§ 66‑372. Miscellaneousrequirements for motor vehicle and home appliance service agreement companies.
(a) The provisions ofthis section and G.S. 66‑373 apply to companies specified in G.S. 66‑370and G.S. 66‑371.
(b) The followingdefinitions apply in this section and in G.S. 66‑373:
(1) Service agreement. Includes motor vehicle service agreements and home appliance serviceagreements.
(2) Service agreementcompany. Includes motor vehicle service agreement companies and homeappliance service agreement companies.
(c) Before the sale ofany service agreement, the service agreement company shall give written noticeto the customer clearly disclosing that the purchase of the agreement is notrequired either to purchase or to obtain financing for a motor vehicle or homeappliance, as the case may be.
(d) No serviceagreement may be used in this State by any service agreement company if theagreement:
(1) In any respectviolates, or does not comply with, the laws of this State;
(2) Contains, orincorporates by reference when incorporation is otherwise permissible, anyinconsistent, ambiguous, or misleading clauses or any exceptions and conditionsthat deceptively affect the risk purported to be assumed in the generalcoverage of the agreement;
(3) Has any title,heading, or other indication of its provisions that is misleading; or
(4) Is printed orotherwise reproduced in a manner that renders any material provision of theagreement substantially illegible.
(e) All serviceagreements used in this State by a service agreement company shall:
(1) Not containprovisions that allow the company to cancel the agreement in its discretionother than for nonpayment of premiums or for a direct violation of theagreement by the consumer where the service agreement states that violation ofthe agreement would subject the agreement to cancellation;
(2) With respect to amotor vehicle service agreement as defined in G.S. 66‑370(b)(1), providefor a right of assignability by the consumer to a subsequent purchaser beforeexpiration of coverage if the subsequent purchaser meets the same criteria formotor vehicle service agreement acceptability as the original purchaser; and
(3) Contain acancellation provision allowing the consumer to cancel at any time afterpurchase and receive a pro rata refund less any claims paid on the agreementand a reasonable administrative fee, not to exceed ten percent (10%) of theamount of the pro rata refund.
(f) Each serviceagreement company, as a minimum requirement for permanent office records, shallmaintain:
(1) A complete set ofaccounting records, including a general ledger, cash receipts and disbursementsjournals, accounts receivable registers, and accounts payable registers.
(2) Memorandum journalsshowing the service agreement forms issued to the company salespersons andrecording the delivery of the forms to dealers.
(3) Memorandum journalsshowing the service agreement forms received by dealers and indicating thedisposition of the forms by the dealers.
(4) A detailed serviceagreement register, in numerical order by agreement number, of agreements inforce. The register shall include the following: agreement number, date ofissue, issuing dealer, name of agreement holder, description of item covered,service agreement period (and, if applicable, mileage), gross premium, totalcommission paid, and net premium.
(5) A detailed claimsregister, in numerical order by service agreement number. The register shallinclude the following information: agreement number, date of issue, date claimpaid, and, if applicable, disposition other than payment and reason for thedisposition.
(g) Repealed by SessionLaws 1993 (Reg. Sess., 1994), c. 730, s. 3.
(h) No insurer orservice agreement company shall act as a fronting company for any unauthorizedinsurer or service agreement company that is not in compliance with thissection. As used in this subsection, "fronting company" means alicensed insurer or service agreement company that, by reinsurance orotherwise, generally transfers to one or more unauthorized insurers or serviceagreement companies that are not in compliance with this section a substantialportion of the risk of loss under agreements it writes in this State.
(i) All fundsbelonging to insurers, companies, or others received by a salesperson of aservice agreement are trust funds received by the salesperson in a fiduciarycapacity; and the salesperson, in the applicable regular course of business,shall account for and pay the funds to the person entitled to the funds. Anysalesperson who, not being entitled to the funds, diverts or appropriates thefunds or any portion of the funds, other than funds representing thesalesperson's commission if authorized by the salesperson agreement, to his orher own use, upon conviction is guilty of embezzlement under G.S. 14‑90.
