Citations Affected: IC 8-2.1; IC 9-24; IC 9-25; IC 27-18; noncode.
Synopsis: Motor vehicles and insurance. Specifies requirements for
financial responsibility and licensure of a contract carrier that
transports railroad employees. Specifies requirements for suspension
and reinstatement of a driver's license related to convictions or
judgments for operating a motor vehicle without financial
responsibility. Provides for registration of a vehicle protection product
warrantor and specifies requirements for sale of vehicle protection
Effective: July 1, 2008.
January 8, 2008, read first time and referred to Committee on Insurance and Financial
January 24, 2008, amended, reported favorably _ Do Pass.
January 28, 2008, read second time, ordered engrossed.
January 29, 2008, engrossed. Read third time, passed. Yeas 45, nays 2.
A BILL FOR AN ACT to amend the Indiana Code concerning
under 49 U.S.C. 13906(a)(1).
(b) A person who violates this section commits a Class C infraction. However, the offense is a Class A misdemeanor if the person has a prior unrelated judgment for violating this section.
(c) In addition to any other penalty imposed upon a person for a conviction of a Class A misdemeanor under subsection (b), the law enforcement agency may impound the vehicles owned by the person. Unless the vehicle is impounded or forfeited under a law other than this section, the vehicle shall be released to the carrier when the carrier complies with this section.
section, the court shall recommend the suspension of the person's
driving privileges for one (1) year; or
(2) two (2) or more prior unrelated convictions or judgments under this section, the court may recommend the suspension of the person's driving privileges for not more than five (5) years.
In determining the period of suspension imposed under subdivision (2), the court shall consider all relevant circumstances concerning the person's unlawful operation of the motor vehicle, including whether the person was involved in an accident and whether the accident caused property damage or serious bodily injury.
(d) In addition to any other penalty imposed on a person for violating this section, if:
(1) the person was involved in an accident that resulted in the death of a person; and
(2) the person had one (1) or more prior unrelated convictions or judgments under this section within the five (5) years preceding the conviction or judgment under this section;
the court shall recommend the suspension of the person's driving privileges for ten (10) years.
(d) (e) Upon receiving the recommendation of the court under
subsection (c) or (d), the bureau shall suspend the person's driving
privileges for the period recommended by the court.
ARTICLE 18. VEHICLE PROTECTION PRODUCTS
Chapter 1. Definitions
Sec. 1. The definitions in this chapter apply throughout this article.
Sec. 2. "Administrator" means a third party other than the warrantor that is designated by the warrantor to be responsible for the administration of vehicle protection product warranties.
Sec. 3. "Commissioner" refers to the insurance commissioner appointed under IC 27-1-1-2.
Sec. 4. "Department" refers to the department of insurance created by IC 27-1-1-1.
Sec. 5. "Incidental costs" means the expenses specified in the warranty that are incurred by the warranty holder related to the failure of the vehicle protection product to perform as provided in the warranty. Incidental costs include:
(1) insurance policy deductibles;
(2) rental vehicle charges;
(3) the difference between the:
(A) actual value of the stolen vehicle at the time of theft; and
(B) cost of a replacement vehicle;
(4) sales taxes;
(5) registration fees;
(6) transaction fees; and
(7) mechanical inspection fees.
Sec. 6. "Vehicle protection product" means a product that is designed to prevent the loss of or damage to a vehicle resulting from theft.
Sec. 7. (a) "Vehicle protection product warrantor" or "warrantor" means a person that is contractually obligated to the warranty holder under the terms of the vehicle protection product warranty agreement.
(b) The term does not include an authorized insurer providing a warranty reimbursement insurance policy.
Sec. 8. "Vehicle protection product warranty" or "warranty" means a written agreement by a warrantor that provides that if the vehicle protection product fails to prevent the loss of or damage to a vehicle from a specific cause, the warrantor will pay to or on behalf of the warranty holder specified incidental costs as a result of the failure of the vehicle protection product to perform under the terms of the warranty.
Sec. 9. "Warranty holder" means a person that:
(1) purchases a vehicle protection product; or
(2) is a permitted transferee of a vehicle protection product.
