[Rev. 11/21/2013 1:15:23 PM--2013]

CHAPTER 690C - SERVICE CONTRACTS

GENERAL PROVISIONS

NRS 690C.010        Definitions.

NRS 690C.020        “Administrator” defined.

NRS 690C.030        “Consumer” defined.

NRS 690C.040        “Contractual liability insurance policy” defined.

NRS 690C.050        “Goods” defined.

NRS 690C.060        “Holder” defined.

NRS 690C.070        “Provider” defined.

NRS 690C.080        “Service contract” defined.

NRS 690C.100        Applicability.

NRS 690C.110        General tax on premiums not applicable.

NRS 690C.120        Applicability of other provisions.

CERTIFICATE OF REGISTRATION

NRS 690C.150        Certificate required to issue, sell or offer for sale service contracts.

NRS 690C.160        Application for certificate; fees; renewal.

NRS 690C.170        Contractual liability insurance policy or certain net worth required. [Effective through December 31, 2013.]

NRS 690C.170        Contractual liability insurance policy, reserve account and security or certain net worth required. [Effective January 1, 2014.]

MISCELLANEOUS PROVISIONS

NRS 690C.200        Name of provider.

NRS 690C.210        Requirements of contractual liability insurance policy; holder authorized to apply to issuer of policy for performance in certain circumstances.

NRS 690C.220        Requiring purchase of service contract as condition of loan or purchase of goods prohibited.

NRS 690C.230        Receipt or written evidence of service contract required; copy of service contract required to be furnished to holder within reasonable time.

NRS 690C.240        Vehicle service contract; ceasing to do business; notification.

PROVISIONS OF CONTRACT

NRS 690C.250        Conditions under which service contract void and refund required; right of original purchaser; provision stating right required; penalty.

NRS 690C.260        Contents; false or misleading statement prohibited.

NRS 690C.270        Grounds for cancellation; date cancellation effective.

REGULATION AND ENFORCEMENT

NRS 690C.300        Regulations of Commissioner.

NRS 690C.310        Retention of records.

NRS 690C.320        Examinations to enforce provisions of chapter by Commissioner.

NRS 690C.325        Administrative fines; suspension, limitation, revocation or refusal to renew certificate of registration.

NRS 690C.330        Penalty for violation of chapter or order or regulation of Commissioner.

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GENERAL PROVISIONS

      NRS 690C.010  Definitions.  As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 690C.020 to 690C.080, inclusive, have the meanings ascribed to them in those sections.

      (Added to NRS by 1999, 3335)

      NRS 690C.020  “Administrator” defined.  “Administrator” means a person who is responsible for administering a service contract that is issued, sold or offered for sale by a provider.

      (Added to NRS by 1999, 3335)

      NRS 690C.030  “Consumer” defined.  “Consumer” means a person who purchases, other than for resale, goods used primarily for personal, family or household purposes and not for business or research purposes.

      (Added to NRS by 1999, 3335)

      NRS 690C.040  “Contractual liability insurance policy” defined.  “Contractual liability insurance policy” means a policy of insurance that is issued to a provider to either:

      1.  Reimburse the provider under the terms of a service contract issued or sold by the provider; or

      2.  If the provider does not satisfy his or her obligation under a service contract, pay on behalf of the provider any money the provider has an obligation to pay under the service contract.

      (Added to NRS by 1999, 3335)

      NRS 690C.050  “Goods” defined.  “Goods” means all tangible personal property, whether movable at the time of purchase or a fixture, that is used primarily for personal, family or household purposes.

      (Added to NRS by 1999, 3335)

      NRS 690C.060  “Holder” defined.  “Holder” means a resident of this state who:

      1.  Purchases a service contract; or

      2.  Is legally in possession of a service contract and is entitled to enforce the rights of the original purchaser of the service contract.

      (Added to NRS by 1999, 3335)

      NRS 690C.070  “Provider” defined.  “Provider” means a person who is obligated to a holder pursuant to the terms of a service contract to repair, replace or perform maintenance on, or to indemnify the holder for the costs of repairing, replacing or performing maintenance on, goods.

      (Added to NRS by 1999, 3335)

      NRS 690C.080  “Service contract” defined.