(j) Any person whoknowingly offers for sale or sells a service agreement for a company that hasfailed to comply with the provisions of this section is guilty of a Class 1misdemeanor. All service agreement companies and individuals selling serviceagreements are subject to G.S. 75‑1 through G.S. 75‑19.
(k) Repealed by SessionLaws 1993 (Reg. Sess., 1994), c. 730, s. 2.
(l) No serviceagreement company shall use in its name, contracts, literature, advertising inany medium, or any other printed matter the words "insurance","casualty", "surety", "mutual", or any otherwords descriptive of the insurance business or deceptively similar to the nameor description of any insurer doing business in this State, except to indicatethat the obligations of the contract are insured by an insurance company.
(m) Repealed by SessionLaws 2007‑95, s. 11. (1991 (Reg. Sess., 1992), c. 1014, s. 1; 1993, c. 504,ss. 50, 51, 52; c. 539, s. 444; 1994, Ex. Sess., c. 24, s. 14(c); 1993 (Reg.Sess., 1994), c. 730, ss. 2, 3, 5; 1995, c. 193, ss. 4, 5; 2003‑290, s.2; 2007‑95, ss. 4, 11.)
§ 66‑372. Miscellaneousrequirements for motor vehicle and home appliance service agreement companies.
(a) The provisions ofthis section and G.S. 66‑373 apply to companies specified in G.S. 66‑370and G.S. 66‑371.
(b) The followingdefinitions apply in this section and in G.S. 66‑373:
(1) Service agreement. Includes motor vehicle service agreements and home appliance serviceagreements.
(2) Service agreementcompany. Includes motor vehicle service agreement companies and homeappliance service agreement companies.
(c) Before the sale ofany service agreement, the service agreement company shall give written noticeto the customer clearly disclosing that the purchase of the agreement is notrequired either to purchase or to obtain financing for a motor vehicle or homeappliance, as the case may be.
(d) No serviceagreement may be used in this State by any service agreement company if theagreement:
(1) In any respectviolates, or does not comply with, the laws of this State;
(2) Contains, orincorporates by reference when incorporation is otherwise permissible, anyinconsistent, ambiguous, or misleading clauses or any exceptions and conditionsthat deceptively affect the risk purported to be assumed in the generalcoverage of the agreement;
(3) Has any title,heading, or other indication of its provisions that is misleading; or
(4) Is printed orotherwise reproduced in a manner that renders any material provision of theagreement substantially illegible.
(e) All serviceagreements used in this State by a service agreement company shall:
(1) Not containprovisions that allow the company to cancel the agreement in its discretionother than for nonpayment of premiums or for a direct violation of theagreement by the consumer where the service agreement states that violation ofthe agreement would subject the agreement to cancellation;
(2) With respect to amotor vehicle service agreement as defined in G.S. 66‑370(b)(1), providefor a right of assignability by the consumer to a subsequent purchaser beforeexpiration of coverage if the subsequent purchaser meets the same criteria formotor vehicle service agreement acceptability as the original purchaser; and
(3) Contain acancellation provision allowing the consumer to cancel at any time afterpurchase and receive a pro rata refund less any claims paid on the agreementand a reasonable administrative fee, not to exceed ten percent (10%) of theamount of the pro rata refund.
(f) Each serviceagreement company, as a minimum requirement for permanent office records, shallmaintain:
(1) A complete set ofaccounting records, including a general ledger, cash receipts and disbursementsjournals, accounts receivable registers, and accounts payable registers.
(2) Memorandum journalsshowing the service agreement forms issued to the company salespersons andrecording the delivery of the forms to dealers.
(3) Memorandum journalsshowing the service agreement forms received by dealers and indicating thedisposition of the forms by the dealers.
