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* * * BETWEEN THE DEALER [i.e., each petitioner] AND YOU [the
vehicle purchaser]” and is “NOT AN INSURANCE POLICY". An EWA
further provides that “Dealer in regards to this contract is
acting as a Principal and not as an Agent on behalf of any
insurer.” An EWA also states: “Issuing Dealer has insurance
with Western General Insurance Co., * * * – a Licensed Insurer.”
Finally, an EWA provides:
NOTICE: If a Breakdown Claim has been filed with
the Issuing Dealer who has failed to pay the claim
within sixty (60) days after proof of loss has been
filed with the Issuing Dealer, you the Service Contract
Purchaser shall also be entitled to make a Direct Claim
against the Issuing Dealer’s insurance company, Western
General Insurance Company * * *
During the years in issue, each petitioner sold EWA’s
pursuant to an agreement (Western General Agreement) with the
Western General Insurance Co. of Encino, California (Western
General), under which Western General assumed petitioners’
liabilities under the EWA’s in exchange for a single lump-sum
payment with respect to each EWA, referred to in the agreements
as an “insurance premium and policy fee”. Under the Western
General Agreement, Western General agreed “to issue and maintain
individual insurance policy coverage at DEALER’S [i.e., each
petitioner’s] expense which shall insure the DEALER for covered
costs of repairs and/or replacements incurred by the DEALER and
covered under the * * * EWA”. Each petitioner agreed to sell
EWA’s only through the forms provided by Western General and to
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Last modified: May 25, 2011