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Car Talk / Extended Warranties / Extended Warranty Laws: A State-By-State Guide


UNDERSTANDING EXTENDED WARRANTY LAWS: A STATE-BY-STATE GUIDE

 * Brandon Bankston
 * 2/8/2024
 * Share
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Car Talk’s Understanding Extended Warranty Insider’s Guide gave you many tools
you need to make smart decisions on whether to buy an “extended warranty,” more
accurately called a vehicle service contract, for your car, and how to pick the
right company for your needs. But one thing it doesn’t elaborate on is the laws
surrounding the service contract industry in the United States.


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That’s because each state maintains its own service contract laws, which means
the legal picture is going to be very different depending on where you live.
This state-by-state guide is meant to help you understand the laws covering
vehicle service contracts where you live.

One thing that makes the picture a little less complicated than having 50
totally unique legal frameworks for service contracts is that many states have
adopted something called the Service Contract Model Act.

That’s a document written by the Service Contract Industry Council, a trade
association for the extended warranty industry, and the National Association of
Insurance Commissioners. It’s meant to provide a relatively uniform set of laws
across the states that adopt it. If you’re curious, you can read the Model Act
here.

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Many states have adopted the Model Act. Usually those states will require the
service contract company to provide you with a copy of the contract fairly soon
after you buy it. They’ll set a certain number of days you must be given to
change your mind and receive a full refund if you haven’t made any claims,
sometimes allowing small administrative fees. Usually you’ll get 10 to 20 days,
but not always. Florida, for example, gives you 2 months to cancel.

Model Act states will usually expect the company administering the service
contract to guarantee them in some way so that if you have to make a claim,
there will be money to pay for it. Often that guarantee will be done by the
administration company getting a reimbursement policy for the contracts from an
insurance company.

Another way for a company to guarantee claims will be paid is by posting a bond
with the state, usually a percentage of all the money they take in selling the
contracts. If it’s a company with a high net-worth, often in the neighborhood of
100 million bucks, they might not have to separately guarantee the contracts.
Model Act states usually also require companies to tell you how the contracts
are guaranteed, including the name of the company insuring them if there is one.
And they’ll usually mandate that if the administration company can’t or won’t
pay a claim, the customer can demand payment directly from that insurance
company.

Model Act states often insist that the contract prominently disclose conditions,
exemptions, restrictions, and other important details about the claims process,
transferring the contract if you sell the car, and how and if the administration
company can cancel the contract. They usually also require a disclosure if the
plan will use non-factory parts in repairs.

And most Model Act states say that no one, including the bank you get a loan
from to buy the car, can require you to buy an extended warranty as a condition
of the loan or the purchase of the car.

Where Model Act states tend to differ the most is in punishing companies that
break the law. Penalties range from fairly minor fines for each violation, all
the way up to serious charges if a company breaks certain parts of the service
contract laws. Missouri, for example, can charge anyone who intentionally lies
to sell a service contract with a felony, and the punishment can be up to a
decade in prison!

As you read the guide to your state’s vehicle service contract laws that affect
your extended warranty, keep in mind that laws sometimes use common words to
refer to specific things. For instance, throughout these guides we’ve referred
to the company that issues and services the contract as the “administrator.”
Some states call that company the “provider.” In this guide, the two terms are
used interchangeably.

This state-by-state summary is only an incomplete summary. In fact, our lawyers
are probably sweating right about now, so we should tell you that it’s not
comprehensive, and the people researching and writing this guide aren’t lawyers.
Also, laws can be changed, not only by legislative sessions but by court
decisions as well. We just don’t have the legal resources to look into every law
to make sure nothing’s been overturned.

Because of that, you should consider this guide a starting point, from which to
do your own research into laws that affect you. It is, to put it succinctly, not
legal advice and you should not rely on it alone for legal research.


EXTENDED WARRANTY LAWS BY STATE


ALABAMA

Alabama is a state of many firsts. It had the first electric trolley system in
the nation. The first stage of the Saturn V rocket which took humans to the Moon
was built in Huntsville. And it was among the first states to adopt the Model
Act, just 2 years after it was released.

That means Alabamians can expect a number of standard protections when they buy
a service contract. They’ll get 10 days from the purchase to change their mind
and get a full refund, and that goes up to 20 if they have to wait to see the
contract until it’s mailed to them.

Service contract providers must have their policies insured to guarantee the
company’s ability to pay, and the name of the insurance company must be stated
in the contract. Barring insurance, companies can establish an account with 30%
of the income from active contracts, plus place at least 5% of that income, with
a minimum of $25,000, into a trust. Companies with a net worth of at least $100
million don’t have to comply with either the deposit or insurance requirements.

Any deductibles that you’ll have to pay must be disclosed in the contract. You
must also be told of any exclusions to coverage, and anything you must do to
keep the contract in force, such as performing scheduled maintenance. If the
extended warranty company wants to use non-original parts to fix your car, they
must tell you in the contract. If pre-existing conditions or consequential
damages are excluded, that too must be disclosed.

Buying a car or getting a car loan cannot legally be made contingent on your
purchase of a service contract in Alabama.

Contract providers breaking Alabama’s extended warranty laws can be barred from
conducting further business in the state, as well as fined $500 per violation,
up to a total of $10,000 for “similar” violations.

Read full Alabama car warranty laws here.


ALASKA

Alaska is known as bear country, with all three species of North American bears
making the state home. If you’re being chased by a polar bear it’s a bad time
for your car to break down, and that might make you think about getting a
service contract. Alaska’s laws surrounding extended warranties provide a
framework that companies selling service contracts have to follow.

Extended warranty companies, both sellers and administrators, have to be
licensed by the state. As part of the application process, companies have to
prove their contracts comply with state laws and that they’ll be able to pay for
covered repairs.

Contract providers in Alaska, like many states, must insure their policies to
guarantee they can pay for claims. They can do that with an actual insurance
policy, or by keeping ten to fifteen million bucks in the bank, earmarked for
covering claims. Very large companies with net worths of $100 million or more
are exempt.

Companies have to disclose certain things in their contracts, such as whether or
not they’ll fix your car with non-original parts, and whether consequential
damage from covered parts is covered. If there will be a deductible you have to
pay for service, companies must disclose that in the contract. Anything you must
do to keep the contract in effect, such as performing routine maintenance on the
vehicle, has to be spelled out.

Contract sellers aren’t allowed to be deceptive, including omitting pertinent
information, when selling or writing contracts. They can’t claim to be
affiliated with your car’s manufacturer, and they can’t claim to know whether or
not your factory warranty is about to expire unless they actually do, and they
can’t tell you that you have to buy their service contract to keep your factory
warranty in place. Those are all things you’ll commonly hear from unsolicited
telemarketers trying to sell you service contracts, and it’s a good sign that
those companies aren’t legitimate. You can read more about extended car warranty
scams here.

Companies breaking Alaska’s service contract laws can have their license
suspended or revoked, and be fined $2,500 per violation, capped at $50,000 for
multiple offenses. If the company intentionally broke the law, that fine
increases to $5,000, and there is no cap for multiple violations.

Read full Alaska car warranty laws here.


ARIZONA

The Grand Canyon State is known for big holes in the ground, from the
aforementioned “Big Ditch” to one of the best-preserved meteor craters on the
planet. It’s also home to Winslow, a town made famous by The Eagles in their
meteoric hit Take It Easy, where the singer stands on a corner and attracts the
interest of a lady in a flatbed Ford.