(4) A detailed serviceagreement register, in numerical order by agreement number, of agreements inforce. The register shall include the following: agreement number, date ofissue, issuing dealer, name of agreement holder, description of item covered,service agreement period (and, if applicable, mileage), gross premium, totalcommission paid, and net premium.
(5) A detailed claimsregister, in numerical order by service agreement number. The register shallinclude the following information: agreement number, date of issue, date claimpaid, and, if applicable, disposition other than payment and reason for thedisposition.
(g) Repealed by SessionLaws 1993 (Reg. Sess., 1994), c. 730, s. 3.
(h) No insurer orservice agreement company shall act as a fronting company for any unauthorizedinsurer or service agreement company that is not in compliance with thissection. As used in this subsection, "fronting company" means alicensed insurer or service agreement company that, by reinsurance orotherwise, generally transfers to one or more unauthorized insurers or serviceagreement companies that are not in compliance with this section a substantialportion of the risk of loss under agreements it writes in this State.
(i) All fundsbelonging to insurers, companies, or others received by a salesperson of aservice agreement are trust funds received by the salesperson in a fiduciarycapacity; and the salesperson, in the applicable regular course of business,shall account for and pay the funds to the person entitled to the funds. Anysalesperson who, not being entitled to the funds, diverts or appropriates thefunds or any portion of the funds, other than funds representing thesalesperson's commission if authorized by the salesperson agreement, to his orher own use, upon conviction is guilty of embezzlement under G.S. 14‑90.
(j) Any person whoknowingly offers for sale or sells a service agreement for a company that hasfailed to comply with the provisions of this section is guilty of a Class 1misdemeanor. All service agreement companies and individuals selling serviceagreements are subject to G.S. 75‑1 through G.S. 75‑19.
(k) Repealed by SessionLaws 1993 (Reg. Sess., 1994), c. 730, s. 2.
(l) No serviceagreement company shall use in its name, contracts, literature, advertising inany medium, or any other printed matter the words "insurance","casualty", "surety", "mutual", or any otherwords descriptive of the insurance business or deceptively similar to the nameor description of any insurer doing business in this State, except to indicatethat the obligations of the contract are insured by an insurance company.
(m) Repealed by SessionLaws 2007‑95, s. 11. (1991 (Reg. Sess., 1992), c. 1014, s. 1; 1993, c. 504,ss. 50, 51, 52; c. 539, s. 444; 1994, Ex. Sess., c. 24, s. 14(c); 1993 (Reg.Sess., 1994), c. 730, ss. 2, 3, 5; 1995, c. 193, ss. 4, 5; 2003‑290, s.2; 2007‑95, ss. 4, 11.)
§ 66‑372. Miscellaneousrequirements for motor vehicle and home appliance service agreement companies.
(a) The provisions ofthis section and G.S. 66‑373 apply to companies specified in G.S. 66‑370and G.S. 66‑371.
(b) The followingdefinitions apply in this section and in G.S. 66‑373:
(1) Service agreement. Includes motor vehicle service agreements and home appliance serviceagreements.
(2) Service agreementcompany. Includes motor vehicle service agreement companies and homeappliance service agreement companies.
(c) Before the sale ofany service agreement, the service agreement company shall give written noticeto the customer clearly disclosing that the purchase of the agreement is notrequired either to purchase or to obtain financing for a motor vehicle or homeappliance, as the case may be.
(d) No serviceagreement may be used in this State by any service agreement company if theagreement:
(1) In any respectviolates, or does not comply with, the laws of this State;
(2) Contains, orincorporates by reference when incorporation is otherwise permissible, anyinconsistent, ambiguous, or misleading clauses or any exceptions and conditionsthat deceptively affect the risk purported to be assumed in the generalcoverage of the agreement;
(3) Has any title,heading, or other indication of its provisions that is misleading; or
(4) Is printed orotherwise reproduced in a manner that renders any material provision of theagreement substantially illegible.
