2023 Colorado Revised Statutes › Title 10 - INSURANCE (§§ 10-1-101 — 10-23-110) › PROPERTY AND CASUALTY INSURANCE (§§ 10-4-101 — 10-4-1909) › Article 4 - PROPERTY AND CASUALTY INSURANCE (§§ 10-4-101 — 10-4-1909) › Part 16 - CONSUMER GOODS SERVICE CONTRACTS (§§ 10-4-1601 — 10-4-1609) › Section 10-4-1603 - Requirements for sale of consumer goods service contracts - definitions

(1)
A provider may appoint an administrator or other designee to be responsible for any or all of the administration of service contracts issued by the provider and for compliance with this part 16.
(2)
A provider shall not issue, sell, or offer for sale a service contract unless the provider has:
(a)
Provided a receipt for, or other written evidence of, the purchase of the service contract to the contract holder; and
(b)
Provided a copy of the service contract to the service contract holder before or within a reasonable period of time after the date of purchase.
(3)
Upon a consumer's request, a provider shall provide the consumer with a complete sample copy of the service contract terms and conditions or direct the consumer to a website containing a complete sample of the terms and conditions of the service contract.
(4)
(a)
A provider shall assure faithful performance to its service contract holders by complying with one or more of the following:
(I)
Insuring all service contracts under a reimbursement insurance policy issued by a licensed insurer; or
(II)
Maintaining, or together with its parent company maintaining, a net worth or stockholders' equity of at least one hundred million dollars.
(b)
For the purposes of subparagraph (II) of paragraph (a) of this subsection (4), a provider shall:
(I)
Upon the commissioner's request, provide a copy of the provider's or provider's parent company's most recent form 10-K or form 20-F filed with the federal securities and exchange commission; or
(II)
If the company does not file with the federal securities and exchange commission, provide, upon the commissioner's request, a copy of the company's audited financial statements showing a net worth of the provider or its parent company of at least one hundred million dollars; or
(III)
If the provider's parent company's form 10-K, form 20-F, or financial statements are filed to meet the requirements of this subsection (4), agree to guarantee the obligations of the provider relating to service contracts sold by the provider in this state.
(c)
Except for the requirements set forth in this subsection (4), the commissioner shall require no other financial security requirements for service contract providers.
(5)
(a)
A provider must permit the service contract holder to void the service contract by returning it within twenty days after the date the service contract is mailed to the service contract holder or within ten days after delivery if the service contract is delivered to the service contract holder at the time of sale. The service contract is void when the service contract holder returns the service contract to the provider, and the provider shall refund to the service contract holder, or credit the account of the contract holder, the full purchase price of the service contract.
(b)
A service contract may establish a return period greater than twenty days.
(c)
The right to void the service contract is not transferable and applies only to the original service contract purchaser.
(d)
The right to void the service contract does not apply if a claim has been made prior to the return of the service contract to the provider.
(e)
If a refund of a service contract provider fee is not paid or credited within forty-five days after the return of the service contract under this subsection (5), then a ten percent penalty per month shall be added to the refund.
(6)
(a)
After the time specified in subsection (5) of this section, or if a claim has been made within that time, a service contract holder may cancel the service contract. Upon cancellation, the provider shall refund to the contract holder one hundred percent of the unearned pro rata provider fee, less any claims made.
(b)
A provider may charge a reasonable administrative fee, not to exceed ten percent of the gross provider fee paid by the service contract holder.
(7)
(a)
The provider may cancel a service contract upon mailing, at least five days prior to the date of cancellation, a written notice to the service contract holder at the contract holder's last-known address contained in the provider's records. The notice must state the effective date of the cancellation and the reason for the cancellation.
(b)
Prior notice is not required if the reason for cancellation is nonpayment of the provider fee, a material misrepresentation by the service contract holder to the provider, or a substantial breach by the service contract holder relating to the covered product or its use.
(c)
If the provider cancels a service contract for a reason other than nonpayment of the provider fee, the provider shall refund to the service contract holder one hundred percent of the unearned pro rata provider fee, less any claims paid.
(8)
(a)
Provider fees collected on service contracts are not subject to premium taxes.
(b)
Premiums for reimbursement insurance policies are subject to applicable taxes.
(9)
(a)
Providers, related service contract sellers, and administrators are exempt from any licensing requirements of this state set forth in this title.
(b)
(I)
Each provider of service contracts sold in Colorado shall register with the commissioner. The registration must contain the provider's name, full corporate address, telephone number, and the name of an individual contact person. In addition, the provider shall designate an agent for service of process in Colorado. The provider shall give the commissioner written notice of any change in this information within thirty days after the change.
(II)
Upon initial registration, and annually thereafter, each provider that registers pursuant to this paragraph (b) shall pay to the commissioner a fee, set by the commissioner, in an amount sufficient to defray the commissioner's direct and indirect costs of administering this part 16 and subject to periodic adjustment in accordance with section
24-75-402
, C.R.S.
(10)
With the exception of the requirements set forth in this part 16, the marketing, sale, offering for sale, issuance, making, proposing to make, and administration of service contracts by providers, related service contract sellers, and administrators are exempt from the requirements of this title.
Added by 2014 Ch. 204, § 2, eff. 1/1/2015.
L. 2014: Entire part added, (HB 14-1199), ch. 204, p. 744, § 2, effective 1/1/2015.