And when that Ford breaks down, if it’s covered by a service contract, that
contract is covered by Arizona’s service contract laws.

Companies selling service contracts in Arizona must get a permit. One
requirement for being permitted is to prove to the state that the company has
the resources to pay for claims. Companies can do that by insuring their
contracts, or by filing a surety bond of at least $100,000. If insured,
contracts must state the name and address of the insurance company. Anyone
selling service contracts who isn’t registered can be charged with a
misdemeanor.

Companies selling service contracts have to submit their contracts to the state
for approval. They must disclose any deductibles and their amounts, as well as
anything that’s excluded from coverage. If non-original parts are to be used in
repairs, the contract must say so. Extended warranties must, at minimum, be
returnable at any time for a pro-rated refund, minus any claims paid and at
most, a 10% administrative fee.

Contracts have to tell you anything you must do to keep them in force, such as
performing scheduled maintenance on the car. Pre-existing conditions cannot be
excluded unless the service contract company had no way of knowing about them.

Companies breaking Alabama’s service contract laws can have their permit revoked
or suspended.

Read full Arizona car warranty laws here.


ARKANSAS

Home state of Johnny Cash, General Douglas MacArthur, and Walmart, Arkansas is
also known for its unusual state law against mispronouncing its name. For the
record, it’s “Ar-kan-Saw”. While there aren’t any penalties for pronouncing it
“Ar-Kansas,” there are sanctions for companies breaking the state’s laws
surrounding service contracts.

Arkansas has several regulations in common with many other states, but the law
specifically regulating extended warranties isn’t as fleshed out as you’ll find
in other jurisdictions.

Service contract providers must insure their policies to guarantee they can pay
claims. They have to disclose pertinent information such as whether or not
claims carry a deductible. Any exclusions to coverage must be discussed in the
contract. They have to allow customers to change their mind for a refund within
the first 30 days of purchase. And buying a car or getting a car loan can’t be
made contingent on buying a service contract.

But barring other laws that might cover contracts in general, there’s not much
to Arkansas’ service contract provisions. That means if you live in Arkansas,
you’ll want to read that contract especially carefully to make sure it meets
your needs.

Read full Arkansas car warranty laws here.


CALIFORNIA

California is the state of extremes, from the most damaging earthquakes in the
US to the highest mountain peak in the lower 48. And its extended warranty laws
are no exception.

In fact, California has two different types of extended warranty laws, each
covering a different setup. For the types of service contracts we’ve been
talking about, California requires that companies selling them be licensed car
dealers. Anyone who is not a licensed dealer who sells extended warranties in
California is committing a felony.

California also requires extended warranty administrators to have their own
Vehicle Service Contract Provider license, which costs nearly $5,000 to get, and
$847 to renew. And they must have a backup insurance company to guarantee claims
payment, unless they can show that they have $100 million in assets to guarantee
their obligations.

Companies providing vehicle service contracts in California must submit copies
of those contracts to the state. Contracts have to be insured to guarantee
claims can be paid. The insurance company must score at least a B++ rating from
A.M. Best Company. The name and address of the insurance company must be in the
contract. Companies worth at least $100 million do not need to comply with the
insurance requirement. But they do have to include contact information in the
contract to the Department of Insurance, which will receive any
breach-of-contract complaints.

Unlicensed companies, or companies that don’t properly insure their contracts,
can be fined up to half a million bucks, or charged with a felony. Or both.

Remember, all of that is for “Vehicle Service Contract Providers,” and their
contracts can only be legally sold by licensed car dealerships. But there is a
third-party seller option in California that’s covered by a different section of
the law. That's called “Mechanical Breakdown Insurance” (MBI) which mostly does
the same thing as a vehicle service contract as far as paying for covered
breakdowns. It’s just regulated as insurance.

You don't have to be a licensed car dealer to sell mechanical breakdown
insurance, but you do have to be a licensed insurance seller, and the
administration company has to be a licensed insurance provider. Unlike the
dealer-sold service contracts, you can buy MBI online.

To the consumer, the big difference between the two types of service contracts
other than where you buy them is that, as with any insurance policy, MBI pricing
is regulated by the Department of Insurance, while pricing of an extended
warranty you get from a car dealership is at the discretion of the seller.

Read full California car warranty laws here.

There is also another good resource here.


COLORADO

The home of Pike’s Peak and its world-famous hill climb race doesn’t have very
many laws specifically governing service contracts.

Extended warranties in Colorado have to be backed by an insurance policy, and
contracts have to give you the name and address of the insurance company. But
other than a ban on deceptive trade practices, there aren’t many laws specific
to service contracts in Colorado. There are no codified penalties that we could
find for violating those regulations, except that the regulations can be used by
wronged consumers when filing civil lawsuits.

This means you’ll want to very carefully read your contract, and make sure that
it includes everything you want, and doesn’t exclude anything important.

Read full Colorado car warranty laws here.

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CONNECTICUT

The first hamburger was made in Connecticut. Or at least, that’s what they’ll
tell you in Connecticut. Other states, like Wisconsin, Ohio, Texas, and Oklahoma
insist they are the hamburger’s birthplace, but Connecticut’s is the only claim
backed by the Library of Congress.

One thing Connecticut is not first in, is comprehensive laws surrounding
extended warranties. While there are laws, there aren’t many restrictions
regarding what a service contract company can and can’t do - mostly requirements
that they disclose what they’re doing in their contracts.

For instance whereas many states require providers to allow you to cancel your
contract, Connecticut law just says that service contract companies either tell
you what their cancellation policy is, or tell you that they don’t allow
cancellations.

Providers are required to insure contracts to guarantee ability to pay, and they
have to tell you the name of their insurance company. Companies that can prove
that financial reserves for paying claims are not more than 50% of the
provider’s net worth don’t have to comply with the insurance requirement.

For disputes between the customer and the contract provider, there’s an
arbitration process set up by the Insurance Commissioner that you’ll have to
follow.

If you live in Connecticut, you’ll want to carefully peruse your contract before
you sign, and do plenty of research on the company you’re considering to make
sure it will meet your needs.

Read full Connecticut car warranty laws here.


DELAWARE

Delaware may have been the first state to ratify the US Constitution, the first
to fly the American Flag, and even the first state to produce Nylon. But it’s
far from the first to regulate extended warranties. The state’s Department of
Insurance took the position that service contracts are insurance, and expressed
concern that service contract industry profits were higher than allowed for
traditional insurers but that regulating them the same way as traditional
insurance companies may be “counterproductive.”

The department recommended adopting the Service Contracts Model Act, but the
state’s General Assembly instead amended the law to clarify that service
contracts are not insurance.

There aren’t any laws specifically regulating extended warranties in Delaware
that we could find. Instead, service contracts fall under the state’s general
consumer protection complaint process, such as the Consumer Fraud Act and the
Deceptive Trade Practices Act.

For that reason, you’ll want to carefully read the service contract before you
agree to buy, and don’t forget to research the company you’re considering to
make sure you know what you’re agreeing to.

Car Talk could not find any listing of Delaware State car warranty laws to
provide.


DISTRICT OF COLUMBIA

Home to the Smithsonian Institution, the only place in the world where you can
see a 1986 Dodge Caravan, a Tucker Torpedo, and Abraham Lincoln’s hat in the
same building, District of Columbia a.k.a. Washington D.C. isn’t a state. But
the District still has laws governing extended warranties.

