AB231 - Requires certain service contracts to impose certain duties upon the provider of the service contract. (BDR 57-655)

(Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT A.B. 231 - *AB231_R1* ASSEMBLY BILL NO. 231–ASSEMBLYMEMBERS HUNT; D’SILVA AND JACKSON FEBRUARY 10, 2025 ____________ JOINT SPONSOR: SENATOR NEAL ____________ Referred to Committee on Commerce and Labor SUMMARY—Requires certain service contracts to impose certain duties upon the provider of the service contract. (BDR 57-655) FISCAL NOTE: Effect on Local Government: No. Effect on the State: No. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to insurance; requiring certain service contracts to impose certain duties upon the provider of the service contract; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law provides for the regulation of providers of service contracts by the 1 Commissioner of Insurance. (Chapter 690C of NRS) Existing law requires that a 2 service contract specify the duties of the provider and any limitations, exceptions or 3 exclusions. (NRS 690C.260) This bill sets forth certain duties of a provider of a 4 home warranty service contract, which this bill defines to mean a service contract 5 that covers only the structural components, appliances or home systems of a 6 residence. This bill requires the duties of a provider of a home warranty service 7 contract set forth in the contract to include, without limitation, the duty to ensure 8 that: (1) any goods, other than an air conditioner, furnace or heater in a home or 9 dwelling, covered under the service contract are restored to sound working 10 condition within 14 business days after receiving notice that the goods are 11 defective; and (2) any goods which are restored and become defective within 14 12 business days after the date on which the goods were restored are restored within 2 13 business days after receiving notice that the goods are defective. With respect to an 14 air conditioner, furnace or heater in a home or dwelling that is covered under a 15 service contract, this bill requires a service contract to provide that the provider has 16 the duty to: (1) ensure that the air conditioner, furnace or heater is restored to sound 17 working condition within 5 business days after receiving notice that the air 18 conditioner, furnace or heater is defective; and (2) if the provider fails to do so, 19 – 2 – - *AB231_R1* provide the holder with a per diem allowance for lodging until the air conditioner, 20 furnace or heater is restored. 21 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. NRS 690C.260 is hereby amended to read as 1 follows: 2 690C.260 1. A service contract must: 3 (a) Be written in language that is understandable and printed in a 4 typeface that is easy to read. 5 (b) Indicate that it is insured by a contractual liability insurance 6 policy if it is so insured, and include the name and address of the 7 issuer of the policy or that it is backed by the full faith and credit of 8 the provider if the service contract is not insured by a contractual 9 liability insurance policy. 10 (c) Include the amount of any deductible that the holder is 11 required to pay. 12 (d) Include the name and address of the provider and, if 13 applicable: 14 (1) The name and address of the administrator; and 15 (2) The name of the holder, if provided by the holder. 16  The names and addresses of such persons are not required to be 17 preprinted on the service contract and may be added to the service 18 contract at the time of the sale. 19 (e) Include the purchase price of the service contract. The 20 purchase price must be determined pursuant to a schedule of fees 21 established by the provider. The purchase price is not required to be 22 preprinted on the service contract and may be negotiated with the 23 holder and added to the service contract at the time of sale. 24 (f) Include a description of the goods covered by the service 25 contract. 26 (g) Specify the duties of the provider and any limitations, 27 exceptions or exclusions. If the service contract is a home warranty 28 service contract, the duties of the provider must include, without 29 limitation, the duty to: 30 (1) Except as otherwise provided in subparagraphs (2) and 31 (3), ensure that any goods described in the service contract that 32 the provider is obligated to repair or replace in the event the goods 33 become defective are restored within 14 business days after 34 receiving notice from the holder that the goods are defective. 35 (2) Except as otherwise provided in subparagraph (3), 36 ensure that any air conditioner, furnace or heater in a home or 37 dwelling that the provider is obligated to repair or replace in the 38 event that the air conditioner, furnace or heater becomes defective 39 – 3 – - *AB231_R1* is restored within 5 business days after receiving notice from the 1 holder that the air conditioner, furnace or heater is defective. If 2 the provider fails to restore the air conditioner, furnace or heater 3 within that period, the provider shall provide to the holder a per 4 diem allowance for lodging at the same rate as the comparable 5 rate established for employees of the Federal Government by the 6 Administrator of General Services pursuant to 5 U.S.C. § 5707 7 until the air conditioner, furnace or heater is restored. 8 (3) If the provider restores any goods and the goods become 9 defective within 14 business days after the date on which the goods 10 were restored, ensure that the goods are restored within 2 business 11 days after receiving notice from the holder that the goods are 12 defective. 13 (h) If the service contract covers a motor vehicle, indicate 14 whether replacement parts that are not made for or by the original 15 manufacturer of the motor vehicle may be used to comply with the 16 terms of the service contract. 17 (i) Include any restrictions on transferring or renewing the 18 service contract. 19 (j) Include the terms, restrictions or conditions for cancelling the 20 service contract before it expires and the procedure for cancelling 21 the service contract. The conditions for cancelling the service 22 contract must include, without limitation, the provisions of 23 NRS 690C.270. 24 (k) Include the duties of the holder under the contract, including, 25 without limitation, the duty to protect against damage to the goods 26 covered by the service contract or to comply with any instructions 27 included in the owner’s manual for the goods. 28 (l) Indicate whether the service contract authorizes the holder to 29 recover consequential damages. 30 (m) Indicate whether any defect in the goods covered by the 31 service contract existing on the date the contract is purchased is not 32 covered under the service contract. 33 2. A provider shall not allow, make or cause to be made a false 34 or misleading statement in any of the service contracts of the 35 provider or intentionally omit a material statement that causes a 36 service contract to be misleading. The Commissioner may require 37 the provider to amend any service contract that the Commissioner 38 determines is false or misleading. 39 3. As used in this section: 40 (a) “Home warranty service contract” means a service 41 contract that covers only the structural components, appliances or 42 home systems of a residence, including, without limitation, the 43 electrical, heating, cooling and plumbing systems and other 44 similar systems of a residence. 45 – 4 – - *AB231_R1* (b) “Restored” means restoration to a sound working 1 condition by replacing the goods or any part thereof, or by 2 correcting what is inoperative. 3 Sec. 2. The amendatory provisions of this act apply to service 4 contracts entered into on or after October 1, 2025. 5 H