Sec. 10. "Warranty reimbursement insurance policy" means a policy of insurance that is issued to the vehicle protection product warrantor to:
(1) provide reimbursement to the warrantor for; or
(2) pay on behalf of the warrantor;
all covered contractual obligations incurred by the warrantor under the terms and conditions of the vehicle protection product warranties issued by the warrantor.
Chapter 2. Applicability
Sec. 1. A vehicle protection product may not be sold or offered for sale unless a seller, warrantor, or administrator complies with this article.
Sec. 2. A warranty, indemnity agreement, or guarantee that is not provided as a part of a vehicle protection product is not subject to the provisions of this article.
Chapter 3. Registration of Vehicle Protection Product Warrantors
Sec. 1. Except as provided in section 5 of this chapter, a person may not:
(1) operate as a warrantor; or
(2) represent to the public that the person is a warrantor;
unless the person is registered with the department under this chapter.
Sec. 2. (a) A person who:
(1) operates as a warrantor; or
(2) represents to the public that the person is a warrantor;
must register with the department by filing an application on a form prescribed by the commissioner.
(b) An application filed under subsection (a) must contain the following information:
(1) The warrantor's name, any fictitious name under which the warrantor does business in Indiana, the principal location, mailing address, and telephone number of the warrantor, and corresponding information for any offices maintained in Indiana.
(2) The name and address of the agent of the warrantor for service of process in Indiana, if other than the warrantor.
(3) The names of the warrantor's executive officer or officers directly responsible for the warrantor's vehicle protection
(4) The name, address, and telephone number of any administrators designated by the warrantor to be responsible for the administration of vehicle protection product warranties.
(5) A copy of the warranty reimbursement insurance policy or policies or other financial information required by IC 27-18-4-1.
(6) A copy of each warranty that the warrantor proposes to use.
(7) A statement indicating under which subdivision of IC 27-18-4-1 the warrantor qualifies to do business as a warrantor.
Sec. 3. (a) A registration must be:
(1) updated not later than thirty (30) days after any change that makes information previously provided under section 2(b) of this chapter no longer correct; and
(2) renewed on an annual basis.
(b) If a warrantor registered under section 2 of this chapter fails to renew the registration by the registration deadline, and a renewal is not filed within thirty (30) days, the warrantor shall be made inactive by the commissioner.
Sec. 4. The department may establish:
(1) a fee for the issuance of a registration; and
(2) a fee for the renewal of registration;
under this chapter in an amount sufficient to implement this article. Fees collected under this section shall be deposited in the department of insurance fund established by IC 27-1-3-28.
Sec. 5. An administrator or person that sells or solicits a sale of a vehicle protection product but is not a warrantor is not required to register as a warrantor or to be licensed under this title to sell a vehicle protection product.
Chapter 4. Financial Responsibility
Sec. 1. A vehicle protection product shall not be sold or offered for sale unless the conditions set forth in at least one (1) of the following subdivisions are met to ensure adequate performance under the warranty:
(1) All of the following apply:
(A) The vehicle protection product warrantor is insured under a warranty reimbursement insurance policy that is issued by an insurer authorized to do business in Indiana.
(B) The warranty reimbursement insurance policy
provides that the insurer will pay to, or on behalf of, the
warrantor one hundred percent (100%) of all sums that
the warrantor legally is obligated to pay according to the
warrantor's contractual obligations under the warrantor's
vehicle protection product warranty.
(C) A true and exact copy of the warranty reimbursement insurance policy has been filed with the department by the warrantor.
(D) The warranty reimbursement insurance policy contains the provisions required under IC 27-18-5-1.
(2) All of the following apply:
(A) The vehicle protection product warrantor or its parent company maintains a net worth or stockholders' equity of at least fifty million dollars ($50,000,000).
(B) The warrantor provides the commissioner with a copy of:
(i) the warrantor's most recent audited financial statement; or
(ii) the warrantor's parent company's audited financial statement;
showing a net worth of at least fifty million dollars ($50,000,000).
(C) If clauses (A) and (B) are satisfied through the warrantor's parent company, the warrantor's parent company agrees to guarantee the obligations of the warrantor relating to warranties issued by the warrantor.
The financial information filed under this subdivision is confidential as a trade secret of the entity filing the information.