      1.  “Service contract” means a contract pursuant to which a provider, in exchange for separately stated consideration, is obligated for a specified period to a holder to repair, replace or perform maintenance on, or indemnify or reimburse the holder for the costs of repairing, replacing or performing maintenance on, goods that are described in the service contract and which have an operational or structural failure as a result of a defect in materials, workmanship or normal wear and tear, including, without limitation:

      (a) A contract that includes a provision for incidental payment of indemnity under limited circumstances, including, without limitation, towing, rental and emergency road service; and

      (b) A contract that provides for the repair, replacement or maintenance of goods for damages that result from power surges or accidental damage from handling.

      2.  The term does not include a contract pursuant to which a provider, other than the manufacturer, builder, seller or lessor of a manufactured home, in exchange for separately stated consideration, is obligated for a specified period to a holder to repair or replace, or indemnify or reimburse the holder for the costs of repairing or replacing, any component of the physical structure of the manufactured home, including, without limitation, the walls, roof supports, structural floor base or foundation.

      (Added to NRS by 1999, 3336; A 2007, 3328)

      NRS 690C.100  Applicability.

      1.  The provisions of this title do not apply to:

      (a) A warranty;

      (b) A maintenance agreement;

      (c) A service contract provided by a public utility on its transmission device if the service contract is regulated by the Public Utilities Commission of Nevada;

      (d) A service contract sold or offered for sale to a person who is not a consumer;

      (e) A service contract for goods if the purchase price of the goods is less than $250; or

      (f) Except as otherwise provided in NRS 690C.240, a service contract issued, sold or offered for sale by a vehicle dealer on vehicles sold by the dealer, if the dealer is licensed pursuant to NRS 482.325 and the service contract obligates either the dealer or the manufacturer of the vehicle, or an affiliate of the dealer or manufacturer, to provide all services under the service contract.

      2.  The sale of a service contract pursuant to this chapter does not constitute the business of insurance for the purposes of 18 U.S.C. §§ 1033 and 1034.

      3.  As used in this section:

      (a) “Maintenance agreement” means a contract for a limited period that provides only for scheduled maintenance.

      (b) “Warranty” means a warranty provided solely by a manufacturer, importer or seller of goods for which the manufacturer, importer or seller did not receive separate consideration and that:

             (1) Is not negotiated or separated from the sale of the goods;

             (2) Is incidental to the sale of the goods; and

             (3) Guarantees to indemnify the consumer for defective parts, mechanical or electrical failure, labor or other remedial measures required to repair or replace the goods.

      (Added to NRS by 1999, 3336; A 2007, 1272)

      NRS 690C.110  General tax on premiums not applicable.  The tax imposed pursuant to NRS 680B.027 does not apply to any business transacted pursuant to the provisions of this chapter.

      (Added to NRS by 1999, 3338)

      NRS 690C.120  Applicability of other provisions.

      1.  Except as otherwise provided in this chapter, the marketing, issuance, sale, offering for sale, making, proposing to make and administration of service contracts are not subject to the provisions of title 57 of NRS, except, when applicable, the provisions of:

      (a) NRS 679B.020 to 679B.152, inclusive;

      (b) NRS 679B.159 to 679B.300, inclusive;

      (c) NRS 679B.310 to 679B.370, inclusive;

      (d) NRS 679B.600 to 679B.690, inclusive;

      (e) NRS 685B.090 to 685B.190, inclusive;

      (f) NRS 686A.010 to 686A.095, inclusive;

      (g) NRS 686A.160 to 686A.187, inclusive; and

      (h) NRS 686A.260, 686A.270, 686A.280, 686A.300 and 686A.310.

      2.  A provider, person who sells service contracts, administrator or any other person is not required to obtain a certificate of authority from the Commissioner pursuant to chapter 680A of NRS to issue, sell, offer for sale or administer service contracts.

      (Added to NRS by 1999, 3338)

CERTIFICATE OF REGISTRATION

      NRS 690C.150  Certificate required to issue, sell or offer for sale service contracts.  A provider shall not issue, sell or offer for sale service contracts in this state unless the provider has been issued a certificate of registration pursuant to the provisions of this chapter.

