S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   962

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            January 22, 2009
                               ___________

Introduced  by  Sen.  KRUGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to licensing requirements
  for persons who offer warranties for motor vehicles and appliances

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The insurance law is amended by adding a new article 21-A
to read as follows:
                               ARTICLE 21-A
                  ADMINISTRATION OF PRODUCT WARRANTIES
SECTION 2150. DEFINITIONS.
        2151. ADMINISTRATOR'S LICENSE REQUIRED.
        2152. PENALTIES.
        2153. PROMULGATION OF REGULATIONS.
  S 2150. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
  (A) "PERSON" MEANS ANY  INDIVIDUAL,  FIRM,  ASSOCIATION,  CORPORATION,
PARTNERSHIP,  JOINT-STOCK  COMPANY,  JOINT VENTURE, ANY OTHER ENTITY, OR
ANY AGGREGATION OF ANY OF THE FOREGOING.
  (B) "WARRANTY" MEANS ANY CONTRACT, WARRANTY OR GUARANTY, ANY  EXTENDED
WARRANTY OR SERVICE CONTRACT, OR ANY AGREEMENT THAT PROMISES REPLACEMENT
OR REPAIR OF COVERED PARTS IN THE EVENT OF THE BREAKDOWN OF SUCH PART IN
A  MOTOR  VEHICLE,  A MECHANICAL OR ELECTRONIC APPLIANCE, OFFERED TO THE
CONSUMER FOR A SEPARATELY STATED CHARGE AS AN INCIDENT TO THE SELLING OR
LEASING OF SUCH PRODUCTS.
  (C) "SELLER" MEANS ANY PERSON WHO SELLS A MOTOR VEHICLE OR  MECHANICAL
OR ELECTRONIC APPLIANCE TO A CONSUMER.
  (D)  "CONSUMER"  MEANS  A  PERSON WHO PURCHASES A PRODUCT FOR PURPOSES
OTHER THAN THE RESALE THEREOF AS PART OF HIS  OCCUPATIONAL  OR  BUSINESS
ACTIVITY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06799-01-9

              

S. 962                              2

  (E)  "ADMINISTRATOR"  MEANS ANY PERSON WHO ISSUES WARRANTIES ON BEHALF
OF THE SELLER, COLLECTS AND MAINTAINS CLAIMS REPAIR RESERVES, AND ADMIN-
ISTERS THE REPAIR OR REPLACEMENT OF PARTS PURSUANT TO THE TERMS  OF  THE
UNDERLYING WARRANTY.
  S  2151.  ADMINISTRATOR'S  LICENSE REQUIRED. (A) NO PERSON SHALL BE AN
ADMINISTRATOR OF WARRANTIES IN THIS STATE NOR SHALL  ANY  PERSON  BE  AN
ADMINISTRATOR  OF  WARRANTIES  OUTSIDE  THIS STATE FOR ANY PERSON WITHIN
THIS STATE UNLESS SUCH PERSON HAS BEEN LICENSED BY THE DEPARTMENT PURSU-
ANT TO THE PROVISIONS OF THIS ARTICLE.
  (B) THE DEPARTMENT SHALL ISSUE SUCH A LICENSE TO ANY APPLICANT  THERE-
FOR THAT MEETS THE FOLLOWING CRITERIA:
  (1)  THE  APPLICANT MUST SUBMIT TO THE DEPARTMENT A COMPLETED APPLICA-
TION ON A FORM TO BE PRESCRIBED BY THE DEPARTMENT TOGETHER WITH A FEE OF
FIVE HUNDRED DOLLARS;
  (2) THE APPLICANT, AND ITS OFFICERS AND  MANAGERS,  MUST  BE  OF  GOOD
CHARACTER AND EXHIBIT A BUSINESS HISTORY OF HIGH INTEGRITY;
  (3)  THE  APPLICANT  MUST INDICATE A NET WORTH, ACCORDING TO GENERALLY
ACCEPTED PRINCIPLES OF ACCOUNTING, OF NOT LESS THAN  ONE  HUNDRED  FIFTY
THOUSAND DOLLARS AT THE TIME OF THE MAKING OF THE APPLICATION;
  (4)  THE  APPLICANT  MUST  SWEAR  THAT HE WILL AT ALL TIMES DURING HIS
LICENSURE ACTUALLY MAINTAIN AN ADDRESS WITHIN THIS STATE FOR THE  TRANS-
ACTION  OF  BUSINESS  AND A LOCAL TELEPHONE NUMBER WITHIN THE STATE OR A
TOLL FREE TELEPHONE NUMBER FOR PURPOSES OF PROCESSING CLAIMS MADE BY NEW
YORK STATE CONSUMERS;
  (5) THE APPLICANT SHALL AGREE THAT HE WILL AT  ALL  TIMES  DURING  HIS
LICENSURE  MAINTAIN  IN FORCE AND EFFECT AN INSURANCE POLICY ISSUED ONLY
BY A LICENSED NEW YORK INSURER THAT GUARANTEES TO INDEMNIFY PROMPTLY THE
ADMINISTRATOR AND THE SELLER PERFORMING FOR THE  ADMINISTRATOR  AND  THE
PURCHASER  OF  THE WARRANTY IN THE EVENT OF THE LOSS OR DEPLETION OF THE
CLAIMS RESERVE ACCOUNT PAID TO AND HELD BY  THE  ADMINISTRATOR  FOR  THE
PAYMENT  OF  REPAIR CLAIMS UNDER THE TERMS AND CONDITIONS OF THE WARRAN-
TIES. SUCH POLICY SHALL  BE  AUTHORIZED  IN  THE  FORM  OF  "CONTRACTUAL
LIABILITY"  INSURANCE,  OR IN SUCH OTHER FORM AS APPROVED BY THE DEPART-
MENT, AND SHALL BE ISSUED TO THE ADMINISTRATOR, AND SHALL GUARANTEE  THE
PERFORMANCE  OF  THE  ADMINISTRATOR  TO THE SELLER AND THE PURCHASER AND
GUARANTEE THAT THE CLAIMS RESERVES PAID TO THE  ADMINISTRATOR  SHALL  AT
ALL  TIMES  BE  ADEQUATE  TO PAY FOR ALL REPAIR CLAIMS ARISING UNDER THE
WARRANTIES. PROOF OF SUCH INSURANCE SHALL BE PROVIDED BY THE ADMINISTRA-
TOR TO EACH SELLER. THE APPLICANT SHALL PROVIDE THE DEPARTMENT WITH  THE
NAME  OF THE INSURER PROVIDING THE POLICY ON HIS APPLICATION.
  S  2152.  PENALTIES.  ANY  PERSON  WHO VIOLATES THE PROVISIONS OF THIS
ARTICLE SHALL BE GUILTY OF A MISDEMEANOR PUNISHABLE BY A FINE OF  UP  TO
FIVE  HUNDRED  DOLLARS  FOR  THE  FIRST VIOLATION AND UP TO ONE THOUSAND
DOLLARS AND A TERM OF IMPRISONMENT OF UP TO ONE YEAR FOR EACH SUCCEEDING
VIOLATION.
  S 2153. PROMULGATION OF REGULATIONS. THE DEPARTMENT  SHALL  PROMULGATE
ALL RULES AND REGULATIONS NECESSARY TO EFFECTUATE THE PROVISIONS OF THIS
ARTICLE.
  S  2. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law, except that any  rules
and  regulations  necessary for the timely implementation of this act on
its effective date shall be promulgated on or before such date.