2003 - 2004 LEGISLATURE
February 19, 2004 - Introduced by Representatives Ladwig, Hahn, Plouff and
Townsend, cosponsored by Senators Schultz, Kanavas and Hansen. Referred
to Committee on Insurance.
1An Act to amend
601.41 (1) (intro.); and to create
100.203, 600.01 (1) (b) 11., 2
601.31 (1) (km), 631.37 (4) (g) and 632.185 of the statutes; relating to: vehicle
3protection product warranties.
Analysis by the Legislative Reference Bureau
The Wisconsin Administrative Code (code) provides requirements for the
business of issuing warranties in lieu of the application of the insurance provisions
of the statutes. The code provides that the commissioner of insurance
(commissioner) finds that the making of a contract relating to the repair,
replacement, or restoration of a good, product, or object is the transaction of
insurance and that the person making the contract is subject to the insurance
provisions of the statutes unless the person complies with the requirements under
the code. This bill provides that the insurance provisions of the statutes do not apply
to a vehicle protection product warranty and establishes a system to regulate vehicle
protection product warranties. A vehicle protection product warranty is defined as
a written representation, made to a warranty holder, that applies to a vehicle
protection product (a device, system, or service installed on or applied to a vehicle
that is designed to prevent loss or damage to the vehicle) and that asserts the vehicle
protection product will prevent specified loss or damage to the vehicle or the
warrantor will pay the warranty holder specified incidental costs.
Under the bill, if a person sells or offers to sell a vehicle protection product that
includes a warranty, the warrantor must meet several requirements. These
1. The warrantor must register with the office of the commissioner before he
or she may operate as a warrantor or represent to the public that he or she is a
warrantor. The commissioner may charge an annual fee not to exceed $250 for
processing and maintaining registration records. A warrantor must renew his or her
registration annually. If the warrantor fails to renew his or her registration, the
commissioner will suspend the warrantor's registration after 30 days. If the
warrantor still fails to renew his or her registration one year after the renewal
deadline, his or her registration will be terminated.
2. The warrantor must meet one of two conditions of financial responsibility.
Either the warrantor must have a net worth of, or ownership interests in the
warrantor must total, at least $50,000,000 or the warrantor must be insured under
a warranty reimbursement insurance policy (insurance policy) that meets the
conditions specified in the bill and must have filed a copy of the insurance policy with
3. If the warrantor is insured under an insurance policy, the insurance policy
must meet several conditions. The conditions include: the insurance policy issuer
must be authorized to do business in this state; the insurance policy must state that
the policy issuer will pay all covered sums; the insurance policy must state that, if
the warrantor does not provide payment due within 60 days after the warranty
holder has filed proof of loss, the warranty holder may file directly with the insurance
policy issuer for reimbursement; and the insurance policy must contain specified
4. The warrantor must provide specific disclosures on each warranty. The
disclosures include the identity of the warrantor, the seller, and the warranty holder;
the total purchase price and payment terms; the procedure for making a claim; the
existence of any deductible amount; any conditions of substitution; and any terms
and conditions governing the cancellation.
5. The warrantor may cancel a warranty only under limited, specified
conditions. The conditions include circumstances in which the warranty holder:
fails to pay for the vehicle protection product; commits fraud; or breaches the
warranty holder's duties under the warranty.
6. The warrantor must maintain accurate records of all warranty transactions,
and the records must be available to the commissioner. The records must include the
following: copies of all warranties under which the warrantor is obligated; names
and addresses of warranty holders; and dates, amounts, and descriptions of all
receipts, claims, and expenditures related to the warrantor's warranties.
If a warrantor violates a requirement under the vehicle protection product
warranty provisions, the commissioner may enforce the requirement, issue orders,
and protect warranty holders. A violator may be ordered to forfeit not more than
$500 per violation and not more than $10,000 for all violations of a similar nature.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB862, s. 1
100.203 of the statutes is created to read:
2100.203 Vehicle protection product warranties. (1) Definitions.
In this 3
(a) "Administrator" means a party other than the warrantor whom the 5
warrantor designates to be responsible for the administration of warranties.
(b) "Commissioner" means the commissioner of insurance.
(c) "Incidental costs" means expenses incurred by the warranty holder that are 8
specified in the warranty and that are related to the failure of the vehicle protection 9
product to perform as the warranty provides. "Incidental costs" include insurance 10
policy deductibles, rental vehicle charges, the difference between the actual value of 11
the stolen vehicle at the time of theft and the cost of a replacement vehicle, sales 12
taxes, registration fees, transaction fees, and mechanical inspection fees.
(d) "Office" means the office of the commissioner.