In D.C., companies providing service contracts must register with the District’s
Commissioner of Insurance each year. Companies have to secure their ability to
pay claims by one of several methods. They can insure the contracts and maintain
a 10 to 15 million dollar surplus. Alternatively, they can keep a reserve
account with at least 40% of income from current contracts plus a trust of at
least 5% of that income or $25,000, whichever is more. Companies with a net
worth of at least $100 million can skip both of those options.

Contracts marketed in Washington, D.C. have to tell you how they’re backed, and
if they’re insured, they must tell you the name and address of the insurer. Any
deductibles for service have to be disclosed, as must any exclusions or
limitations on coverage. If the company wants to use non-original parts to fix
your car, they must tell you in the contract. And they have to tell you whether
or not the contract covers consequential damages or pre-existing conditions.

Companies breaking D.C.’s vehicle service contract laws can be barred from
selling contracts in the city and face civil penalties of up to $500 per
violation, to a total of $10,000 for similar violations.

Read full Washington D.C. car warranty laws here.


FLORIDA

Home to alligators, a world-famous mouse, and the launch arm of the space
program, the Sunshine State is also home to nearly 8-million vehicles, and
that’s a lot of potential extended warranties to sell. Florida has a number of
regulations surrounding service contracts, some of which are relatively rare.

Companies selling service contracts in Florida must be licensed through the
Office of Insurance Regulation. Their contracts have to highlight any
restrictions or limitations, including if non-original or used parts can be used
to repair cars.

Contracts have a longer cancellation period than many states - you’ll have 60
days from purchase to cancel for a full refund, minus an administrative fee that
can’t be more than 5% of the contract’s price.

Companies are forbidden from misrepresenting important facts and provisions
about what’s covered, and not covered in the contract, and they’re required to
act on claims “promptly.” They cannot deny coverage based on lack of proper
maintenance unless the maintenance would have prevented the breakdown.

Beyond that, Florida has ways for consumers to easily do research on extended
warranty companies. You can verify that a company is licensed in Florida by
checking this website. And you can check this site to find any complaints lodged
against a service contract company.

Read full Florida car warranty laws here.


GEORGIA

Famous for Coke, the world’s busiest airport, and peaches, one thing Georgia
isn’t famous for is its extended warranty laws. But perhaps it should be because
they can be a little confusing.

For instance, service contracts are regulated as property insurance, unless
they’re insured. What that boils down to is that contracts aren’t subject to
property insurance regulations as long as the provider gets reimbursement
insurance that will guarantee payment of claims.

But there’s an exception: If you buy a car from a dealership, and they sell you
an extended warranty, it’s not regulated as insurance even if it’s not insured,
as long as the contract is backed by a company with a net worth of at least $50
million.

Georgia is also a bit unusual in that it doesn’t permit arbitration if there’s a
dispute between the buyer and the provider. That means disputes will go through
the legal system, not be shunted off to an arbitrator who may have a financial
incentive to side with a company over the consumer.

And in Georgia, a service contract can’t duplicate an existing warranty. In our
Understanding Extended Warranties: An Insider’s Guide, we talked about “extended
warranties” that can only be used if a breakdown isn’t already covered by the
manufacturer’s warranty, which means that a 5 year service contract on a car
with a 4 year warranty is in effect only a 1 year contract. In Georgia, extended
warranty companies aren’t supposed to charge you for those 4 years of the
factory warranty period unless you specifically consent in writing to the
charges.

Obviously, that means you’ll want to read the contract very carefully to make
sure it doesn’t duplicate coverage you already have.

Read full Georgia car warranty laws here.


HAWAII

The last state admitted to the union is also the only state that grows coffee,
and it’s one of the few states which, over time, has relaxed its laws
surrounding extended warranties. In 2019 Hawaii cut down on oversight by
removing a requirement that companies file a copy of its service contracts with
the state for approval.

But the state does still have expectations of extended warranty providers. They
must either insure the contracts to guarantee payment of claims, or deposit 40%
of gross revenues from contract sales in a reserve account and open a trust
account with the state of $25,000 or 5% of revenues, whichever is larger.
Companies worth at least $100 million are exempt from those requirements.

Contracts can’t be deceptive. They must disclose any deductibles the customer
will have to pay, as well as whether repairs can use non-original parts. And as
with most states, the sale of a vehicle can’t be dependent on the customer
buying an extended warranty.

Companies that break the law can be forbidden from selling warranties in the
state, and the state’s insurance commissioner can require them to provide
restitution to customers harmed by the violations.

Read full Hawaii car warranty laws here.


IDAHO

Idaho likes extremes. It’s home to North America’s highest sand dune, its
deepest gorge, and the world’s largest man-made geyser. One thing that isn’t
extreme is its extended warranty laws - in general, they’re a lot like many
other states.

In Idaho, service contracts have to be insured to guarantee payment of claims.
Unlike many states, there’s no way to avoid having to insure the contracts by
having a high enough corporate net worth or depositing a bond with the state.
Contracts have to identify the insurer.

Anything that isn’t covered by the extended warranty must be disclosed in the
contract. Buyers must be allowed to cancel the contract within 30 days, assuming
they haven’t filed a claim, for a full refund minus a fee that can’t be more
than $50. Buyers can also cancel the contract after 30 days for a pro-rated
refund.

Not only is it against the law to require a customer to buy an extended warranty
as a condition to buy a car or get a car loan, but providers are required to
tell customers so, in writing.

Companies breaking these laws face fines up to $1,000 per violation, to a
maximum of $25,000.

Read full Idaho car warranty laws here.


ILLINOIS

Illinois likes to stand out. After all, Chicago dyes its namesake river green
every St. Patrick’s day. It’s also home to the world’s first skyscraper, and the
first man-made nuclear reactor. But one place it fits right in is in its
extended warranty laws, which are very similar to those of many other states.

Providers of extended warranties have to register with the state, and file
copies of their contracts with the Department of Insurance. Service contracts in
Illinois must be insured to guarantee payment of claims. Companies can opt out
of insuring their contract if they keep money in a reserve account that’s at
least 40% of the revenues from active contracts, or if the company’s net worth
is at least $100 million.

Any deductibles and excluded parts have to be disclosed in the contract,
including whether or not the contract covers breakdowns resulting from normal
wear and tear.

Buyers must be allowed to cancel the contract within 30 days for a full refund
minus a cancellation fee that can’t be higher than $50. And they can cancel
after 30 days for a pro-rated refund.

A company violating any of the state’s rules for service contracts can be fined
$500 for every violation, up to $10,000.

As of January 2022, there is a new warranty reimbursement law on the books. You
can read more about this here.

Read full Illinois car warranty laws here.


INDIANA

Indiana has quite the car pedigree. Studebaker got its start in South Bend,
making horse-drawn wagons before transitioning to cars. The state was home to
some of the most desirable classics of old - Duesenberg, Auburn, and Stutz. And,
of course, there’s that famous 500 mile race in Indianapolis.

With all that car cred, it’s no surprise that Indiana has a number of laws on
the books governing extended warranties. In fact, Indiana is one of the few
states to clarify in its laws that “extended warranties” are not warranties
because they aren’t included in the purchase price of the car. Instead, the
state is careful to point out, those “extended warranties” are really service
contracts.

Service contracts in Indiana must be backed by an insurance policy to guarantee
payment of claims. Contracts must inform the customer which insurance company
backs their contract. Companies wanting to skip the insurance requirements can
maintain a funded account with at least 40% of income from active contracts.