Sec. 2. No financial security requirements or financial standards for warrantors other than those set forth in section 1 of this chapter are required under this article.
Chapter 5. Warranty Reimbursement Policy Requirements
Sec. 1. A warranty reimbursement insurance policy may not be issued, sold, or offered for sale unless the policy meets the following conditions:
(1) The policy states that the issuer of the policy will:
(A) reimburse or pay on behalf of the vehicle protection product warrantor all covered sums that the warrantor is legally obligated to pay; or
(B) provide all service that the warrantor is legally obligated to perform according to the warrantor's
contractual obligations under the provisions of the insured
warranties issued by the warrantor.
(2) The policy states that if payment due under the terms of the warranty is not provided by the warrantor within sixty (60) days after proof of loss has been filed according to the terms of the warranty by the warranty holder, the warranty holder may file directly with the warranty reimbursement insurance company for reimbursement.
(3) The policy provides that:
(A) a warranty reimbursement insurance company that insures a warranty shall be considered to have received payment of the premium if the warranty holder paid for the vehicle protection product; and
(B) the insurer's liability under the policy shall not be reduced or relieved by a failure of the warrantor, for any reason, to report the issuance of a warranty to the insurer.
(4) The policy has the following provisions regarding cancellation of the policy:
(A) The issuer of a reimbursement insurance policy may not cancel the policy until a notice of cancellation in writing has been mailed or delivered to the commissioner and each insured warrantor.
(B) The cancellation of a reimbursement insurance policy may not reduce the issuer's responsibility for vehicle protection products sold before the date of cancellation.
(C) If an insurer cancels a policy that a warrantor has filed with the commissioner, the warrantor shall do one (1) of the following:
(i) File a copy of a new policy with the commissioner before the termination of the prior policy, to ensure that there is no lapse in coverage following the termination of the prior policy.
(ii) Discontinue offering warranties as of the termination date of the policy until a new policy becomes effective and is accepted by the commissioner.
Chapter 6. Disclosure to Warranty Holder; Incidental Costs
Sec. 1. A vehicle protection product warranty may not be sold or offered unless the warranty does the following:
(A) "The obligations of the warrantor to the warranty holder are guaranteed under a warranty reimbursement insurance policy" if the warrantor elects to meet its
financial responsibility obligations under IC 27-18-4-1(1);
(B) "The obligations of the warrantor under this warranty are backed by the full faith and credit of the warrantor" if the warrantor elects to meet its financial responsibility obligations under IC 27-18-4-1(2).
(2) States that if a warranty holder must make a claim against a party other than the warranty reimbursement insurance policy holder, the warranty holder may make a direct claim against the insurer upon the failure of the warrantor to pay any claim or meet any obligation under the terms of the warranty within sixty (60) days after proof of loss has been filed with the warrantor, if the warrantor elects to meet its financial obligations under IC 27-18-4-1(1).
(3) States the name and address of the issuer of the warranty reimbursement insurance policy. This information does not need to be preprinted on the warranty form, but may be added to or stamped on the warranty, if the warrantor elects to meet its financial obligations under IC 27-18-4-1(1).
(4) Identifies the:
(B) seller; and
(C) warranty holder.
(5) Sets forth the total purchase price and the terms under which the purchase price is to be paid. However, the purchase price is not required to be preprinted on the vehicle protection product warranty and may be negotiated with the consumer at the time of sale.
(6) Sets forth the procedure for making a claim, and includes the name, mailing address, and telephone number of a contact representing the warrantor.
(7) Sets forth the payments or performance to be provided under the warranty, including:
(A) payment for incidental costs;
(B) the manner of calculation or determination of payment or performance; and
(C) any limitations, exceptions, or exclusions.
(8) Sets forth all the obligations and duties of the warranty holder, including:
(A) the duty to protect against any further damage to the vehicle;
(B) the obligation to notify the warrantor in advance of
any repair; or
(C) a similar requirement.
(9) Sets forth any terms, restrictions, or conditions governing transferability and cancellation of the warranty, if any.
(10) Contains a disclosure that reads substantially as follows:
"This agreement is a product warranty and is not insurance.".
