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Daily Court Reporter - News Proposal would simplify state law pertaining to auto service contracts


Proposal would simplify state law pertaining to auto service contracts

KEITH ARNOLD, Daily Reporter Staff Writer

Any motorist who's lost or damaged a key fob to their car or truck knows the expense of replacing the pocket-sized gadget that unlocks and, in many cases, starts the engine.

A bipartisan bill in the Ohio House of Representatives is intended to streamline vehicle service contracts and specifically includes a contract for key replacement in the motor vehicle ancillary product protection, or MVAPP, contract provisions.

Filed as House Bill 632, the legislation remains in the Transportation and Public Safety Committee.

"As motor vehicles become more technologically advanced, certain aspects of the vehicle are becoming increasingly expensive to replace," Rep. Glenn Holmes, D-McDonald, told fellow House members seated for the committee. "This new language will allow the purchase of a contract to repair or replace a lost, stolen, or inoperable key or key fob.

"Ohio law should allow consumers to purchase a motor vehicle ancillary protect protection contract to replace key fobs, a critical tool in the operation of a motor vehicle."

According to the sponsor testimony, 29 states and Puerto Rico have passed legislation expressly authorizing a motor vehicle ancillary product protection contract to include protection for key fobs.

HB 632 would merge motor vehicle tire or wheel road hazard contract provisions into the MVAPP contract provisions, analysis of the bill provided.

Under continuing law, all road hazard and MVAPP contracts are subject to certain requirements.

"For example, such a contract must be covered by a reimbursement insurance policy," Yosef Schiff wrote for the Ohio Legislative Service Commission. "It must contain certain items, including a disclosure that the contract is not insurance, a disclosure that the obligations are guaranteed under a reimbursement insurance policy and the contract holder's rights under that policy.

"The reimbursement policy must include certain statements regarding procedures for contract holders to collect under the provider's policy and protections in the event of cancellation of the policy."

The sale or issuance of road hazard or MVAPP contracts is subject to the Consumer Sales Practices Act.

"Generally, we have also introduced this bill to simplify and clarify Ohio law describing these contracts," Holmes said. "The law clearly says what motor vehicle service contracts (warranties) are not - they are not insurance under Title 39 of the Ohio Revised Code.

"However, existing law could better describe what these contracts are. H.B. 632 clearly defines what 'motor vehicle services contracts' and 'motor vehicle ancillary product protection contracts' are."

The proposed language collapses R.C. 3905.425 into R.C. 3905.426, which will simplify this section of the code and apply the same disclaimers and requirements to motor vehicle service contracts, MVAPP protection contracts, and tire or wheel road hazard contracts, joint sponsor Rep. George Lang, R-West Chester, told committee members.

"The proposal further clarifies that motor vehicle service contracts, vehicle protection product warranties as defined in R.C. 3905.421, home service contracts as defined in R.C. 3905.422, consumer goods service contracts as defined in R.C. 3905.423, and contracts for pre-paid routine, scheduled maintenance only are not insurance and not subject to any provision of insurance law in Ohio unless expressly made so," Lang explained. "Finally, as previously mentioned, this language includes 'key fobs' as an item included in a 'MVAPP contract.'"

He said, like tire or wheel road hazard contracts, including key fobs in this section provides consumers with an option for replacement of malfunctioning, lost or stolen key fobs - avoiding high out-of-pocket expenditures.

"Specifically, key fobs fall into a category of cost where they are too expensive to replace without assistance, but not expensive enough to claim on a vehicle owner's general auto policy," Lang continued. "The proposed language modernizes this section of code to cover a new technology in an effective and efficient way."

HB 632, which enjoys cosponsor support of four fellow House members, had not been scheduled a second hearing at time of publication.

Date Published: October 17, 2018


Copyright © 2018 The Daily Reporter - All Rights Reserved


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