Companies selling contracts have to send a copy of all of their service
contracts to the state. Any deductibles for service, and anything that’s
excluded from coverage, has to be disclosed in the contract. If non-original
parts may be used to fix your car, you have to be told so in the contract.
Pre-existing conditions and consequential damages may be excluded, but only if
the contract says they are. Companies also have to inform you what needs to be
done to keep the contract in effect, such as performing regular maintenance.

As penalties go, Indiana is fairly strict; companies breaking the service
contract laws can be fined up to $10,000 per violation, and prohibited from
doing business in the state.

Read full Indiana car warranty laws here.


IOWA

Iowa is home to lots of corn, soybeans, and in the small town of Britt, the
National Hobo Convention, where the Hobo King and Queen are crowned each Autumn.

On the extended warranty front, Iowa has a number of regulations in place which
companies have to follow. Administration companies must register with the state
each year. Each service contract must be insured to guarantee payment of claims,
and contracts have to tell you which insurance company issued the policy.
Alternatively, companies may keep a reserve account of at least 40% of gross
income from currently active contracts as long as they’re worth at least $100
million or deposit a bond of at least $25,000 in lieu of insuring contracts.

Contracts have to disclose to buyers anything that’s excluded from the contract,
as well as what the buyer must do to maintain coverage, such as performing
regular maintenance.

Buyers can cancel contracts within 10 to 20 days for a full refund as long as
they haven’t made any claims, depending on whether or not they got a copy of the
contract at purchase or it was mailed to them.

Service contracts aren’t allowed to duplicate existing factory warranties unless
the buyer consents in writing. As with most states, deceptive marketing and
contract language is forbidden. Also common to many states, buying a service
contract can’t be a requirement to buy a car or get a car loan.

If you have an extended warranty in Iowa, the administration company must get
your written permission to repair your car with used parts, but there’s a
caveat: If a part is used, but was rebuilt “according to national standards,”
it’s OK to use it to repair your car.

Iowa is among a limited number of states which assign felony penalties for
intentionally violating the state’s service contract laws - penalties include up
to 5 years in prison and up to $7,500 in fines.

Read full Iowa car warranty laws here.


KANSAS

Famous in textile circles for Cawker City’s giant ball of twine (13 feet wide
and counting), Kansas is less well-known for its extended warranty laws.

That’s because it doesn’t have many that we could find. There’s a mention in the
Insurance code exempting service contracts from being regulated as insurance
and, well, that’s about it.

Because of that you’ll want to be very careful while reading that service
contract. Make sure you understand what is, and is not, included in coverage,
and what deductible, if any, you’ll have to pay if you make a claim. And be sure
to familiarize yourself with anything you might be contractually obligated to do
in order to keep the contract valid, such as keeping up with routine
maintenance.

Read full Kansas car warranty laws here.


KENTUCKY

The state that makes the Corvette, Kentucky’s contributions to car culture can’t
be denied. But there aren’t many laws governing extended warranties for those
cars.

Service contracts are considered insurance, and subject to insurance laws in
Kentucky unless the company administering them chooses to register with the
state and either carries insurance on every policy to guarantee payment of
claims, or proves they have a net worth of at least $100 million.

If the company does that, then there aren’t specific laws governing their
contracts. This means you’ll want to carefully read your contract if you buy one
in Kentucky. Make sure you know what is and is not covered by the extended
warranty. Look for information on whether or not you will be expected to pay a
deductible if you make a claim, and how much that will be. And be sure to know
what you have to do to keep the contract in effect, such as performing regular
maintenance on your car.

Read full Kentucky car warranty laws here.

There is also another good resource here.


LOUISIANA

The state of Cajuns, Creoles, and crawdads, Louisiana is also well known for
having a labyrinthine set of laws, some of which are to this day inspired by the
legal system of ancient Rome.

Fortunately for us, the laws surrounding extended warranties aren’t too tough to
get a handle on! Automotive service contract companies in Louisiana are
considered “Vehicle Mechanical Breakdown Insurers.” And to be one, a company has
to register with the state’s Commissioner of Insurance and get licensed. It’s
not enough to simply fill out a registration form - companies have to prove that
their directors and other management are “competent and trustworthy.” Customer
application forms and insurance policies have to be filed with the Commissioner
of Insurance as part of the licensure process.

Companies wanting to sell extended warranties in Louisiana must deposit at least
$150,000 in a security account or a surety bond with the state before it can be
licensed. The Commissioner of Insurance can determine extra funds beyond the
bond that the service contract company must hold in reserve to cover losses. But
there aren’t many specific regulations as to what a service contract can and
can’t say; this means you’ll want to read your contract carefully, and assume
that if it’s not mentioned as being covered in the contract, it’s not covered.

Companies breaking the Vehicle Mechanical Breakdown Insurance laws can be fined
up to $1,000 per violation, and also risk license suspension or revocation.

Read full Louisiana car warranty laws here.


MAINE

The state known for lobsters and blueberries has a number of laws in place
governing vehicle service contracts. Companies administering them must register
with the state each year, and insure their contracts to guarantee payment of
claims. Contracts must specify which company insures them. Companies with net
worths greater than $100 million can skip the insurance requirement; contracts
must inform the customer if the policy is not insured.

Customers must be allowed to return contracts for a full refund within 10 days -
20 if the contract is mailed to them - as long as they haven’t made any claims.
After that, customers can still return contracts for prorated refunds.

Contracts have to explain how to get approval for repairs, and whether there’s a
deductible for service. They also must disclose any exclusions to coverage.

If a service contract company wants to use non-original parts in repairs, it has
to disclose that in the contract. It must say whether or not the plan covers
consequential damages (damage caused on a covered part by a non-covered part) or
preexisting conditions. And, the contract has to tell you what you need to do in
order to maintain coverage, such as performing scheduled maintenance on the car.

Companies breaking these laws can be fined up to $15,000 per violation, be
forced to stop selling contracts, and be ordered to pay restitution to anyone
wronged.

Read full Main car warranty laws here.


MARYLAND

Maryland is home to the US Naval Academy, Babe Ruth, and the National Anthem.
The state’s extended warranty laws look a little different than most. For one,
they’re classified under the Transportation Code in the “dealers” section rather
than insurance or consumer protection. But that doesn’t mean only car dealers
can sell them; any company can as long as it meets legal requirements.

Companies selling extended warranties must register with the Insurance
Commissioner every year. Contracts have to be covered by an insurance policy to
guarantee payment of claims, and copies of the contracts have to be filed with
the state.

Contracts have to clearly say when they begin and end, can’t be deceptive, and
must follow all the conditions in the Maryland Service Contracts and Consumer
Products Guaranty Act. Rules under that act that must be followed include more
required disclosures. Contracts have to tell you what you need to do to keep the
contract in effect, such as performing scheduled maintenance. They must inform
you of any excluded coverages.

The Guaranty Act requires that contracts must be returnable for a full refund in
the first 20 days, unless a claim was made.

Companies violating any of these rules can be ordered to stop doing business,
and in some cases face fines of up to $5,000 and possibly up to a year in jail
in addition to paying restitution to any customer wronged by their actions.

Read full Maryland car warranty laws here.