      (Added to NRS by 1999, 3336)

      NRS 690C.160  Application for certificate; fees; renewal.

      1.  A provider who wishes to issue, sell or offer for sale service contracts in this state must submit to the Commissioner:

      (a) A registration application on a form prescribed by the Commissioner;

      (b) Proof that the provider has complied with the requirements for security set forth in NRS 690C.170;

      (c) A copy of each type of service contract the provider proposes to issue, sell or offer for sale;

      (d) The name, address and telephone number of each administrator with whom the provider intends to contract; and

      (e) A fee of $1,000 and, in addition to any other fee or charge, all applicable fees required pursuant to NRS 680C.110.

      2.  In addition to the fee required by subsection 1, a provider must pay a fee of $25 for each type of service contract the provider files with the Commissioner.

      3.  A certificate of registration is valid for 1 year after the date the Commissioner issues the certificate to the provider. A provider may renew his or her certificate of registration if, before the certificate expires, the provider submits to the Commissioner an application on a form prescribed by the Commissioner, a fee of $1,000 and, in addition to any other fee or charge, all applicable fees required pursuant to NRS 680C.110.

      (Added to NRS by 1999, 3336; A 2001, 2228; 2009, 1813)

      NRS 690C.170  Contractual liability insurance policy or certain net worth required. [Effective through December 31, 2013.]  To be issued a certificate of registration, a provider must comply with one of the following:

      1.  Purchase a contractual liability insurance policy which insures the obligations of each service contract the provider issues, sells or offers for sale. The contractual liability insurance policy must be issued by an insurer which is not an affiliate of the provider and which is authorized to transact insurance in this state or pursuant to the provisions of chapter 685A of NRS; or

      2.  Maintain, or be a subsidiary of a parent company that maintains, a net worth or stockholders’ equity of at least $100,000,000. Upon request, a provider shall provide to the Commissioner a copy of the most recent Form 10-K report or Form 20-F report filed by the provider or parent company of the provider with the Securities and Exchange Commission within the previous year. If the provider or parent company is not required to file those reports with the Securities and Exchange Commission, the provider shall provide to the Commissioner a copy of the most recently audited financial statements of the provider or parent company. If the net worth or stockholders’ equity of the parent company of the provider is used to comply with the requirements of this subsection, the parent company must guarantee to carry out the duties of the provider under any service contract issued or sold by the provider.

      (Added to NRS by 1999, 3337; A 2011, 3386)

      NRS 690C.170  Contractual liability insurance policy, reserve account and security or certain net worth required. [Effective January 1, 2014.]  To be issued a certificate of registration, a provider must comply with one of the following:

      1.  Purchase a contractual liability insurance policy which insures the obligations of each service contract the provider issues, sells or offers for sale. The contractual liability insurance policy must be issued by an insurer which is licensed, registered or otherwise authorized to transact insurance in this state or pursuant to the provisions of chapter 685A of NRS.

      2.  Maintain a reserve account and deposit with the Commissioner security as provided in this subsection. The reserve account must contain at all times an amount of money equal to at least 40 percent of the unearned gross consideration received by the provider for any unexpired service contracts. The Commissioner may examine the reserve account at any time. The provider shall also deposit with the Commissioner security in an amount that is equal to $25,000 or 10 percent of the unearned gross consideration received by the provider for any unexpired service contracts, whichever is greater. The security must be:

      (a) A surety bond issued by a surety company authorized to do business in this State;

      (b) Securities of the type eligible for deposit pursuant to NRS 682B.030;

      (c) Cash;

      (d) An irrevocable letter of credit issued by a financial institution approved by the Commissioner; or

      (e) In any other form prescribed by the Commissioner.

      3.  Maintain, or be a subsidiary of a parent company that maintains, a net worth or stockholders’ equity of at least $100,000,000. Upon request, a provider shall provide to the Commissioner a copy of the most recent Form 10-K report or Form 20-F report filed by the provider or parent company of the provider with the Securities and Exchange Commission within the previous year. If the provider or parent company is not required to file those reports with the Securities and Exchange Commission, the provider shall provide to the Commissioner a copy of the most recently audited financial statements of the provider or parent company. If the net worth or stockholders’ equity of the parent company of the provider is used to comply with the requirements of this subsection, the parent company must guarantee to carry out the duties of the provider under any service contract issued or sold by the provider.

