Warranties, service contracts or maintenance agreements offered by public 
utilities on their transmission devices to the extent they are regulated by the Public 
Utilities Commission; 
D. Service contracts sold or offered for sale to persons other than consumers; 
E. 
Service contracts on tangible personal property when the tangible personal 
property for which the service contract is sold has a purchase price of $100 or less, 
exclusive of sales tax; 
F. Road or tourist service contracts under section 3, subsection 2; 
G. Home service contracts under section 3, subsection 3; and 
H. Warranties, service contracts and maintenance agreements that are conditioned 
upon or otherwise associated with the sale or supply of heating fuel. 
4. Limited exclusions. The application of this chapter to the following is limited as 
follows. 
A. Service contracts under which a motor vehicle dealer licensed pursuant to Title 
29-A. chapter 9 is obligated to perform and that are sold in connection with the sale 
or service of a motor vehicle as defined in Title 29-A, section 101, subsection 42 are 
exempt from the requirements of section 7103, subsection 5 but must comply with all 
other requirements of this chapter. 
B. 
A motor vehicle manufacturer's service contracts on the motor vehicle 
manufacturer's products must comply only with section 7103, subsection 7; section 
7105, subsection 1 and subsections 4 to 13; section 7109; and section 7110, as 
applicable. 
The types of agreements referred to in subsections 3 and 4 and service contracts governed 
by this chapter are not insurance and are not required to comply with any provision of the 
insurance laws of this State other than as expressly made applicable in this chapter as 
long as the service contract provider and administrator have registered with the 
superintendent as required by section 7103, subsection 4. 
§7102. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Administrator. "Administrator" means the person who is responsible for the 
administration of a service contract program or who is responsible for any submission 
required by this chapter. 
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2. Consumer. "Consumer" means an individual who buys other than for purposes of 
resale any tangible personal property that is distributed in commerce and that is normally 
used for personal, family or household purposes and not for business or research 
purposes. 
3. Maintenance agreement. "Maintenance agreement" means a contract of limited 
duration that provides for scheduled maintenance only and does not include repair or 
replacement. 
4. Motor vehicle manufacturer. "Motor vehicle manufacturer" means a person 
that: 
A. Manufactures or produces motor vehicles and sells motor vehicles under its own 
name or label: 
B. Is a wholly owned subsidiary of a person that manufactures or produces motor 
vehicles: 
C. Is a corporation that owns 100% of a person that manufactures or produces motor 
vehicles: 
D. 
Sells motor vehicles under the trade name or label of another person that 
manufactures or produces motor vehicles: or 
E. 
Does not manufacture or produce motor vehicles but, pursuant to a written 
contract, licenses the use of its trade name or label to another person that 
manufactures or produces motor vehicles and that sells motor vehicles under the 
licensor's trade name or label. 
5. Nonorieinal manufacturer's parts. "Nonoriginal manufacturer's parts" means 
replacement parts not made for or by the original manufacturer of the property, 
commonly referred to as "aftermarket parts." 
6. Person. "Person" means an individual, partnership, corporation, incorporated or 
unincorporated association, joint stock company, reciprocal, syndicate or any similar 
entity or combination of entities acting in concert. 
7. 
Premium. 
"Premium" means the consideration paid to an insurer for a 
reimbursement insurance policy. 
8. Provider. "Provider" means a person who is contractually obligated to a service 
contract holder under the terms of a service contract. 
9. Provider fee. "Provider fee" means the consideration paid for a service contract. 
10. Reimbursement insurance policy. "Reimbursement insurance policy" means a 
policy of insurance, issued to a provider, that provides reimbursement to the provider 
under the terms of the insured service contracts issued or sold by the provider or, in the 
event of the provider's nonperformance, pays to service contract holders on behalf of the 
provider all covered contractual obligations incurred by the provider under the terms of 
the insured service contracts issued or sold by the provider. 
11. Service contract. "Service contract" means a contract or agreement for a 
separately stated consideration for a specific duration to perform the repair, replacement 
or maintenance of property or to indemnify for the repair, replacement or maintenance for 
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an operational or structural failure of any motor vehicle or other property due to a defect 
in materials or workmanship or normal wear and tear, with or without additional 
provisions for incidental payment of indemnity under limited circumstances, including, 
but not limited to, towing, rental and emergency road service and road hazard protection. 