MASSACHUSETTS

Massachusetts has some serious car cred. After all, it’s home to Cambridge, “Our
Fair City” where the Tappet Brothers themselves got their start running a DIY
repair shop called Hacker's Haven. Currently, Massachusetts has a number of laws
on the books regulating service contracts. Companies providing service contracts
in Massachusetts must register with the state every three years. They have to
insure their contracts to guarantee claims will be paid, and state the name of
the insurance company in the contract. Alternatively, they can keep a reserve
account funded with at least 40% of their income from selling contracts, plus a
security deposit of at least 5% of that income or $25,000, whichever is more.

Administration companies have to let you return your contract for a full refund
within 10 days of buying it, or 20 days if the contract is mailed to you, as
long as you haven’t already made a claim on it.

Contracts have to disclose any deductibles and their amounts, as well as
anything that’s excluded from coverage. Anything you must do to keep the
contract in force, such as performing regular maintenance, must be spelled out
in the contract. The contract has to specify whether or not the plan covers
pre-existing conditions.

Companies breaking Massachusetts’ laws surrounding service contracts can be
barred from doing business in the state, and face civil penalties of up to $500
per violation with a total of $10,000 for multiple similar violations.

There’s something else you should know. At this moment, while we are publishing
this article, bills are working their way through the legislature that could
change how these companies are regulated in Massachusetts. You’ll want to keep
an eye on any new legislation in the coming months.

Read full Massachusetts car warranty laws here.

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MICHIGAN

Home of the American automobile, Michigan’s laws are surprisingly light
regarding extended warranties. In fact, there aren’t any that we could find.
Service contracts instead fall under other laws, such as consumer protection.
The Michigan Attorney General’s office has created a website to help you avoid
problems when you’re shopping for an extended warranty. It covers a lot of the
topics we talked about in the Insider’s Guide and is worth a read before buying
a service contract in Michigan.

Car Talk could not find any listing of Michigan State car warranty laws to
provide.


MINNESOTA

Minnesota, land of 10,000 lakes, seemingly a hundred trillion mosquitoes, and
the birthplace of the Tonka Truck. It’s also a state with a considerable legal
framework surrounding extended warranty companies.

Service contract administration companies have to register with the state each
year. They have to have insurance policies on their contracts to guarantee that
claims can be paid - a requirement they can only skip if they have a reserve
account that totals at least 40% of their gross income for every active contract
they have, or have a company net worth of more than $100 million.

Companies have to let you return the contract for a refund within 10 days, or 20
if the contract is mailed to you, as long as you haven’t already made a claim.
Any deductibles you’ll have to pay when filing claims must be specified in the
contract.

The law requires that contracts tell you about anything that’s excluded from the
agreement, including consequential damages and pre-existing conditions. And the
company must tell you anything you have to do to keep the contract in effect,
like performing regular maintenance on your car. In Minnesota, buying extended
warranties isn’t allowed to be a requirement for buying a car or getting a car
loan.

Read full Minnesota car warranty laws here.


MISSISSIPPI

Mississippi is the birthplace of B.B. King, Jim Henson, and Elvis. And it’s a
state with a number of laws surrounding vehicle service contracts.

Companies selling extended warranties have to send a copy of the contracts to
the state. They also have to carry insurance on their contracts to guarantee
payment of claims unless they have a net worth of at least $100 million, and
they have to send a copy of the insurance policy to the state as well. The
contracts have to state the name of the company that insures them.

Extended warranty contracts must inform customers of any deductibles that will
be charged, and they have to spell out anything that’s excluded from coverage.
Contracts are also required to explain when using non-original parts to fix the
car will be allowed, and they have to tell the customers everything they must do
to maintain coverage under the contract, such as performing regular maintenance.

Warranty sellers aren’t allowed to lie about their service contracts, or make
buying an extended warranty a requirement for buying or getting a loan for a
car.

Read full Mississippi car warranty laws here.


MISSOURI

Home state of President Harry Truman and Mark Twain, Missouri is also known for
being the starting point for the westbound Pony Express. Folks buying vehicle
service contracts in the Show-Me State are protected by a number of laws
regulating their sale and administration.

Extended warranty companies must register with the state and in some cases
obtain a license. They must take out insurance policies for all service
contracts to guarantee payment of claims. The contract must tell you which
insurance company issued the policy. In lieu of insurance, companies can choose
to maintain a funded account with at least 40% of revenues from selling the
contracts, and place in trust with the state a deposit of at least 5% of
revenues or $25,000, whichever is more. Companies with a net worth of at least
$100 million need not do either.

Contracts have to tell you if prior approval of work is required, and how to get
it. They must also inform you of any deductibles for service under the contract,
and how much they will cost. You must be given at least 20 days to change your
mind and return the contract for a full refund, minus any claims you might have
made.

Contracts must disclose any exclusions from coverage, and tell you what you must
do to maintain coverage, such as performing scheduled maintenance.

If the administration company directs service shops to use non-original parts,
they have to disclose that in the contract, as well as whether or not the
contract covers consequential damage or preexisting conditions.

Companies caught breaking any of these laws can be fined between $1,000 and
$5,000 per violation (judges may reduce these fines if they wish, and can even
increase them if they determine the violation was intentional), with an annual
cap of $100,000. The state can also revoke or suspend a company’s registration
or license.

Read full Missouri car warranty laws here.

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MONTANA

Montana gets all the gold rush fame, but a 20-year gold rush in 1864 in what’s
now capital city Helena turned up $3.5 billion worth of gold in today’s dollars.

But Montana’s also known as having a government with a fairly light touch, and
vehicle service contracts are no exception. In fact, there are only 4 chapters
addressing the matter in state laws, and one of those chapters merely defines
the terms.

Companies providing extended warranties in Montana are required to carry
insurance policies on the contracts, to guarantee payment of claims. Companies
with a $15 million surplus, or a net worth of $100 million, or that deposit a
bond of at least $25,000 with an authorized institution are exempt from the
insurance requirement. Contracts must specify which company wrote the insurance
policy, if there is one.

Contracts have to disclose whether there will be a deductible due at services,
and how much it will be. They have to tell you if non-original parts are
allowed, and explain what you must do to keep the contract in force, such as
perform scheduled maintenance on the vehicle.

With so few laws governing extended warranties, you’ll want to make sure to read
your contract carefully to make sure it meets your expectations and needs.

Read full Montana car warranty laws here.


NEBRASKA

Nebraska has one of the best car museums in the country, the Museum of American
Speed. Chock full of historic performance and race cars, you can also see a rare
original Tucker, and even a Duesenberg. But the state’s extended warranty laws
aren’t quite as extensive as the museum’s collection.

In Nebraska, companies administering extended warranties have to submit copies
of their contracts to the state. Service contracts must be insured to guarantee
payment of claims, and the contracts have to tell you which insurance company
wrote the policy that covers it. The rest is left to the Director of Insurance
to determine what elements must be in the contracts.

Those regulations state that contracts must disclose any deductible you’ll have
to pay when filing claims. They have to tell you about any exclusions to
coverage, and anything you have to do to keep the contract in effect such as
performing regular maintenance.

Companies violating Nebraska’s extended warranty laws can be barred from
conducting business in the state.

Read full Nebraska car warranty laws here.


NEVADA

Nevada’s famous for casinos and glitzy entertainment, and for being the site of
Area 51 which is either a research facility for advanced aircraft or a storage
site for alien spacecraft, depending on how crazy the person making the claim
is.

But the state’s downright down-to-earth in its vehicle service contract laws.
Nevada requires extended warranty providers to get a certificate of registration
from the state. Contracts have to be insured to guarantee payment of claims.
Contracts have to specify the name of the insurance provider.