      (Added to NRS by 1999, 3337; A 2011, 3386; 2013, 2695, effective January 1, 2014)

MISCELLANEOUS PROVISIONS

      NRS 690C.200  Name of provider.

      1.  Except as otherwise provided in this section, a provider shall not include in the name of the business of the provider:

      (a) The words “insurance,” “casualty,” “surety,” “mutual” or any other word or term that implies that the provider is engaged in the business of transacting insurance or is a surety company; or

      (b) A name that is deceptively similar to the name or description of an insurer or surety company or the name of another provider.

      2.  A provider may include the word “guaranty” or a similar word in the name of the business of the provider.

      3.  This section does not apply to a provider who, before January 1, 2000, includes in the name of the business of the provider a name that does not comply with the provisions of subsection 1. Such a provider shall include in each service contract the provider issues, sells or offers for sale a statement that the service contract is not a contract of insurance.

      (Added to NRS by 1999, 3340)

      NRS 690C.210  Requirements of contractual liability insurance policy; holder authorized to apply to issuer of policy for performance in certain circumstances.

      1.  A contractual liability insurance policy issued in this state must provide that the issuer of the policy shall:

      (a) Reimburse or pay on behalf of the provider any money the provider has a duty to pay under a service contract; or

      (b) Otherwise provide for the performance of the duties of the provider under a service contract.

      2.  If a provider fails to perform his or her duties under a service contract within 60 days after receiving notice from the holder that the goods described in the contract are defective, the holder may apply to the issuer of the contractual liability insurance policy for performance of the duties of the provider under the service contract.

      (Added to NRS by 1999, 3338)

      NRS 690C.220  Requiring purchase of service contract as condition of loan or purchase of goods prohibited.  No person may require the purchase of a service contract as a condition for the approval of a loan or the purchasing of goods.

      (Added to NRS by 1999, 3340)

      NRS 690C.230  Receipt or written evidence of service contract required; copy of service contract required to be furnished to holder within reasonable time.

      1.  A provider shall provide a receipt for, or other written evidence of, the purchase of a service contract.

      2.  The provider shall furnish a copy of the service contract to the holder within a reasonable time after the contract is purchased.

      (Added to NRS by 1999, 3340)

      NRS 690C.240  Vehicle service contract; ceasing to do business; notification.

      1.  A provider who, whether directly or through a vehicle dealer licensed pursuant to NRS 482.325, enters into a vehicle service contract with a buyer shall, within 30 days after ceasing doing business in this State, notify any buyer who purchased such a contract in writing of the fact that the provider has ceased doing business in this State if the specified period of the vehicle service contract has not yet expired.

      2.  The provisions of this section do not:

      (a) Render a service contract void pursuant to NRS 690C.250;

      (b) Cancel a service contract pursuant to NRS 690C.270; or

      (c) Release the provider from any liability imposed by a violation of any provision of this chapter.

      3.  As used in this section:

      (a) “Buyer” means the buyer of a vehicle service contract.

      (b) “Vehicle service contract” means a contract pursuant to which a provider, in exchange for separately stated consideration, is obligated for a specified period to a buyer to repair, replace or perform maintenance on, or indemnify or reimburse the buyer for the costs of repairing, replacing or performing maintenance on, a motor vehicle which is described in the vehicle service contract and which has an operational or structural failure as a result of a defect in materials, workmanship or normal wear and tear, including, without limitation, a contract that includes a provision for incidental payment of indemnity under limited circumstances, including, without limitation, towing, rental and emergency road service.

      (Added to NRS by 2007, 1271)

PROVISIONS OF CONTRACT

      NRS 690C.250  Conditions under which service contract void and refund required; right of original purchaser; provision stating right required; penalty.

      1.  A service contract is void and a provider shall refund to the holder the purchase price of the service contract if the holder has not made a claim under the service contract and the holder returns the service contract to the provider:

      (a) Within 20 days after the date the provider mails a copy of the service contract to the holder;

      (b) Within 10 days after the purchaser receives a copy of the service contract if the provider furnishes the holder with the copy at the time the contract is purchased; or

      (c) Within a longer period specified in the service contract.