Coverage issued by an authorized insurance company pursuant to a personal automobile 
insurance policy for payment of towing, rental, emergency road service or automobile 
mechanical breakdown is not a service contract. Service contracts may provide for the 
repair, replacement or maintenance of property for damage resulting from power surges 
or interruption. "Service contract" includes a contract or agreement sold for a separately 
stated consideration for a specific duration that provides for any of the following: 
A. The repair or replacement or indemnification for the repair or replacement of a 
motor vehicle for the operational or structural failure of one or more parts or systems 
of the motor vehicle brought about by the failure of an additive product to perform as 
represented: 
B. The repair or replacement of tires or wheels on a motor vehicle damaged as a 
result of coming into contact with road hazards, including, but not limited to, 
potholes, rocks, wood debris, metal parts, glass, plastic, curbs or composite scraps; 
C. The removal of dents, dings or creases on a motor vehicle that can be repaired 
using the process of paintless dent removal without affecting the existing paint finish 
and without replacing vehicle body panels, sanding, bonding or painting; 
D. 
The repair of small motor vehicle windshield chips or cracks but not the 
replacement of the entire windshield; or 
E. The repair of damage to the interior components of a motor vehicle caused by 
wear and tear but that expressly excludes the replacement of any part or component 
of a motor vehicle's interior. 
Notwithstanding any other provision of law, service contracts are not insurance in this 
State and may not be regulated as insurance except for a contract or agreement providing 
indemnification for a loss caused by misplacement, theft, collision, fire or other peril 
typically covered in the comprehensive section of an automobile insurance policy or by a 
homeowner's policy or a marine or inland marine policy. 
12. Service contract holder. "Service contract holder" means a person who is the 
purchaser or holder of a service contract. 
13. Superintendent. "Superintendent" means the Superintendent of Insurance. 
14. Tangible net worth. "Tangible net worth" means equity less assets that have no 
physical existence and depend on expected future benefits for their ascribed value. 
15. Warranty. "Warranty" means a warranty made solely by the manufacturer, 
importer or seller of property or services without consideration that is not negotiated or 
separated from the sale of the product and is incidental to the sale of the product and that 
guarantees indemnity for defective parts, mechanical or electrical breakdown, labor or 
other remedial measures, such as repair or replacement of the property or repetition of 
services. 
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§7103. Requirements for doing business 
1. Administrator. A provider may, but is not required to, appoint an administrator 
or other designee to be responsible for any or all of the administration of the provider's 
service contracts and compliance with this chapter. 
All administrators of service 
contracts sold in this State shall register with the superintendent as provided in this 
section. 
2. Provision of receipt and copy of contract. A service contract may not be issued, 
sold or offered for sale in this State unless the provider has: 
A. Registered with the superintendent pursuant to this section; 
B. Provided a receipt for, or other written evidence of, the purchase of the service 
contract to the service contract holder; 
C. Provided a copy of the service contract to the service contract holder within a 
reasonable period of time from the date of purchase; and 
D. Complied with the provisions of this chapter. 
3. Sample copy before sale. A provider shall make a complete sample copy of the 
service contract terms and conditions available for inspection by a consumer prior to the 
time of sale. 
4. Registration. A provider or administrator of service contracts issued .. sold or 
offered for sale in this State shall apply for registration with the superintendent on a form 
prescribed by the superintendent, providing the registrant's name. full business address. 
telephone number and contact person and designating an agent in this State for service of 
process. The registration must be updated by written notification to the superintendent if 
changes occur in the registration on file. 
A. The registrant shall pay to the superintendent a fee as set forth in section 60 I, 
subsection 29 upon initial registration and every year thereafter. 
B. A registrant whose registration has terminated shall send notice within 15 days as 
follows: 
(1) To all in-force service contract holders, if the registrant is a provider. Such 
registrant shall also cease issuing new service contracts in this State and may not 
renew existing service contracts unless authorized by the terms of a run-off plan 
approved by the superintendent; and 
(2) To all providers for which it acts as an administrator, and to all in-force 
service contract holders of those providers, if the registrant is an administrator. 
