HB4830 - Relating to the regulation of service contracts and service contract providers and administrators.

      By: Phelan H.B. No. 4830       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of service contracts and service   contract providers and administrators.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1304.002(4), Occupations Code, is   amended to read as follows:                (4)  "Consumer" means an individual to whom a service   contract is sold, offered, or marketed [ who, for a purpose other   than resale, buys tangible personal property that is:                      [ (A)  distributed in commerce; and                      [ (B)     normally used for personal, family, or   household purposes and not for business or research purposes ].          SECTION 2.  Section 1304.003(a), Occupations Code, is   amended by amending Subdivisions (2) and (4) and adding Subdivision   (5) to read as follows:                (2)  "Service contract" means an agreement that is   entered into for a separately stated consideration and for a   specified term under which a provider agrees to:                      (A)  repair, replace, or maintain a product, or   provide reimbursement or payment [ indemnification ] for the repair,   replacement, or maintenance of a product, for operational or   structural failure , for damage caused by a power surge to a product,   or for damage caused by a defect in materials or workmanship or by   normal wear;                      (B)  provide identity recovery, if the service   contract is financed under Chapter 348 or 353, Finance Code;                      (C)  provide compensation to the lessee or buyer   of a vehicle on the total constructive loss under a depreciation   benefit optional member program; [ or ]                      (D)  provide a service, reimbursement, or payment   under a residential service contract ; or                       (E)     in conjunction with a leased motor vehicle,   provide for:                             (i)     the repair, replacement, or maintenance   of property due to:                                   (a)  excess wear and use;                                   (b)     damage for items such as tires,   paint cracks or chips, interior stains, rips or scratches, exterior   dents or scratches, windshield cracks or chips, and missing   interior or exterior parts; or                                   (c)     excess mileage that would result   in a lease-end charge; and                             (ii)     payment, in an amount not to exceed the   purchase price of the vehicle, for:                                   (a)     the repair, replacement, or   maintenance of property due to excess wear and use, damage for items   described by Subparagraph (i)(b), or excess mileage that would   result in a charge at the end of the lease term; or                                   (b)     any other charge for damage that   is considered as excess wear and use by a lessor under a motor   vehicle lease .                (4)  "Residential service contract" :                       (A)   means a service contract , other than a   service contract described by Paragraph (B),  of any duration under   which a provider [ agrees to ], in the event of the operational or   structural failure of, damage caused by a power surge to, a defect   in materials or workmanship of, or damage caused by normal wear to a   structural component, an appliance, or an electrical, plumbing,   heating, cooling, or air-conditioning system of a residential   property that is attached to or located on the residential   property , agrees to :                             (i)  perform [ (A) ] service, maintain,   repair, or replace all or any part of the covered items [ the   structural component, appliance, or electrical, plumbing, heating,   cooling, or air-conditioning system ];                             (ii)  [ (B) ]  provide incidental payment or   reimbursement [ of indemnity ] under limited circumstances for the   covered items , including food spoilage; or                             (iii)  [ (C) ]  provide reimbursement or   payment instead of service, repair, or replacement of the covered   items; and                       (B)  does not include a service contract offered:                             (i)     in connection with the retail purchase   of an appliance and the terms of which do not include any other item   listed in Paragraph (A); or                             (ii)     by a registered provider that covers   appliances attached to or located on residential property and the   terms of which do not include any other item listed in Paragraph (A)   [ when a part, structural component, appliance, or service provider   or technician is unavailable ].                 (5)     "Residential service contract provider" means a   provider who is contractually obligated to a service contract   holder under the terms of a residential service contract and may   also offer service contracts that cover appliances attached to or   located on the residential property with or without coverage for   structural components or an electrical, plumbing, heating,   cooling, or air-conditioning system of a residential property.          SECTION 3.  Section 1304.003(b), Occupations Code, is   amended to read as follows:          (b)  A service contract described by Subsection (a)(2)(A)   may provide for:                (1)  incidental payment or reimbursement [ indemnity ]   under limited circumstances, including towing, rental, and   emergency road service;                (2)  the repair or replacement of a product for damage   resulting from [ a power surge or for ] accidental damage incurred in   handling the product;                (3)  identity recovery, if the service contract is   financed under Chapter 348 or 353, Finance Code; or                (4)  the replacement of a motor vehicle key or key fob   in the event the key or key fob is inoperable, lost, or stolen.          SECTION 4.  Section 1304.004, Occupations Code, is amended   to read as follows:          Sec. 1304.004.  EXEMPTIONS.  (a)  In this section:                (1)  "Maintenance agreement" means an agreement that   provides only for scheduled maintenance for a specified [ limited ]   period. The term does not include coverage for repairs or other   incidental expenses necessitated by an operational or structural   failure due to the breakdown of a part, regardless of whether the   replacement of the part otherwise constitutes scheduled   maintenance.                 (2)     "Scheduled maintenance" means service performed   at or with reference to a time or wear interval for a device,   appliance, electrical, plumbing, heating, cooling, or   air-conditioning system, or motor vehicle and may include the   replacement of fluids, filters, brake pads, wiper blades, belts,   tires, and other similar parts designed to wear out with normal use   and recommended to be replaced or replenished at designated   intervals.                 (3)  [ (2) ]  "Warranty" means an undertaking made solely   by the manufacturer or importer of a product or the seller of a   product , structural component, system, or service that:                      (A)  guarantees [ indemnity for ] a [ defective   part, mechanical or electrical breakdown, or labor cost or   guarantees another ] remedial measure in the event of a defect in or   performance failure of the covered item. The remedial measure may   include reimbursement for costs related to the defect or failure ,   [ including ] the repair or replacement of the product , component,   system, or part, or the repetition of service;                      (B)  is made without payment of additional   consideration;                      (C)  is not negotiated or separated from the sale   of the product or service; and                      (D)  is incidental to the sale of the product or   service.          (b)  This chapter does not apply to:                (1)  a warranty;                (2)  a maintenance agreement;                (3)  a service contract sold or offered for sale to a   person concerning property purchased for other than personal,   family, or household purposes [ who is not a consumer ];                (4)  an agreement issued by an automobile service club   that holds a certificate of authority under Chapter 722,   Transportation Code;                (5)  a service contract sold by a motor vehicle dealer   on a motor vehicle sold by that dealer, if the dealer:                      (A)  is the provider;                      (B)  is licensed as a motor vehicle dealer under   Chapter 2301; and                      (C)  covers its obligations under the service   contract with a reimbursement insurance policy; or                (6)  a contract offered by a local exchange telephone   company that provides for the repair of inside telephone wiring,   if:                      (A)  the contract term does not exceed [Text truncated for display. Full text available on Congress.gov.]