      2.  The right of a holder to return a service contract pursuant to this section applies only to the original purchaser of the service contract.

      3.  A service contract must include a provision that clearly states the right of a holder to return a service contract pursuant to this section.

      4.  The provider shall refund to the holder the purchase price of the service contract within 45 days after a service contract is returned pursuant to subsection 1. If the provider fails to refund the purchase price within that time, the provider shall pay the holder a penalty of 10 percent of the purchase price for each 30-day period or portion thereof that the refund and any accrued penalties remain unpaid.

      (Added to NRS by 1999, 3338)

      NRS 690C.260  Contents; false or misleading statement prohibited.

      1.  A service contract must:

      (a) Be written in language that is understandable and printed in a typeface that is easy to read.

      (b) Indicate that it is insured by a contractual liability insurance policy if it is so insured, and include the name and address of the issuer of the policy or that it is backed by the full faith and credit of the provider if the service contract is not insured by a contractual liability insurance policy.

      (c) Include the amount of any deductible that the holder is required to pay.

      (d) Include the name and address of the provider and, if applicable:

             (1) The name and address of the administrator; and

             (2) The name of the holder, if provided by the holder.

Ê The names and addresses of such persons are not required to be preprinted on the service contract and may be added to the service contract at the time of the sale.

      (e) Include the purchase price of the service contract. The purchase price must be determined pursuant to a schedule of fees established by the provider. The purchase price is not required to be preprinted on the service contract and may be negotiated with the holder and added to the service contract at the time of sale.

      (f) Include a description of the goods covered by the service contract.

      (g) Specify the duties of the provider and any limitations, exceptions or exclusions.

      (h) If the service contract covers a motor vehicle, indicate whether replacement parts that are not made for or by the original manufacturer of the motor vehicle may be used to comply with the terms of the service contract.

      (i) Include any restrictions on transferring or renewing the service contract.

      (j) Include the terms, restrictions or conditions for cancelling the service contract before it expires and the procedure for cancelling the service contract. The conditions for cancelling the service contract must include, without limitation, the provisions of NRS 690C.270.

      (k) Include the duties of the holder under the contract, including, without limitation, the duty to protect against damage to the goods covered by the service contract or to comply with any instructions included in the owner’s manual for the goods.

      (l) Indicate whether the service contract authorizes the holder to recover consequential damages.

      (m) Indicate whether any defect in the goods covered by the service contract existing on the date the contract is purchased is not covered under the service contract.

      2.  A provider shall not allow, make or cause to be made a false or misleading statement in any of the service contracts of the provider or intentionally omit a material statement that causes a service contract to be misleading. The Commissioner may require the provider to amend any service contract that the Commissioner determines is false or misleading.

      (Added to NRS by 1999, 3339)

      NRS 690C.270  Grounds for cancellation; date cancellation effective.

      1.  No service contract that has been in effect for at least 70 days may be cancelled by the provider before the expiration of the agreed term or 1 year after the effective date of the service contract, whichever occurs first, except on any of the following grounds:

      (a) Failure by the holder to pay an amount when due;

      (b) Conviction of the holder of a crime which results in an increase in the service required under the service contract;

      (c) Discovery of fraud or material misrepresentation by the holder in obtaining the service contract, or in presenting a claim for service thereunder;

      (d) Discovery of:

             (1) An act or omission by the holder; or

             (2) A violation by the holder of any condition of the service contract,

Ê which occurred after the effective date of the service contract and which substantially and materially increases the service required under the service contract; or

      (e) A material change in the nature or extent of the required service or repair which occurs after the effective date of the service contract and which causes the required service or repair to be substantially and materially increased beyond that contemplated at the time that the service contract was issued or sold.

      2.  No cancellation of a service contract may become effective until at least 15 days after the notice of cancellation is mailed to the holder.

      (Added to NRS by 1999, 3340)

REGULATION AND ENFORCEMENT

      NRS 690C.300  Regulations of Commissioner.  The Commissioner may adopt such regulations as are necessary to carry out the provisions of this chapter.