Such registrant shall also cease acting as an administrator as to all service 
contract programs that it has contracted for in this State. 
This section may not be construed to require a provider or administrator to apply for and 
obtain a license under chapter 16, subchapter 2-A. 
5. Provider's obligations. To ensure the performance of the provider's obligations 
to its service contract holders, the provider shall either: 
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A. Insure all service contracts under a reimbursement insurance policy filed with the 
superintendent and issued by an insurer authorized to transact casualty insurance in 
this State, purchased through a risk retention group registered with the 
superintendent, or issued pursuant to chapter 19 by an eligible surplus lines insurer 
that agrees in writing to comply with the terms of this chapter and to submit to the 
jurisdiction of the superintendent for purposes of enforcing this chapter, as long as 
stich insurer or risk retention group either: 
(1) At the time the policy is filed with the superintendent and continuously 
thereafter: 
fa) 
Maintains surplus as to policyholders and paid-in capital of at least 
$15,000,000; and 
(b) Files annually copies of the insurer's or risk retention group's as audited 
financial statements, its annual statement under section 423 and the actuarial 
certification required by and filed in the insurer's state of domicile; or 
(2) At the time the policy is filed with the superintendent and continuously 
thereafter: 
fa) 
Maintains surplus as to policyholders and paid-in capital of at least 
$10,000,000; 
(b) Demonstrates to the satisfaction of the superintendent that the insurer 
maintains a ratio of net written premiums, wherever written, to surplus as to 
policyholders and paid-in capital of not greater than 3 to 1; and 
fc) Files annually copies of the insurer's audited financial statements, its 
annual statement under section 423 and the actuarial certification required by 
and filed in the insurer's state of domicile; or 
B. Maintains, or together with its parent company maintains, a tangible net worth of 
at least $100,000,000 and upon request provides the superintendent with a copy of the 
provider's or, if the provider's financial statements are consolidated with those of its 
parent company, the provider's parent company's most recent Form 10-K or Form 
20-F annual report filed with the United States Securities and Exchange Commission 
within the last calendar year or, if the company does not file with the United States 
Securities and Exchange Commission, a copy of the company's audited financial 
statements that shows a tangible net worth of the provider or its parent company of at 
least $100,000,000. If the provider's parent company's Form 10-K or Form 20-F 
annual report or financial statements are filed to meet the provider's financial stability 
requirement, the parent company shall agree, on a form approved by the 
superintendent, to guarantee the obligations of the provider relating to service 
contracts sold by the provider in this State. 
6. Other financial security requirements. Except for the requirements specified in 
subsections 4 and 5, other financial security requirements may not be required by the 
superintendent for providers. 
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7. Return of service contract. A service contract must require the provider to 
permit the service contract holder to return the service contract subject to the following 
conditions. 
A. A service contract holder may return a service contract within 20 days of the date 
the service contract was mailed to the service contract holder or within 1 0 days of 
delivery if the service contract is delivered to the service contract holder at the time 
of sale or within a longer time period permitted under the service contract. Upon 
return of the service contract to the provider within the applicable time period, if no 
claim has been made under the service contract prior to its return to the provider, the 
service contract is void and the provider shall refund to the service contract holder or 
lienholder if the service contract holder has financed the purchase of the service 
contract the full provider fee and any sales tax refund required pursuant to state law. 
The right to void the service contract provided in this subsection is not transferable 
and applies only to the original service contract purchaser and only if no claim has 
been made prior to its return to the provider. A monthly penalty equal to 1 0% of the 
provider fee outstanding must be added to a refund that is not paid or credited within 
days after return of the service contract to the provider. 
B. After the time period specified in paragraph A for returning a service contract or 
if a claim has been made under the service contract within that time period, a service 
contract holder may cancel the service contract and the provider shall refund to the 
service contract holder 100% of the unearned pro rata provider fee, less any claims 
paid. An administrative fee not to exceed 10% of the provider fee paid by the service 
contract holder may be charged by the provider. 
8. Premium taxes. Insurance premium taxes under Title 36, chapter 357 aPRly as 
follows. 