(e) All serviceagreements used in this State by a service agreement company shall:
(1) Not containprovisions that allow the company to cancel the agreement in its discretionother than for nonpayment of premiums or for a direct violation of theagreement by the consumer where the service agreement states that violation ofthe agreement would subject the agreement to cancellation;
(2) With respect to amotor vehicle service agreement as defined in G.S. 66‑370(b)(1), providefor a right of assignability by the consumer to a subsequent purchaser beforeexpiration of coverage if the subsequent purchaser meets the same criteria formotor vehicle service agreement acceptability as the original purchaser; and
(3) Contain acancellation provision allowing the consumer to cancel at any time afterpurchase and receive a pro rata refund less any claims paid on the agreementand a reasonable administrative fee, not to exceed ten percent (10%) of theamount of the pro rata refund.
(f) Each serviceagreement company, as a minimum requirement for permanent office records, shallmaintain:
(1) A complete set ofaccounting records, including a general ledger, cash receipts and disbursementsjournals, accounts receivable registers, and accounts payable registers.
(2) Memorandum journalsshowing the service agreement forms issued to the company salespersons andrecording the delivery of the forms to dealers.
(3) Memorandum journalsshowing the service agreement forms received by dealers and indicating thedisposition of the forms by the dealers.
(4) A detailed serviceagreement register, in numerical order by agreement number, of agreements inforce. The register shall include the following: agreement number, date ofissue, issuing dealer, name of agreement holder, description of item covered,service agreement period (and, if applicable, mileage), gross premium, totalcommission paid, and net premium.
(5) A detailed claimsregister, in numerical order by service agreement number. The register shallinclude the following information: agreement number, date of issue, date claimpaid, and, if applicable, disposition other than payment and reason for thedisposition.
(g) Repealed by SessionLaws 1993 (Reg. Sess., 1994), c. 730, s. 3.
(h) No insurer orservice agreement company shall act as a fronting company for any unauthorizedinsurer or service agreement company that is not in compliance with thissection. As used in this subsection, "fronting company" means alicensed insurer or service agreement company that, by reinsurance orotherwise, generally transfers to one or more unauthorized insurers or serviceagreement companies that are not in compliance with this section a substantialportion of the risk of loss under agreements it writes in this State.
(i) All fundsbelonging to insurers, companies, or others received by a salesperson of aservice agreement are trust funds received by the salesperson in a fiduciarycapacity; and the salesperson, in the applicable regular course of business,shall account for and pay the funds to the person entitled to the funds. Anysalesperson who, not being entitled to the funds, diverts or appropriates thefunds or any portion of the funds, other than funds representing thesalesperson's commission if authorized by the salesperson agreement, to his orher own use, upon conviction is guilty of embezzlement under G.S. 14‑90.
(j) Any person whoknowingly offers for sale or sells a service agreement for a company that hasfailed to comply with the provisions of this section is guilty of a Class 1misdemeanor. All service agreement companies and individuals selling serviceagreements are subject to G.S. 75‑1 through G.S. 75‑19.
(k) Repealed by SessionLaws 1993 (Reg. Sess., 1994), c. 730, s. 2.
(l) No serviceagreement company shall use in its name, contracts, literature, advertising inany medium, or any other printed matter the words "insurance","casualty", "surety", "mutual", or any otherwords descriptive of the insurance business or deceptively similar to the nameor description of any insurer doing business in this State, except to indicatethat the obligations of the contract are insured by an insurance company.
(m) Repealed by SessionLaws 2007‑95, s. 11. (1991 (Reg. Sess., 1992), c. 1014, s. 1; 1993, c. 504,ss. 50, 51, 52; c. 539, s. 444; 1994, Ex. Sess., c. 24, s. 14(c); 1993 (Reg.Sess., 1994), c. 730, ss. 2, 3, 5; 1995, c. 193, ss. 4, 5; 2003‑290, s.2; 2007‑95, ss. 4, 11.)