The state outlaws making the purchase of a vehicle or getting a car loan
contingent on buying a service contract. And customers must be allowed to back
out of the contract within 10 or 20 days of purchase for a full refund,
depending on whether the contract was given to the customer at the time of
purchase or mailed to them.

Contracts have to describe what they cover, and specify anything they don’t
cover. They must also detail what you have to do to keep the contract in effect,
such as performing scheduled maintenance.

Contracts have to disclose if they will allow non-original parts or parts not
made for your car to be used in repairs. Companies breaking any of Nevada’s
service contract laws could be barred from selling extended warranties in the
state, or fined up to $1,000 per violation.

Read full Nevada car warranty laws here.


NEW HAMPSHIRE

Birthplace of famous astronaut Alan Shepard, New Hampshire is also the origin of
a more far-out space-travel legend; When Barney and Betty Hill of Portsmouth
reported having been abducted by aliens in 1961, theirs was the nation’s first
in a long series of unverified ET encounters. Closer to home and considerably
more terrestrial, New Hampshire’s laws surrounding vehicle service contracts are
fairly par-for-the-course.

Extended warranty companies in the Granite State must post a minimum $25,000
bond and have a reserve bank account with 40% of income from active contracts in
it. Unless the company is worth at least $25 million, they must also insure
their policies to guarantee their ability to pay claims. The contract has to
include contact information for the insurer.

Administration companies must register each year, but unlike many states,
there’s no requirement that copies of the contracts be filed with the state. But
New Hampshire does have a number of required elements for those contracts.

Service contracts must disclose any deductibles you’ll have to pay when you make
claims. They have to tell you what you must do to keep the contract in effect,
such as performing scheduled maintenance. They have to let you know if anything
is excluded from coverage, including how they will determine if any preexisting
conditions aren’t covered. If the company requires prior approval before you
have work done, they have to tell you in the contract, including how to get that
approval.

Companies breaking New Hampshire’s service contract laws can be barred from
doing business in the state, fined $1,000 per violation (up to $10,000 if they
intentionally broke the law), and be ordered to pay restitution to customers who
were wronged.

Read full New Hampshire car warranty laws here.


NEW JERSEY

The state that lent street names to all the properties on the Monopoly board,
New Jersey’s place in cultural Americana can’t be denied.

And it’s a state with a number of laws surrounding extended warranties. Service
contracts in New Jersey have to be insured to guarantee claims can be paid, and
the contract must give you the name of the insurance company. If a company wants
to bypass the insurance requirement, it must either be worth $100 million, or
deposit at least 40% of its income from active service contracts into a reserve
account.

Contracts have to describe any limitations or exclusions to coverage, and
disclose any deductible fee you will have to pay if you make a claim. If the
company wants to use non-original or used parts for repairs, it must say so in
the contract. Anything you must do to keep the contract in effect, such as
performing scheduled maintenance, must be explained in the contract.

Companies must allow you to return contracts for a full refund within 10 days of
purchase, or 20 if they mail the contract to you.

New Jersey has been known to harshly penalize companies that violate its service
contract laws. One such company was forbidden from continuing to do business in
the state, and subject to hundreds of thousands of dollars in fines and
restitution after it was determined to have cheated customers.

Read full New Jersey car warranty laws here.

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NEW MEXICO

New Mexico has long gazed skyward; its annual Albuquerque International Balloon
Fiesta features hundreds of floating hot-air-powered machines, while its Very
Large Array telescope probes the heavens that, if all goes according to plan,
will soon be toured by people boarding spaceships at Spaceport America.

But the Land of Enchantment also has its gaze firmly on ground-based vehicles,
with a sizable body of legislation aimed at extended warranties. Companies
wanting to provide vehicle service contracts in New Mexico have to register each
year, and they have to guarantee payment of claims via one of two methods.
Companies can choose to insure their contracts, or deposit a $100,000 bond with
the state.

You must be given the right to return the contract for a full refund within 10
days of purchase, or 20 if the contract is mailed to you, as long as you haven’t
made any claims on it. After that time, you can still return the contract for a
pro-rated refund.

All extended warranty contracts have to tell you what is covered, and disclose
any exclusions to that coverage. They also have to tell you if non-original
parts may be used to fix your car. They have to tell you what you must do to
maintain the contract, such as performing scheduled maintenance. And they need
to let you know if pre-existing conditions or consequential damages are covered.

If a company breaks the law, it can be fined up to $5,000 for each violation, to
a maximum of $100,000 total if there are multiple similar violations.

Read full New Mexico car warranty laws here.


NEW YORK

New York, the state with a major metro area that’s made it illegal to honk your
horn unless there’s an emergency. Not, as any New Yorker will tell you, that
anyone follows that law. Expectations of compliance with vehicle service
contract laws are likely to be considerably higher.

In New York, extended warranty companies have to register with the state each
year. They must insure their extended warranties to guarantee payment of claims.
The contract must tell you the name and address of the insurance company.

If they don’t wish to insure the contracts, they can set up a reserve fund of at
least 40% of their income from active contracts. They must also place at least
5% of their income from active contracts or $50,000, whichever is more, in a
trust account. To skip insurance and deposit requirements, a company must prove
to the state that it has a net worth of at least $100 million.

If you wish to return the contract, you may do so within 10 days (20 if it was
mailed to you) for a full refund. Contracts have to tell you if there will be a
deductible you have to pay for service. They must disclose if non-original parts
may be used to fix your car. And they have to tell you if pre-existing
conditions are excluded from coverage.

Buying an extended warranty cannot be made a requirement to buy a car or to get
a car loan. Companies violating any of New York’s service contracts laws can be
forbidden from doing business in the state. They can also face fines of up to
$500 per violation.

Read full New York car warranty laws here.


NORTH CAROLINA

Justifiably famous for containing the site of the Wright Brothers’ first powered
airplane flight, the Tar Heel State has plenty of transportation cred, including
one of the largest state-run highway systems.

But it has fewer laws than many states regarding another facet of
transportation, extended warranties. Because of that, you’ll want to be
especially thorough when reading your contract to make sure it meets your needs.

Companies providing extended warranties in North Carolina must insure their
contracts to guard against inability to pay claims. Companies can skip the
insurance requirement if they’re worth at least $100 million and have been in
business for a decade or more, or they maintain a reserve account of at least
40% of their income from active contracts.

Buying a car or getting a car loan can’t legally be made contingent on buying a
service agreement in North Carolina. While companies aren’t allowed to cancel
contracts except when customers don’t pay or violate the warranty’s terms,
customers must be allowed to cancel whenever they wish. If they cancel, they’re
legally entitled to a pro-rated refund minus an administrative fee that can’t be
more than 10% of the refund amount. Sellers breaking North Carolina’s service
contract law can be charged with a misdemeanor. Because the law has a light
touch on mandatory elements to service contracts, you’ll want to read yours
carefully to make sure it meets your needs.

Read full North Carolina car warranty laws here.


NORTH DAKOTA

North Dakota famously has an art exhibit called The Enchanted Highway; 32 miles
worth of scrap metal sculptures alongside a highway. If you don’t want your car
to perhaps end up as premature art, you might be thinking about an extended
warranty.

North Dakota only has one piece of legislation about extended warranties that we
could find; a law exempting them from being regulated as insurance. As there are
no other specific regulations for service contracts in the Peace Garden State,
if you live there you’ll want to carefully read your contract to be sure it
meets your needs.

Read full North Dakota car warranty laws here.