A. Provider fees collected on service contracts are not subject to premium taxes. 
B. Premiums for reimbursement insurance policies are subject to premium taxes. 
9. Licensing exemption. Except for the registration requirements in subsection 4, a 
license or registration is not required under this Title to provide, administer, market, sell 
or offer to sell service contracts in this State. 
10. Insurance laws exemption. The marketing, sale, offering for sale, issuance, 
making, proposing to make and administration of service contracts by providers and 
related service contract sellers, administrators and other persons are exempt from all 
provisions of the State's insurance laws, except as specified in this chapter, as long as a 
service contract provider or administrator has registered with the superintendent as 
required by subsection 4. Reimbursement insurance policies are subject to all relevant 
provisions of this Title to the full extent consistent with this chapter. 
§7104. Reimbursement insurance policy 
1. Scope of policy. A reimbursement insurance policy insuring service contracts 
issued, sold or offered for sale in this State must unconditionally obligate the insurer that 
issued the reimbursement insurance policy to reimburse or pay on behalf of the provider 
any sums, including the refund of unearned provider fees, the provider is legally 
obligated to pay directly to the service contract holder or, in the event of the provider's 
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nonperformance, to provide the service that the provider is legally obligated to perform 
according to the provider's contractual obligations under the service contracts issued or 
sold by the provider. 
2. Application to insurer. A reimbursement insurance policy must provide that if a 
covered service is not provided by the Qrovider within 60 days of proof of loss by a 
service contract holder. or unearned provider fees are not returned within 60 days of a 
valid refund request, the service contract holder may apply directly to the reimbursement 
insurance company for reimbursement or performance. 
§710S. Required provisions; service contracts 
1. Form; lanv;uage. A service contract marketed, sold, offered for sale, issued. 
made, proposed to be made or administered in this State must be written, printed or typed 
in clear and understandable language that is in a font size that is easily readable by a 
person with average eyesight and must conspicuously disclose the requirements set forth 
in this section, as applicable. A provider may comply with the font size requirement of 
this subsection by directing the consumer to a publicly accessible website containing a 
complete sample ofterms and conditions of the service contract. 
2. Notice of reimbursement insurance policy. A service contract insured under a 
reimbursement insurance policy pursuant to section 7103 must contain a statement in 
substantially the following form: "Obligations of the provider under this service contract 
are insured under a service contract reimbursement insurance policy. If the provider fails 
to payor provide service on a claim. including any claim for the return of the unearned 
portion of the provider fee, within 60 days after proof of loss has been filed. the contract 
holder is entitled to make a claim directly against the insurance company." The service 
contract must also state the name and address of the insurer. 
3. Notice when no reimbursement insurance policy. 
A service contract not 
insured under a reimbursement insurance policy pursuant to section 7103 must contain a 
statement in substantially the following form: "Obligations of the provider under this 
service contract are backed by the full faith and credit of the provider and are not 
guaranteed under a service contract reimbursement insurance policy. " 
4. Contact information. A service contract must state the name and address of the 
provider, the service contract seller and the administrator if different than the provider. A 
service contract must state the service contract holder's name and address to the extent 
furnished by the service contract holder. The identities of the service contract seller and 
service contract holder, to the extent furnished by the service contract holder, are not 
required to be preprinted on the service contract but may be added to the service contract 
at the time of sale. 
S. Purchase price and terms. A service contract must state the total purchase price 
of the service contract and the terms under which the service contract is sold. The 
purchase price is not required to be preprinted on the service contract and may be 
negotiated at the time of sale with the service contract holder. 
6. Pr\or approval. A service contract must consQicuously state the procedure for 
obtaining prior approval for repair work when prior approval is required and for making a 
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claim, including a toll-free telephone number for claim service and a procedure for 
obtaining emergency repairs performed outside of normal business hours. 
7. Deductible amount. A service contract must conspicuously state the existence of 
any deductible amount, if applicable. 
8. Merchandise and services to be provided. A service contract must specify the 
merchandise and services to be provided and any limitations, exceptions or exclusions. 
9. Nonoriginal manufacturer's parts. A service contract covering a motor vehicle 
must state whether the use of nonoriginal manufacturer's parts is allowed. 
