20-1095.06. Approval of motor vehicle service contract program; requirements for approval
A. A service contract administrator or an insurer shall file with the director an application for approval of a motor vehicle service contract program. The fee prescribed in section 20-167 shall accompany each application.
B. The director shall approve a motor vehicle service contract program prior to sale in this state if it meets any of the following requirements:
1. It is insured by mechanical reimbursement insurance.
2. A surety bond issued by an insurer authorized to conduct surety business in this state has been posted with the director conditioned to pay all obligations, up to the sum of the bond, of motor vehicle service contracts written by the motor vehicle dealer during the term of the bond, notwithstanding when the loss occurs during the term of the service contract. The minimum amount of the bond is fifty thousand dollars. The service contract administrator or insurer shall increase the amount of the bond depending on the number of contracts in force at the end of the motor vehicle dealer's preceding accounting year in the following amounts:
Number of contracts Bond amount 1-250 $ 50, 000 251-500 $100, 000 501-750 $150, 000 751-1, 000 $200, 000 1, 001-and over $250, 000
3. Cash or securities equal to the amount of the bond required by paragraph 2 are filed with the state treasurer through the director's office for the purpose of guaranteeing performance under service contracts issued by the motor vehicle dealer.
C. The director shall approve the service contract program within thirty days of filing if the program meets the requirements of this section or disapprove the program specifying the deficiencies in it.
D. The director may disapprove a motor vehicle service contract program that has previously been approved if the program no longer meets the requirements of this section, the service contract administrator or insurer becomes insolvent or the service contract administrator, insurer or a licensed motor vehicle dealer engages in any unfair trade practice described in section 20-1095.09.
E. If the director disapproves a motor vehicle service contract program, the director shall notify, by certified mail, all licensed motor vehicle dealers selling the program. On receiving the notice the motor vehicle dealers shall not continue to sell the program.
Section: Previous 20-1094.01 20-1095 20-1095.01 20-1095.02 20-1095.03 20-1095.04 20-1095.05 20-1095.06 20-1095.07 20-1095.08 20-1095.09 20-1095.10 20-1096 20-1096.01 20-1096.02 NextLast modified: October 13, 2016