OHIO

The Buckeye State does not have any laws regulating extended warranties /
vehicle service contracts that we could find, except for a couple which exempt
them from coverage by some other laws. Because of that, you’ll want to very
carefully read your contract, to make sure it meets your needs.

Car Talk could not find any listing of Ohio State car warranty laws to provide.

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OKLAHOMA

Oklahoma, where the wind comes sweepin’ down the plain, and the service contract
laws are long and labyrinthine.

Oklahoma calls extended warranty companies “Service Warranty Associations.” The
state requires them to be licensed annually unless they’re already a licensed
property or casualty insurance company. To get a licence, a company not only has
to pay $400, but they also have to convince the Insurance Department that their
management is “competent and trustworthy.” Associations also have to file any
warranty or related forms with the Insurance Commissioner for approval.

Service Warranty Associations have to keep funded reserve accounts of at least
25% of gross income from active contracts to guarantee they’ll have enough money
to pay claims. If it’s a multi-year contract that you pay for all at once at the
beginning, they must keep 100% of future year payments in reserve. Companies
also need to establish a surety bond in trust with the Insurance Commissioner of
$25,000 or at least 5% of the income from active contracts, minus any claims
that have been paid, whichever is larger.

Companies wishing to avoid these requirements may instead take out an insurance
policy that guarantees all of its potential claims. And they can’t just pick any
insurance company; the insurer must be licensed in Oklahoma and have a B++ or
higher rating by the A.M. Best Company.

Companies with a net worth of $100 million may be able to bypass all of the
regulations specifically surrounding service contracts, but of course would
still be required to follow other laws, such as those regulating contracts
generally.

Contracts have to allow you to cancel them, for a refund of 90% of the pro-rated
cost of the contract minus any claims paid.

Companies violating any of Oklahoma’s laws surrounding Service Warranty
Associations can have their license suspended or revoked. First time offenders
may be assessed fines of $100 per violation ($1,000 if they did it
deliberately). Multiple violation penalties are capped at $5,000, unless the
company broke the law intentionally; then the cap is $150,000. Those fines can
be assessed in lieu of license suspension or revocation.

If it’s not the company’s first time offending, they can still avoid revocation
or suspension, at the discretion of the Insurance Commissioner, but the fines
can be higher; $1,000 per violation, up to $10,000 if they broke the law
intentionally.

Read full Oklahoma car warranty laws here.


OREGON

The state that claims to be home to the world’s shortest river at around 120
feet (as with many records, this has started an amusing conflict with Montana
which also claims to have the world’s shortest), and the world’s smallest park,
a 2-foot circle, Oregon does not hold the record for the shortest extended
warranty legislation.

Companies providing service contracts in Oregon must register with the state.
They must prove that they have a net worth of at least $100 million. Companies
worth less must insure their policies to guarantee their ability to pay for
claims.

Contracts have to state whether or not prior approval for repairs is required,
and if it is, how to get it. Deductibles and their amounts have to be disclosed.
Contracts must tell you about anything that’s excluded from coverage.

Companies breaking Oregon’s extended warranty laws can be fined up to $2,000 if
it’s their first time. Second offenders can see $5,000 in fines, and violations
after the second can go up to $10,000. Intentional violations can result in a
company’s registration being suspended or revoked.

Read full Oregon car warranty laws here.


PENNSYLVANIA

Boston may be the birthplace of the American Revolution, but the Declaration of
Independence was signed in Philadelphia, so it could be argued that every law in
the country owes its existence to the Keystone State.

Under one of those laws, companies providing extended warranties in Pennsylvania
have to insure their contracts to guarantee they can pay for claims. Companies
can skip the insurance requirement if they have a certified public accountant
verify that they have a reserve account with enough money to cover potential
claims, and that amount is either less than half of their net worth or, if more,
held in an independent trust. If they go the insurance route, they have to tell
you which company insures their contracts and how you can file a claim against
the insurance policy.

Copies of contract forms have to be filed with the state’s Insurance
Commissioner. Those contracts have to specify any exclusions to the warranty and
what you have to do to keep the contract in effect such as having scheduled
maintenance performed. Contracts have to spell out how you can make claims and
get service, as well as any deductibles or other charges you’ll have to pay when
you do.

Buying an extended warranty can’t be made a requirement to buy a car or get a
car loan in Pennsylvania. Customers who feel they were wronged by a company
violating these laws can enter into arbitration with the warranty company.

Beyond that, there aren’t any pertinent laws regarding service contracts that we
could find. As such, you’ll want to read your contract carefully to make sure it
meets your needs.

Read full Pennsylvania car warranty laws here.


RHODE ISLAND

Rhode Island is small. (How small is it?) If we divided the country into states
as small as Rhode Island, we’d end up with more than 3,000 of them.

Similarly small is Rhode Island’s legislation addressing extended warranties.
The state exempts service contracts from being regulated as insurance. Service
contracts are to be extended if a vehicle is repaired through them by however
long it’s in the shop for repair, or if you can’t get it repaired because a
natural disaster or a war closed the shop. That’s all we could find.

Because of that, you’ll want to read your contract very carefully and make sure
its terms meet your needs.

Read full Rhode Island car warranty laws word.


SOUTH CAROLINA

South Carolina’s Lake Murray is said to be home to America’s version of the Loch
Ness Monster, “Messie.” Mythical cryptid hunters shopping for extended
warranties enjoy a number of protections enshrined in state law.

Service contract providers have to register with the state each year. To make
sure claims on warranties can be paid, providers have to do one of three things.
They can insure their contracts, keep 40% of the money they make from active
contracts in a reserve account and place a security deposit of at least 5% of
that money with the state, or prove to the state that their company is worth at
least $100 million.

Contracts that are insured have to tell the customer which company insures it,
and how to contact them. If the customer must get prior approval to have work
done on the car, the contract must disclose that, and spell out the process for
doing so. Deductibles must be disclosed, including their amounts.

You have 10 days (20 if the contract is mailed to you) from signing to change
your mind and return the contract for a full refund as long as you haven’t made
any claims.

Contracts have to disclose any exclusions to coverage, and whether or not
non-original parts may be used. They must tell you what, if anything, you must
do to keep the contract in force, such as performing scheduled maintenance on
your car.

If consequential damages or pre-existing conditions are excluded, the contract
has to say so. Buying an extended warranty can’t be a requirement to buy a car
or get a car loan.

Companies breaking any of South Carolina’s service contracts laws can be ordered
to stop selling contracts and may face civil penalties up to $1,000 per
violation to a maximum of $10,000. If it’s determined the company wilfully broke
the law, there is no maximum limit.

Read full South Carolina car warranty laws here.

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SOUTH DAKOTA

Home to Wall Drug and the dubiously-famous Corn Palace, South Dakota has no
shortage of kitschy tourist attractions. But it does have a shortage of laws
covering extended warranties. Namely, none. The only laws we could find were
ones exempting service contracts from being covered by various laws.

Because of that, you’ll want to read your contract thoroughly to make sure it
does what you need it to do. The South Dakota government has published a small
advice section on purchasing extended warranties, available here.


TENNESSEE

Land of the Great Smoky Mountains, the epicenter of whiskey, and longtime home
of Dolly Parton, Tennessee’s influence on American culture is hard to deny. Its
influence on extended warranty regulation, however…

The state has one law addressing service contracts that we could find, and it
only exempts extended warranties from being governed by insurance laws. Because
of that, you’ll want to make sure you understand what your service contract
covers and doesn’t cover, and any other terms it contains.