10. Transferability. A service contract must state any restrictions governing the 
transferability of the service contract, if applicable. 
11. Cancellation. A service contract must state the terms, restrictions or conditions 
governing cancellation of the service contract prior to the termination or expiration date 
of the service contract by either the provider or the service contract holder. The provider 
of the service contract shall mail a written notice to the service contract holder at the last 
known address of the service contract holder contained in the records of the provider at 
least 15 days prior to cancellation by the provider. The notice must state the effective date 
of the cancellation and the reason for the cancellation. If a service contract is cancelled by 
the provider for a reason other than nonpayment of the provider fee. the provider shall 
refund to the service contract holder 100% of the unearned pro rata provider fee. less any 
claims paid. An administrative fee not to exceed 10% of the provider fee paid by the 
service contract holder may be charged by the provider. 
12. Obligations and duties. A service contract must set forth all of the obligations 
and duties of the service contract holder. such as the duty to protect against any further 
damage and any requirement to follow instructions in the owner's manual. 
13. Consequential damages. A service contract must state whether the service 
contract provides for or excludes consequential damages or preexisting conditions, if 
applicable. A service contract may, but is not required to, cover damage resulting from 
rust, corrosion or damage caused by a noncovered part or system. 
§7106. Record-keeping requirements 
1. Provider records. A provider shall keep accurate accounts, books and records 
concerning transactions regulated under this chapter. The provider'S accounts, books and 
records must include the following: 
A. Copies of each type of service contract sold: 
B. The name and address of each service contract holder to the extent furnished by 
the service contract holder: 
C. A list of the locations where service contracts are marketed, sold or offered for 
sale by the provider: and 
D. Written claims files, which must contain at least the dates and descriptions of 
claims related to the provider's service contracts. 
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2. Retention period. Except as provided in subsection 4, a provider shall retain all 
records required to be maintained by this section for at least 3 years after the specified 
period of coverage has expired. 
3. Form of records. The records required under this chapter may be, but are not 
required to be, maintained on a computer disk or other record-keeping medium. If the 
records are maintained in other than hard copy, the records must be capable of transfer to 
legible hard copy at the request ofthe superintendent. 
4. Discontinuation of business. A provider discontinuing business in this State 
shall maintain its records until it furnishes to the superintendent satisfactory proof that it 
has discharged all obligations to service contract holders in this State. 
§7107. Cancellation of reimbursement insurance policy 
An insurer that issued a reimbursement insurance policy may not cancel or nonrenew 
the policy for any reason, including at the request of the policyholder, until the insurer 
has delivered a notice of such action to the superintendent at least 45 days before such 
action. The cancellation or nonrenewal of a reimbursement insurance policy does not 
reduce the insurer's obligations as to service contracts issued by providers prior to the 
date of cancellation or nonrenewal. 
§7108. Obligation of reimbursement insurance policy insurers 
1. Receipt of premium; agency. A provider is the agent of the insurer that issued 
the reimbursement insurance policy for purposes of obligating the insurer to service 
contract holders in accordance with the service contract and this chapter. When a provider 
is acting as an administrator and enlists other providers, the provider acting as the 
administrator shall notify the insurer of the existence and identities of the other providers. 
An insurer issuing a reimbursement insurance policy to a provider is deemed to have 
received the premiums for such insurance upon the pawent of provider fees by 
consumers for service contracts issued by the insured provider. 
2. Indemnification or subrogation. This chapter does not prevent or limit the right 
of an insurer that issued a reimbursement insurance policy to seek indemnification or 
subrogation against a provider if the insurer pays or is obligated to pay the service 
contract holder sums that the provider was obligated to pay pursuant to the provisions of 
the service contract. 
§7109. Enforcement provisions 
1. Investigation and examination by superintendent. The superintendent may 
conduct investigations and examinations of providers, administrators, insurers or other 
persons to enforce the provisions of this chapter and protect service contract holders. 
Upon request of the superintendent, a person subject to this chapter shall make available 
to the superintendent all accounts, books and records concerning service contracts sold by 
the provider that are necessary to enable the superintendent to determine compliance or 
noncompliance with this chapter. 
