AB370 - Revises provisions relating to service contracts. (BDR 57-517)

A.B. 370 - *AB370* ASSEMBLY BILL NO. 370–COMMITTEE ON COMMERCE AND LABOR (ON BEHALF OF THE JOINT INTERIM STANDING COMMITTEE ON COMMERCE AND LABOR) MARCH 6, 2025 ____________ Referred to Committee on Commerce and Labor SUMMARY—Revises provisions relating to service contracts. (BDR 57-517) FISCAL NOTE: Effect on Local Government: No. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to service contracts; requiring the Division of Insurance of the Department of Business and Industry to establish a toll-free telephone number for receiving certain complaints concerning providers of service contracts; requiring the Commissioner of Insurance to establish a system for rating providers of service contracts based on certain criteria; requiring certain information to be included in a service contract; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law provides for the registration and regulation of providers of service 1 contracts by the Commissioner of Insurance. (Chapter 690C of NRS) Existing law 2 and regulations require certain information to be included in a service contract. 3 (NRS 690C.260; NAC 690C.110) Existing regulations require a service contract to 4 include, among other things, a statement that if the holder of the service contract is 5 not satisfied with the manner in which the provider is handling a claim on the 6 contract, the holder may contact the Commissioner at the toll-free telephone 7 number of the Division of Insurance of the Department of Business and Industry. 8 (NAC 690C.110) Sections 2 and 4 of this bill incorporate similar requirements into 9 statute. Section 2 requires the Division to establish and post on the Internet website 10 of the Division a toll-free telephone number for receiving complaints concerning 11 the manner in which a provider is handling a claim on a service contract. Section 4 12 requires a service contract to include a statement setting forth that toll-free 13 telephone number and indicating that the holder of the service contract may contact 14 – 2 – - *AB370* the Division at that telephone number if the holder is not satisfied with the manner 15 in which the provider is handling a claim on the contract. 16 Section 3 of this bill requires the Commissioner to adopt regulations 17 establishing a system for rating each provider doing business in this State on the 18 compliance by the provider with the provisions of existing law and regulations 19 governing service contracts and the number of complaints received by the Division 20 concerning the provider. Section 3 sets forth certain requirements for these 21 regulations, including the requirement that the rating system must provide for the 22 assignment of a star rating of not more than five stars and not less than one star to 23 each provider, and that the Division is required to post the most recent star rating 24 assigned to each provider on the Internet website of the Division. 25 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 690C of NRS is hereby amended by adding 1 thereto the provisions set forth as sections 2 and 3 of this act. 2 Sec. 2. The Division shall establish a toll-free telephone 3 number for receiving complaints from consumers concerning the 4 manner in which a provider is handling a claim on a service 5 contract. The Division shall post the toll-free telephone number on 6 the Internet website of the Division. 7 Sec. 3. 1. The Commissioner shall adopt regulations 8 establishing a system for rating each provider doing business in 9 this State on the compliance by the provider with the provisions of 10 this chapter and the regulations adopted pursuant thereto and the 11 number of complaints received by the Division concerning the 12 provider. The regulations must: 13 (a) Require the rating system to provide for the assignment of 14 a star rating of not more than five stars and not less than one star 15 to each provider. 16 (b) Set forth the methods and procedures by which the 17 Commissioner will evaluate the compliance of the provider with 18 the provisions of this chapter and the regulations adopted 19 pursuant thereto and the number of complaints received by the 20 Division concerning the provider for the purpose of assigning a 21 star rating to the provider. 22 (c) Provide for a new evaluation to be conducted of and a new 23 star rating to be assigned to each provider periodically in 24 accordance with a schedule prescribed by the Commissioner. 25 (d) Set forth procedures by which a provider may appeal a star 26 rating assigned to the provider. 27 2. The Division shall post on the Internet website of the 28 Division the most recent star rating assigned to each provider 29 doing business in this State pursuant to the regulations adopted 30 pursuant to subsection 1. 31 – 3 – - *AB370* Sec. 4. NRS 690C.260 is hereby amended to read as follows: 1 690C.260 1. A service contract must: 2 (a) Be written in language that is understandable and printed in a 3 typeface that is easy to read. 4 (b) Indicate that it is insured by a contractual liability insurance 5 policy if it is so insured, and include the name and address of the 6 issuer of the policy or that it is backed by the full faith and credit of 7 the provider if the service contract is not insured by a contractual 8 liability insurance policy. 9 (c) Include the amount of any deductible that the holder is 10 required to pay. 11 (d) Include the name and address of the provider and, if 12 applicable: 13 (1) The name and address of the administrator; and 14 (2) The name of the holder, if provided by the holder. 15  The names and addresses of such persons are not required to be 16 preprinted on the service contract and may be added to the service 17 contract at the time of the sale. 18 (e) Include the purchase price of the service contract. The 19 purchase price must be determined pursuant to a schedule of fees 20 established by the provider. The purchase price is not required to be 21 preprinted on the service contract and may be negotiated with the 22 holder and added to the service contract at the time of sale. 23 (f) Include a description of the goods covered by the service 24 contract. 25 (g) Specify the duties of the provider and any limitations, 26 exceptions or exclusions. 27 (h) If the service contract covers a motor vehicle, indicate 28 whether replacement parts that are not made for or by the original 29 manufacturer of the motor vehicle may be used to comply with the 30 terms of the service contract. 31 (i) Include any restrictions on transferring or renewing the 32 service contract. 33 (j) Include the terms, restrictions or conditions for cancelling the 34 service contract before it expires and the procedure for cancelling 35 the service contract. The conditions for cancelling the service 36 contract must include, without limitation, the provisions of 37 NRS 690C.270. 38 (k) Include the duties of the holder under the contract, including, 39 without limitation, the duty to protect against damage to the goods 40 covered by the service contract or to comply with any instructions 41 included in the owner’s manual for the goods. 42 (l) Indicate whether the service contract authorizes the holder to 43 recover consequential damages. 44 – 4 – - *AB370* (m) Indicate whether any defect in the goods covered by the 1 service contract existing on the date the contract is purchased is not 2 covered under the service contract. 3 (n) Include a statement, written in plain language and in a 4 font size that is not smaller than the font size used for the majority 5 of the text in the service contract, indicating that if the holder is 6 not satisfied with the manner in which the provider handles a 7 claim on the contract, the holder may contact the Commissioner 8 by use of the toll-free telephone number of the Division 9 established pursuant to section 2 of this act. The statement must 10 include the current toll-free telephone number established 11 pursuant to section 2 of this act that is posted on the Internet 12 website of the Division. 13 2. A provider shall not allow, make or cause to be made a false 14 or misleading statement in any of the service contracts of the 15 provider or intentionally omit a material statement that causes a 16 service contract to be misleading. The Commissioner may require 17 the provider to amend any service contract that the Commissioner 18 determines is false or misleading. 19 H