(e) "Vehicle protection product" means a device, system, or service installed on 15
or applied to a vehicle that is designed to prevent loss or damage to the vehicle. 16
"Vehicle protection product" includes alarm systems, body-part marking products, 17
steering locks, window-etch products, pedal and ignition locks, fuel and ignition kill 18
switches, and electronic, radio, and satellite tracking devices.
(f) "Warrantor" means a person who is obligated to the warranty holder under 20
the terms of the warranty.
(g) "Warranty" means a written representation, made to a warranty holder, 22
that applies to a vehicle protection product and that asserts that the vehicle 23
protection product will prevent specified loss or damage to a vehicle or the warrantor 24
will pay the warranty holder specified incidental costs.
(h) "Warranty holder" means the person who purchases a vehicle protection 2
product that includes a warranty or who is a permitted transferee under the terms 3
of the warranty.
(i) "Warranty reimbursement insurance policy" means an insurance policy that 5
is issued to a warrantor to provide reimbursement to the warrantor for, or to pay on 6
behalf of the warrantor, all obligations incurred by the warrantor under the terms 7
and conditions of the insured warranties sold by the warrantor.
8(2) Registration and filing requirements of warrantors.
(a) A person shall 9
register with the office by filing a form prescribed by the commissioner before 10
operating as a warrantor or representing to the public that the person is a warrantor.
(b) 1. Warrantor registration records shall be filed with the office annually and 12
shall be updated within 30 days of any change.
2. The registration records shall contain the following information, which shall 14
be available to the public:
a. The warrantor's name, any names under which the warrantor does business 16
in this state, the warrantor's principal office address, and the warrantor's telephone 17
b. The name and address of the warrantor's agent for service of process in this 19
state if other than the warrantor.
3. The registration records shall contain the following information, which is 21
confidential and not available for inspection or copying under s. 19.35 (1):
a. The name of the warrantor's executive officer directly responsible for the 23
warrantor's vehicle protection product business.
b. The name, address, and telephone number of any administrator that the 2
warrantor designates to be responsible for the administration of warranties in this 3
c. A copy of the warranty reimbursement insurance policy or other financial 5
information required under sub. (3).
d. A copy of each warranty that the warrantor plans to use in this state.
e. A statement indicating that the warrantor qualifies to do business in this 8
state under sub. (3) (a) or that the warrantor qualifies to do business in this state 9
under sub. (3) (b).
(c) 1. If a registrant fails to register by the renewal deadline, the commissioner 11
shall give the registrant written notice of the failure. The registrant shall have 30 12
days to complete the renewal before his or her registration is suspended.
2. If a registrant's registration is suspended under subd. 1., the suspension 14
shall last until the registrant registers and pays any late payment, except that the 15
registration shall be terminated one year after the renewal deadline if the registrant 16
has not registered or paid any late payment.
(d) A person who sells or solicits a sale of a vehicle protection product that 18
includes a warranty but who is not a warrantor is not required to register as a 19
warrantor to sell the vehicle protection product.
20(3) Financial responsibility.
No person may sell, or offer to sell, a vehicle 21
protection product that includes a warranty unless the warrantor meets one of the 22
(a) The warrantor is insured under a warranty reimbursement insurance 24
policy that meets the conditions specified in s. 632.185 (2) and has filed with the 25
commissioner a copy of the warranty reimbursement insurance policy.
(b) The warrantor's net worth, or the total of all outstanding ownership 2
interests in the warrantor, is at least $50,000,000, or, if the warrantor is a subsidiary, 3
the parent entity's net worth is at least $50,000,000. If the warrantor files with the 4
U.S. Securities and Exchange Commission, the warrantor provides the 5
commissioner with a copy of the warrantor's, or the parent entity's, most recent U.S. 6
Securities and Exchange Commission form 10-K or form 20-f, filed within the 7
preceding year pursuant to 15 USC 78L
(b) or (g), 78m
, or 78o
(d). If the warrantor 8
does not file with the U.S. Securities and Exchange Commission, the warrantor 9
provides the commissioner a copy of the warrantor's, or the parent entity's, audited 10
financial statements. If the warrantor's parent entity's forms or audited financial 11
statements are filed to meet the condition specified under this subsection, then the 12
parent entity shall agree to guarantee the obligations of the warrantor relating to 13
warranties issued by the warrantor in this state.
14(4) Disclosure to warranty holder.
(a) Every warranty shall be written in 15
clear language that is understandable to lay persons and shall be printed or typed 16
in easy-to-read size and style of type. No warranty may be sold or offered for sale 17
unless it meets all of the following conditions:
1. If the warrantor chooses to meet its financial responsibility obligations 19
under sub. (3) (a):
a. The warranty states that the obligations of the warrantor to the warranty 21
holder are guaranteed under a warranty reimbursement insurance policy and states 22
the name and address of the insurer.