Illinois Proposes Expansion of “Service Contract” Definition

Illinois legislators have proposed an amendment to the Illinois Service Contract Act which would expand the definition of “service contract” to include contracts for a wide array of motor vehicle maintenance-related service.  Illinois House Bill 1460, formally titled the Motor Vehicle Ancillary Products Act, signals the continued evolution the Illinois Service Contract Act, 215 ILCS 152/1, et al. Under House Bill 1460, the regulatory framework governing service contracts would include a wide range of contracts for motor vehicle services, such as tire, body, and windshield repairs. All such “motor vehicle ancillary products” would now be subject to the same regulations of service contracts, including but not limited to:

a)      registration with the Director of Insurance;

b)      payment of initial and annual fees to the Director;

c)      certain registration requirements;

d)     financial responsibility requirements; and

e)      certain disclosure requirements.

House Bill 1460 also amends the Illinois Insurance Code to provide that the Code shall not be construed to apply to ancillary product contracts under the Motor Vehicle Ancillary Products Act. The bill was initially proposed as separate statute, but was later incorporated into provisions of the Service Contract Act and Insurance Code.

Illinois House Bill 1460, introduced on February 8, 2013, was passed by the House of Representatives on April 12, 2013, by a vote of 104 to 3.  The bill has arrived in the Senate and is currently being reviewed by the Senate Assignments Committee. The bill is sponsored by Senator Michael Hastings. The passage of this bill would bring Illinois in line with the significant number of states around the country that strictly regulate service contracts on motor vehicle-related products.  This amendment to the service contract framework signals that Illinois legislators are cognizant of nationwide issues in service contract regulation.

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Filed under Service Contract, Statutes & Regulations

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