2. Enforcement actions. The superintendent may assess civil penalties or take any 
other action permitted under section 12-A against any person who violates any provision 
of this chapter or the superintendent's rules and orders, and nothing in this section may be 
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construed as limiting the superintendent's authority to take enforcement action under 
section 12-A in connection with violations of applicable provisions of this Title. 
3. Refusal of registration. suspension or revocation. The superintendent may 
suspend, revoke or refuse to accept the registration of a provider under this chapter as set 
out in this section. 
A. The superintendent shall deny an application for registration if the registrant has 
not demonstrated that it is qualified to do business in accordance with this chapter or 
for any reason that would be a ground for suspension or revocation of registration. 
B. 
If, upon investigation or examination, the superintendent finds that a person 
registered under this chapter in this State has exceeded its powers, has failed to 
comply with any of the provisions of this chapter, is not fulfilling its service contracts 
in good faith or is conducting its business fraudulently or in a manner injurious to its 
contract holders or the public, the superintendent shall notify the person of the 
deficiency or deficiencies and state in writing the reasons that warrant suspension, 
revocation or refusal of the person's registration. The notice must require that the 
deficiency or deficiencies be corrected. 
After receipt of the notice, the person has 30 days to comply with the superintendent's 
request for correction, and if the person fails to comply the superintendent shall 
notify the person of the findings of noncompliance and require the person to show 
cause. on a date set by the superintendent. why its registration should not be 
suspended. revoked or refused. If on that date the person does not present good and 
sufficient reason why its authority to do business in this State should not be 
suspended. revoked or refused. the superintendent may suspend or refuse the 
registration of the person to do business in this State until satisfactory evidence is 
furnished to the superintendent that the suspension or refusal should be withdrawn or 
the superintendent may revoke the authority of the person to do business in this State. 
4. Service of process. A provider and administrator registered under this chapter 
shall appoint in writing an agent located in the State in the same manner as insurers are 
required to appoint agents under section 421. 
5. 
Administrative procedures. 
Anv person aggrieved by an order of the 
superintendent under this chapter may submit an application for a hearing as provided in 
section 229. upon which the procedures set forth in section 229 apply. 
6. 
Construction; existing contracts. 
This section may not be construed as 
preventing any provider from continuing in good faith all service contracts made in this 
State during the time the provider was legally authorized to transact business in this State. 
§7110. Unfair methods of competition; unfair and deceptive acts and practices 
1. Prohibited acts and practices. A person may not engage in this State in any act 
or practice determined by the superintendent to be unfair or deceptive or in any of the 
following acts or practices in connection with the marketing. sale. offering for sale. 
issuance. making, proposing to make or administration or solicitation of a service 
contract. 
A. 
A person may not make. issue. circulate, or cause to be made, issued or 
circulated, any estimate, illustration, circular or statement misrepresenting the terms 
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of any service contract issued or to be issued or the benefits or advantages promised 
thereby or make any misleading representation or any misrepresentation as to the 
financial condition of any provider. 
B. A person may not make, publish, disseminate, circulate or place before the public, 
or cause, directly or indirectly, to be made, published, disseminated, circulated or 
placed before the public, in a newspaper, magazine or other publication or on a 
business card, or in the form of a notice, circular, pamphlet, letter or poster, or over 
any radio or television station, or in any other way, an advertisement, announcement 
or statement containing any assertion, representation or statement wi th respect to the 
business of service contracts or with respect to any person in the conduct of that 
person's service contract business in a manner that is untrue, deceptive or misleading. 
C. A person may not file with any supervisory or other public official, or make, 
publish, disseminate, circulate or deliver to any person, or place before the public, or 
cause directly or indirectly to be made, published, disseminated, circulated, delivered 
to any person or placed before the public, any false statement of financial condition 
of a provider with intent to deceive. A person may not make any false entry in any 
book, report or statement of any provider with intent to deceive any agent or 
examiner lawfully appointed to examine into its condition or into any of its affairs, or 
any public official to whom such person is required by law to report, or who has 
authority by law to examine into its condition or into any of its affairs, or, with like 
intent, willfully omit to make a true entry of any material fact pertaining to the 
business of such person in any book, report or statement of such provider. 