      (Added to NRS by 1999, 3341)

      NRS 690C.310  Retention of records.

      1.  A provider shall maintain records of the transactions governed by this chapter. The records of a provider must include:

      (a) A copy of each type of service contract that the provider issues, sells or offers for sale;

      (b) The name and address of each holder who possesses a service contract under which the provider has a duty to perform, to the extent that the provider knows the name and address of each holder;

      (c) A list that includes each location where the provider issues, sells or offers for sale service contracts; and

      (d) The date and a description of each claim made by a holder under a service contract.

      2.  Except as otherwise provided in this subsection, a provider shall retain all records relating to a service contract for at least 1 year after the contract has expired. A provider who intends to discontinue doing business in this state shall provide the Commissioner with satisfactory proof that the provider has discharged his or her duties to the holders in this state and shall not destroy his or her records without the prior approval of the Commissioner.

      3.  The records required to be maintained pursuant to this section may be stored on a computer disc or other storage device for a computer from which the records can be readily printed.

      (Added to NRS by 1999, 3341)

      NRS 690C.320  Examinations to enforce provisions of chapter by Commissioner.

      1.  Except as otherwise provided in this subsection, the Commissioner may conduct examinations to enforce the provisions of this chapter pursuant to the provisions of NRS 679B.230 to 679B.300, inclusive, at such times as the Commissioner deems necessary. The Commissioner is not required to comply with the requirement in NRS 679B.230 that insurers be examined not less frequently than every 5 years in the enforcement of this chapter.

      2.  A provider shall, upon the request of the Commissioner, make available to the Commissioner for inspection any accounts, books and records concerning any service contract issued, sold or offered for sale by the provider which are reasonably necessary to enable the Commissioner to determine whether the provider is in compliance with the provisions of this chapter.

      (Added to NRS by 1999, 3341)

      NRS 690C.325  Administrative fines; suspension, limitation, revocation or refusal to renew certificate of registration.

      1.  The Commissioner may refuse to renew or may suspend, limit or revoke a provider’s certificate of registration if the Commissioner finds after a hearing thereon, or upon waiver of hearing by the provider, that the provider has:

      (a) Violated or failed to comply with any lawful order of the Commissioner;

      (b) Conducted business in an unsuitable manner;

      (c) Willfully violated or willfully failed to comply with any lawful regulation of the Commissioner; or

      (d) Violated any provision of this chapter.

Ê In lieu of such a suspension or revocation, the Commissioner may levy upon the provider, and the provider shall pay forthwith, an administrative fine of not more than $1,000 for each act or violation.

      2.  The Commissioner shall suspend or revoke a provider’s certificate of registration on any of the following grounds if the Commissioner finds after a hearing thereon that the provider:

      (a) Is in unsound condition, is being fraudulently conducted, or is in such a condition or is using such methods and practices in the conduct of its business as to render its further transaction of service contracts in this State currently or prospectively injurious to service contract holders or to the public.

      (b) Refuses to be examined, or its directors, officers, employees or representatives refuse to submit to examination relative to its affairs, or to produce its books, papers, records, contracts, correspondence or other documents for examination by the Commissioner when required, or refuse to perform any legal obligation relative to the examination.

      (c) Has failed to pay any final judgment rendered against it in this State upon any policy, bond, recognizance or undertaking as issued or guaranteed by it, within 30 days after the judgment became final or within 30 days after dismissal of an appeal before final determination, whichever date is the later.

      3.  The Commissioner may, without advance notice or a hearing thereon, immediately suspend the certificate of registration of any provider that has filed for bankruptcy or otherwise been deemed insolvent.

      (Added to NRS by 2011, 3385)

      NRS 690C.330  Penalty for violation of chapter or order or regulation of Commissioner.  A person who violates any provision of this chapter or an order or regulation of the Commissioner issued or adopted pursuant thereto may be assessed a civil penalty by the Commissioner of not more than $500 for each act or violation, not to exceed an aggregate amount of $10,000 for violations of a similar nature. For the purposes of this section, violations shall be deemed to be of a similar nature if the violations consist of the same or similar conduct, regardless of the number of times the conduct occurred.

      (Added to NRS by 1999, 3341)