Sec. 2. Incidental costs may be reimbursed under the provisions of a vehicle protection product warranty by:
(1) a fixed amount specified in the warranty or sales agreement; or
(2) the use of a formula itemizing specific incidental costs incurred by the warranty holder.
Chapter 7. Record Keeping
Sec. 1. All vehicle protection product warrantors shall keep accurate accounts, books, and records concerning transactions subject to this article.
Sec. 2. A vehicle protection product warrantor's accounts, books and records must include:
(1) copies of all vehicle protection product warranties;
(2) the name and address of each warranty holder; and
(3) the dates, amounts, and descriptions of all receipts, claims, and expenditures.
Sec. 3. A vehicle protection product warrantor shall retain all required accounts, books, and records related to each warranty holder for at least two (2) years after the specified period of coverage has expired. A warrantor discontinuing business shall maintain the records of the business until the warrantor furnishes satisfactory proof to the commissioner that the warrantor has discharged all obligations to warranty holders in Indiana.
Sec. 4. A vehicle protection product warrantor shall make all accounts, books, and records concerning transactions regulated under this article available to the commissioner for examination at the expense of the warrantor.
Chapter 8. Rulemaking
Sec. 1. The department may adopt rules under IC 4-22-2 to implement this article. If rules are adopted, they must address the following issues:
(1) Disclosures for the benefit of the warranty holder.
(2) Record keeping.
(3) Procedures for public complaints.
(4) Conditions under which surplus line insurers may be
rejected for the purpose of underwriting vehicle protection
product warranty agreements.
Chapter 9. Prohibited Acts
Sec. 1. A vehicle protection product warrantor shall not use in the name, contracts, or literature of the vehicle protection product warrantor the words "insurance", "casualty", "surety", "mutual", or other words descriptive of the insurance, casualty, or surety business or deceptively similar to the name or description of an insurance or a surety corporation, or another vehicle protection product warrantor.
Sec. 2. A vehicle protection product seller or warrantor may not require that a retail purchaser of a vehicle purchase a vehicle protection product as a condition of financing.
Chapter 10. Sanctions and Administrative Penalties
Sec. 1. The commissioner may:
(1) conduct examinations of warrantors, administrators, and other persons to enforce this article; and
(2) take action necessary or appropriate to enforce this article and the rules of the department;
to protect warranty holders.
Sec. 2. If a warrantor engages in a pattern or practice of conduct that appears to violate this article and that the commissioner reasonably believes threatens to render the warrantor insolvent or cause irreparable loss or injury to the property or business of a person, the commissioner shall:
(1) notify the warrantor in writing specifically stating the alleged grounds for sanctions; and
(2) hold a hearing under IC 4-21.5.
Sec. 3. If, after a hearing under section 2 of this chapter, the commissioner finds grounds for sanction, the commissioner may issue:
(1) an order directed to the warrantor to cease and desist from engaging in further acts, practices, or transactions that are causing the conduct that violates this article;
(2) an order prohibiting the warrantor from selling or offering for sale vehicle protection products in violation of this article;
(3) an order imposing a civil penalty on the warrantor; or
(4) a combination of orders under subdivisions (1) through (3), as applicable.
Sec. 4. The decision, determination, or order of the commissioner under section 3 of this chapter is subject to judicial
review under IC 4-21.5.
Sec. 5. The commissioner may bring a civil action in the name of the state through the attorney general, in a circuit or superior court having jurisdiction in a county in which the warrantor does business or in which the property or business of a person may suffer loss or injury from the warrantor, to restrain the warrantor from commencing or continuing to violate any of the following:
(1) This article.
(2) A rule adopted under this article.
(3) An order entered under this article.
Sec. 6. (a) In addition to an order issued against a warrantor under section 3 of this chapter, the commissioner may order the warrantor to pay the department a civil penalty in an amount determined by the commissioner of not more than five hundred dollars ($500) per violation and not more than ten thousand dollars ($10,000) total for all violations of a similar nature.
(b) For purposes of this section, violations are of a similar nature if the violations consist of the same or similar course of conduct, action, or practice, regardless of the number of times the conduct, action, or practice that is determined to be a violation of this article occurred.
(c) Civil penalties collected under this section shall be deposited in the department of insurance fund established by IC 27-1-3-28.