D. A person may not engage in any of the following service contract claims practices 
in conscious disregard of this section and any rules adopted under this section or with 
such frequency as to indicate a general business practice of the person to engage in 
such conduct: 
(1) 
Knowingly misrepresenting to service contract holders relevant facts or 
service contract provisions related to coverages at issue; 
(2) 
Failing to acknowledge with reasonable promptness pertinent written 
communications with respect to claims arising under its service contracts: 
(3) Failing to develop and maintain documented claim files supporting decisions 
made regarding liability; 
(4) Refusing to pay claims without conducting a reasonable investigation; 
(5) Failing, in the case of claims denials, to provide an accurate explanation of 
the basis for those actions; or 
(6) 
Failing to adopt and implement reasonable standards to ensure that the 
repairs of a repairer owned by or required to be used by the provider are 
performed in a competent and professional manner. 
E. A provider may not use in its name the words "insurance," "casualty," "surety," 
"mutual" or any other words descriptive of the insurance, casualty or surety business 
or use a name deceptively similar to the name or description of any insurance or 
surety corporation or to the name of any other provider. The word "guaranty" or a 
COMMITTEE AMENDMENT 
V'.. ;. i· 
COMMITTEE AMENDMENT "A" to H.P. 1109, L.D. 1507 
similar word may be used by a provider. This section does not apply to a provider 
that was using any of the prohibited language in its name prior to January 1, 2012; 
however, such provider must include in its service contracts a statement in 
substantially the following form: "This agreement is not subject to regulation as an 
insurance contract. " 
F. 
A person, including but not limited to a bank, savings and loan association, 
lending institution, manufacturer or seller of any product may not require the 
purchase of a service contract as a condition of a loan or a condition for the sale of 
any property. 
G. A provider of a service contract on a motor vehicle or its representative may not, 
directly or indirectly, represent in any manner, whether by written solicitation or 
telemarketing, a false, deceptive or misleading statement with respect to: 
(1) The provider's affiliation with a motor vehicle manufacturer: 
(2) The provider'S possession of information regarding a motor vehicle owner's 
current motor vehicle manufacturer's original equipment warranty: 
(3) 
The expiration of a motor vehicle owner's current motor vehicle 
manufacturer's original equipment warranty: or 
(4) A requirement that a motor vehicle owner register for a new motor vehicle 
service contract with the provider in order to maintain coverage under the motor 
vehicle owner's current motor vehicle service contract or manufacturer's original 
equipment warranty. 
2. Cease and desist order. The superintendent may issue a cease and desist order 
pursuant to section 12-A, subsection 2 if, after a hearing, the superintendent finds that any 
person in the State has engaged or is engaging, or that a resident of the State has engaged 
or is engaging in another state, in an unfair or deceptive practice not described in this 
chapter or in rules adopted pursuant to this chapter. For any practice not described in this 
chapter or in rules adopted pursuant to this chapter, the civil penalties set forth in section 
12-A. subsection 1 may not be imposed for practice engaged in prior to the issuance and 
service of a valid cease and desist order. 
§7111. Rule-making authority 
The superintendent may adopt rules necessary to implement this chapter. Rules 
adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 
375, subchapter 2-A. 
§7112. Transition 
The exemptions in section 7101, subsection 3 are effective immediately upon the 
effective date of this chapter and extend to contracts that are already in force. All other 
service contracts entered into, renewed or offered for sale in this State on or after January 
1, 2012 must comply with this chapter. The exemptions in section 7101, subsection 4 
apply to all service contracts entered into, renewed or offered for sale on or after the 
provider's registration date. 
COMMITTEE AMENDMENT 
~.,,~. 
COMMITTEE AMENDMENT "A" to H.P. I J09, L.D. 1507 
Sec. 5. Election before January 1, 2012. A service contract provider may elect 
to implement the requirements of the Maine Revised Statutes, Title 24-A, chapter 89 
before January 1,2012. If a provider applies for registration with the Superintendent of 
Insurance on or before December 31, 2011, it may elect to make its in-force contracts 
subj ect to the requirements of Title 24-A, chapter 89. If a provider conforms its in-force 
contracts to the requirements and sends notice to all of its existing contract holders in this 
State making the required disclosures on or before December 31, 2011, the exemptions in 
Title 24-A, section 7101, subsection 4 apply to all service contracts entered into, renewed 
or offered for sale before the provider's registration date. 
