Vermont Statutes Title 8 Sec. 4249
Terms Used In Vermont Statutes Title 8 Sec. 4249
- Commissioner: means the Commissioner of Financial Regulation. See
- Contract: A legal written agreement that becomes binding when signed.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- following: when used by way of reference to a section of the law shall mean the next preceding or following section. See
- Provider: means a person who issues, makes, or provides a service contract, and who is contractually obligated to provide service under a service contract and is not the manufacturer. See
- Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
- said: when used by way of reference to a person or thing shall apply to the same person or thing last mentioned. See
- Service contract: means any contract or agreement to perform or indemnify for a specific duration the repair, replacement, or maintenance of property for operational or structural failure due to a defect in materials, workmanship, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances, including towing, rental, and emergency road service. See
- Service contract reimbursement policy: means a policy of insurance providing full reimbursement coverage for all obligations and liabilities under the terms of a service contract issued by the provider. See
- State: when applied to the different parts of the United States may apply to the District of Columbia and any territory and the Commonwealth of Puerto Rico. See
§ 4249. Proof of financial stability
(a) In order to ensure the performance of a provider‘s obligations to its contract holders, each provider shall continue to possess and provide the Commissioner the following documents as proof of financial stability:
(1)(A) a surety bond, securities of the type eligible for deposit by an authorized insurer in this State, cash, or letter of credit in a form acceptable to the Commissioner, which shall have at all times a value of not less than five percent of the gross annual consideration from all service contracts issued and in force, but in no case to be less than $25,000.00. Such bond, securities, cash, or letter of credit shall be maintained unimpaired as long as the provider continues to do business in this State. When the provider ceases to do business in this State and has furnished the Commissioner proof that it has discharged all its obligations to its service contract holders in this State, the Commissioner shall release said bond, cash, or letter of credit; and
(B) a funded reserve account for its liability under its service contracts issued and outstanding in this State. Such reserve shall at all times be not less than 40 percent of all consideration received, less claims paid, on in force contracts. Such reserve accounts shall be subject to examination and review by the Commissioner upon a request; or
(2) evidence that all of its service contracts are insured through the purchase of a service contract reimbursement policy issued by an insurer that files annually with the National Association of Insurance Commissioners a financial statement prepared in accordance with the accounting practices and procedures required or permitted by their domiciliary regulatory authority and a corresponding audit report that reflects:
(A) capital and surplus of $5,000,000.00 or more;
(B) written premiums not exceeding three times capital and surplus over the most recent five years; and
(C) profitable operations over the most recent five years; or
(3) a copy of the provider’s financial statement or, if the provider’s financial statement is consolidated with those of a parent company or affiliate, the provider’s parent company or affiliate’s financial statement, for the most recent calendar year which shows a net worth of the provider or its parent company or affiliate of at least $50 million. The financial statement shall contain information relating to the general financial condition, ownership, and management of the provider and its controlling parent organization, the identity of the controlling entity, if applicable, and any reinsurance agreements covering all or substantially all of the ceded service contracts. A Form 10-K filed with the Securities and Exchange Commission within the last calendar year may be filed to meet the financial stability filing requirement.
(b) If the provider’s parent or affiliate company’s financial statement is filed with the Commissioner pursuant to subdivision (a)(3) of this section as evidence of a net worth of at least $50 million, the parent or affiliate company shall agree, on a form prescribed by the Commissioner, to guarantee the provider’s obligations relating to service contracts sold by the provider in this State.
(c) The Commissioner may, upon review of the business activities of a provider, determine that the amounts set forth in this section are inadequate for protection of the public, and may require additional assurances of financial stability.
(d) In the event that the Department recovers funds from service contract providers, the Commissioner in his or her discretion may distribute such funds in a manner that he or she determines is equitable and cost-effective, giving due consideration to the amount of funds recovered, the estimated amounts due to consumers, and the costs of administering any distribution. Distributions may be allocated based on claims made, premiums, or the number of consumers affected. If the Commissioner determines that it would be prohibitively expensive or impossible to make restitution to consumers, the recovered funds will be remitted to the General Fund. (Added 1997, No. 109 (Adj. Sess.), § 2, eff. Sept. 1, 1998; amended 2005, No. 122 (Adj. Sess.), § 2.)