Montana Code 30-14-1302. Requirements for conducting business
30-14-1302. Requirements for conducting business. (1) A provider may appoint an administrator or other designee to be responsible for any or all of the administration of service contracts or vehicle theft protection product warranties in compliance with this part.
Terms Used In Montana Code 30-14-1302
- Administrator: means the person who is responsible for the administration of service contracts. See Montana Code 30-14-1301
- Contract: A legal written agreement that becomes binding when signed.
- Department: means the department of justice provided for in 2-15-2001. See Montana Code 30-14-1301
- Provider: means a person who is contractually obligated to the service contract holder or vehicle theft protection product warranty holder under the terms of the service contract or vehicle theft protection product warranty. See Montana Code 30-14-1301
- Reimbursement insurance policy: means a policy of insurance issued to a provider to either provide 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, to pay 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. See Montana Code 30-14-1301
- 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 of property if an operational or structural failure is due to a defect in materials or manufacturing or to normal wear and tear, with or without an additional provision for incidental payment or indemnity under limited circumstances, including but not limited to towing, rental, and emergency road service. See Montana Code 30-14-1301
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See Montana Code 1-1-201
- Vehicle theft protection product: means a device or system that:
(i)is installed on or applied to a motor vehicle;
(ii)is designed to prevent loss or damage to a motor vehicle from theft; and
(iii)includes a vehicle theft protection product warranty. See Montana Code 30-14-1301
- Vehicle theft protection product warranty: means a written agreement by a warrantor that provides that if the vehicle theft protection product fails to prevent loss or damage to a motor vehicle from theft, then the warrantor will pay to or on behalf of the vehicle theft protection product warranty holder specified incidental costs as a result of the failure of the vehicle theft protection product to perform pursuant to the terms of the written agreement. See Montana Code 30-14-1301
(2)Service contracts or vehicle theft protection product warranties may not be issued, sold, or offered for sale in the state unless the provider complies with the requirements of one of the following three provisions:
(a)insures all service contracts or vehicle theft protection product warranties under a reimbursement insurance policy issued by an insurer that is licensed, registered, or otherwise authorized to do business in the state and either:
(i)at the time the policy is issued and during the duration of the policy, maintains a surplus as to policyholders and paid-in capital of at least $15 million and annually files copies of the insurer’s financial statements, its national association of insurance commissioners annual statement, and any actuarial certification required by and filed in the insurer’s state of domicile; or
(ii)at the time the policy is issued and during the duration of the policy, maintains a surplus as to policyholders and paid-in capital of less than $15 million but at least equal to or greater than $10 million and:
(A)upon request of the department, demonstrates that the company maintains a ratio of net written premiums, whenever written, to surplus as to policyholders and paid-in capital of not greater than 3-to-1; and
(B)annually files copies of the insurer’s audited financial statements, its national association of insurance commissioners annual statement, and any actuarial certification required by and filed in the insurer’s state of domicile;
(b)(i) maintains a funded reserve account, which may be subject to examination and review by the department, for its obligations under its contracts issued and outstanding in this state, the reserves of which may not be less than 40% of gross consideration received, less claims paid, on the sale of the service contract or vehicle theft protection product warranty for all service contracts or vehicle theft protection product warranties issued and in force;
(ii)maintains a financial security deposit having a value of not less than 5% of the gross consideration received, less claims paid, on the sale of the service contract or vehicle theft protection product for all service contracts or vehicle theft protection product warranties issued and in force, but not less than $25,000 and consisting of one of the following:
(A)a surety bond issued by an authorized surety;
(B)securities of the type eligible for deposit by authorized insurers in this state;
(C)cash; or
(D)a letter of credit issued by a qualified financial institution; or
(c)maintains, either alone or with its parent company, a net worth of stockholders’ equity of $100 million and provides the department, upon request, with:
(i)a copy of the provider’s or the provider’s parent company’s most recent Form 10-K or Form 20-F filed with the securities and exchange commission within the last calendar year; or
(ii)if the company does not file with the securities and exchange commission, a copy of the company’s audited financial statements showing a net worth of the provider or its parent company of at least $100 million.
(3)If information requested in subsection (2)(c)(i) or (2)(c)(ii) comes from the provider’s parent company, then the parent company shall agree to guarantee the obligations of the provider relating to service contracts sold by the provider in this state.
(4)Except for the requirements provided in subsection (2), no other financial security requirements may be required.
(5)The marketing, sale, offering for sale, issuance, making, proposing to make, and administration of service contracts or vehicle theft protection products by the providers and related service contract or vehicle theft protection product sellers, administrators, and other persons are exempt from all provisions in Title 33, as provided in 33-1-102(10).