Sec. 6. Appropriations and allocations. The following appropriations and 
allocations are made. 
PROFESSIONAL AND FINANCIAL REGULATION, DEPARTMENT OF 
Administrative Services - Professional and Financial Regulation 0094 
Initiative: Allocates funds for costs related to the review of service contract provider or 
administrator initial and renewal registrations. 
OTHER SPECIAL REVENUE FUNDS 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
Insurance - Bureau of 0092 
2011-12 
$3,159 
$3,159 
2012-13 
$4,012 
$4,012 
Initiative: Allocates funds for one half-time Assistant Insurance Analyst position and 
related costs to review service contract provider or administrator initial and renewal 
registrations. 
OTHER SPECIAL REVENUE FUNDS 
POSITIONS - FTE COUNT 
Personal Services 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
PROFESSIONAL AND FINANCIAL 
REGULATION, DEPARTMENT OF 
DEPARTMENT TOTALS 
OTHER SPECIAL REVENUE FUNDS 
DEPARTMENT TOTAL-ALL FUNDS 
2011-12 
0.500 
$25,600 
$1,621 
$27,221 
2011-12 
$30,380 
$30,380 
Sec. 7. Effective date. This Act takes effect January 1,2012.' 
COMMITTEE AMENDMENT 
2012-13 
0.500 
$38,809 
$1,809 
$40,618 
2012-13 
$44,630 
$44,630 
COMMITTEE AMENDMENT '4" to H.P. 1109, L.D. 1507 
SUMMARY 
This amendment replaces the bill. The amendment creates a statutory framework 
within which service contracts are defined and regulated by the Superintendent of 
Insurance within the Maine Revised Statutes, Title 24-A. The bill allocates the statutory 
provisions to Title 10. The amendment provides that service contracts are not insurance 
and are not subject to the insurance laws, but prohibits the sale of service contracts in the 
State unless a service contract provider or administrator registers with the Superintendent 
of Insurance and meets the requirements set forth in the amendment. The amendment 
prohibits unfair or deceptive acts and practices in connection with the marketing, sale, 
offering for sale, issuance, making, proposing to make or administration or solicitation of 
a service contract and clarifies the enforcement authority of the Superintendent of 
Insurance with regard to violations. The amendment also makes changes to conform to 
the provisions of the National Association ofInsurance Commissioners Service Contracts 
Model Act. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
• 
Approved: OS/27/11 .::tvac.. 
LD 1507 
LR2119(02) 
An Act Regarding Service Contracts 
Fiscal Note for Bill as Amended by Committee Amendment '4" 
Committee: Insurance and Financial Services 
Appropriations! Allocations 
Other Special Revenue Funds 
Revenue 
Other Special Revenue Funds 
Correctional and Judicial Impact Statements 
Establishes new civil violations. 
Fiscal Note Required: Yes 
Fiscal Note 
FY 2011-12 
FY 2012-13 
$30,380 
$44,630 
$30,380 
$44,630 
Projections 
FY 2013-14 
$46,974 
$46,974 
The collection of additional fines may also increase General Fund revenue by minor amounts. 
Fiscal Detail and Notes 
Projections 
FY 2014-15 
$49,460 
$49,460 
Provides the Bureau ofInsurance in the Department of Professional and Financial Regulation with an Other Special 
Revenue Funds allocation of $27,221 in 2011-12 and $40,618 in 2012-13 for the costs of one half-time Assistant 
Insurance Analyst position and related costs to review service contract provider or administrator initial and renewal 
registrations. Also provides the Administrative Services Division in the Department of Professional and Financial 
Regulation with an Other Special Revenue Funds allocation of$3, 159 in 2011-12 and $4,012 in 2012-13 for this 
purpose. The bill establishes a service contract provider or administrator annual registration fee of $200 to cover 
these costs. 
LR2119(02) - Fiscal Note - Page 1 of 1