Read full Tennessee car warranty laws here.


TEXAS

They say everything’s bigger in the Lone Star State. Even the capitol building,
which is the largest of any state. The state’s laws are similarly massive and
while the extended warranty provisions might not be the largest, they’re
definitely fairly sizable.

Companies providing extended warranties in Texas must register with the state
each year. To register, a company must convince the state that its directors and
managers are “trustworthy” and competent.

Companies must insure their contracts to make sure they can pay any claims that
arise. Your contract must tell you how to contact the insurer. Warranty
companies can avoid the insurance requirement if they maintain a funded reserve
account with at least 40% of the income from active contracts, with a minimum of
$250,000 for most companies, or $25,000-$75,000 for car dealerships based on
sales revenue. Alternately, firms can prove to the state that their company is
worth at least $100 million to be exempt from insurance or reserve account
requirements.

If you get an extended warranty and then change your mind, the law requires that
you be allowed to cancel the contract within 30 days of buying for a full
refund, or after 30 days for a pro-rated refund, minus any claims you filed. The
law specifically prohibits cancellation fees in the first 30 days, and limits
them to $50 thereafter.

Contracts must disclose if there’s a deductible for service, and the amount. You
have to be told if there are any exclusions from coverage, and what those
exclusions are. Any responsibilities you might have to keep the contract in
force, such as performing scheduled maintenance on your car, must be specified
in the contract. Purchasing a service contract cannot be a requirement for
getting a car loan in Texas.

Texas prohibits telemarketing calls from extended warranty sellers unless there
is an “established business relationship” with the recipient.

Companies violating Texas extended warranty laws can be fined up to $2,500 for
each violation, with a cap of $50,000 total. They also risk license suspension
or revocation.

Read full Texas car warranty laws here.


UTAH

Utah is known as home to Pando, one of the world’s heaviest organisms. Composed
of more than 40,000 trees that share a single root system, Pando’s been around
for thousands of years. Before your car gets that old, you might be thinking of
buying an extended warranty, and if you do, Utah’s got you legally covered.

In Utah, service contract providers have to register with the state. To do that,
they must submit copies of their contract forms as well as proof that they’ve
obtained an insurance policy for their contracts to make sure they can pay any
claims that arise.

Contracts have to give you the name and contact information for that insurer so
that you can file claims directly with them if the administration company fails
to honor the contract. Contracts also have to tell you if there’s a deductible,
and how much it is.

Any exclusions to coverage have to be disclosed, as does any intention to use
non-original parts to fix your car. Buying a service contract can’t be made a
requirement for buying a car or getting a car loan.

Companies breaking Utah’s service contract laws can be fined double any profit
they made from the violation, plus up to $1,000 per incident. Serious or
repeated lawbreakers can also be forbidden from continuing to sell service
contracts in the state, sometimes permanently.

Read full Utah car warranty laws here.


VERMONT

Driving through Vermont, you might notice the absence of billboards; it’s one of
a few states to ban them. With visual clutter laws that tough, you might expect
Vermont’s service contract legislation to be equally strict, but you’d be
surprised. The Green Mountain State’s extended warranty laws are, compared to
other states, decidedly average.

Companies providing service contracts in Vermont must register with the state
every three years. They must be able to demonstrate to the government that
they’ll be able to cover claims on any contracts they sell. To do that, they can
deposit a bond worth at least 5% of their income from currently active
contracts, or $25,000, whichever is more. Additionally, they have to maintain a
reserve account with at least 40% of income from active contracts, minus claims
paid.

Alternatively, they can prove their ability to pay by insuring their contracts,
or proving to the state that their company is worth at least $50 million.

Contracts must disclose any deductibles that must be paid to file claims. If you
change your mind and want to cancel the contract within 20 days, companies must
refund all of your money as long as you haven’t filed any claims.

Companies violating Vermont’s service contract laws can have their registration
suspended or revoked, be banned from selling contracts, and be fined $1,000 per
incident, or $10,000 if the violation was willful. Companies can also be ordered
to make restitution to their customers.

Read full Vermont car warranty laws here.

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VIRGINIA

Virginia has a long tradition of being influential; of the first 5 presidents of
the United States, only John Adams of Massachusetts wasn’t from Virginia. And
the state was home to the nation’s first collegiate law school, established a
mere 3 years after the Colonies declared independence. But its service contract
laws are middle-of-the-road, neither extensive like some states, nor absent like
others.

Extended warranty providers in Virginia must register with the state each year.
To prove their ability to pay claims, companies must maintain a net worth of
$100 million or insure their contracts.

Virginia’s service contract requirements boil down to the notion that if it’s
promised in the contract, it must be honored. Should that not happen, customers
can complain to the Department of Agriculture and Consumer Services. If the
department determines a company broke their word, they can fine the offending
firm $1,000 per violation, up to $10,000. The department can also suspend or
revoke a company’s registration. Anyone who violates the service contract laws
intentionally can be charged with a misdemeanor.

Read full Virginia car warranty laws here.


WASHINGTON

Washington is known for coffee, Microsoft, and for having the most potentially
destructive volcano in the continental US, Mount Rainier. But it should perhaps
also be known for its extended warranty laws, as they’re more extensive than
many states.

Service contract providers must register with the state each year. To guarantee
their ability to pay claims, companies must either insure their policies,
maintain a reserve account of at least 40% of their income from current
contracts and place at least $25,000 or 5% of contract income in trust, or have
a net worth of at least $100 million. If insured, contracts must specify the
name and address of the insurance company and explain that the customer has the
right to make claims directly with them.

If you buy a service contract and then change your mind, you have 30 days to
return it for a full refund, minus a maximum cancellation fee of $25, as long as
you haven’t filed any claims. After 30 days, you’re entitled to a pro-rated
refund.

Service contracts have to lay out the process to make claims, including anything
necessary to get prior approval for repair. They must tell you if there’s a
deductible for service claims, and the amount. They are required to disclose any
exclusions to coverage. You must be told anything you need to do to keep the
contract valid, such as getting scheduled maintenance done. Importantly,
warranty companies can only deny a claim for failure to maintain your vehicle if
the lack of maintenance is the actual cause of the breakdown.

If consequential damages or pre-existing conditions aren’t covered, the contract
must say so. Buying a service contract can’t be made a requirement to get a car
loan or to buy the car.

Companies breaking Washington’s service contract laws can have their
registration suspended or revoked, and become subject to potential sanctions
dictated by the state’s Consumer Protection Act.

Read full Washington car warranty laws here.


WEST VIRGINIA

The Mountain State has no laws that we could find which specifically govern
service contracts beyond exempting them from being considered insurance. Because
of that, you will want to very carefully read your service contract to make sure
it meets your needs.

Read full West Virginia car warranty laws here.


WISCONSIN

The Badger State is known for cheese, beer, and one of the best motorsports
venues in the country, Road America.

Less well-known are Wisconsin’s laws surrounding service contracts. Companies
providing extended warranties in that state must be licensed. A key requirement
for licensure is that a copy of any contract to be sold in Wisconsin must be
sent to the Commissioner of Insurance for approval.

Contracts must be insured to guarantee payment of claims. Companies not wanting
to buy insurance can deposit a security of at least $50,000 plus a varying
percentage of income from selling contracts. Insured contracts have to specify
the name and address of the insurer.

Contracts must disclose any deductibles and their amounts. They have to tell you
if non-original parts can be used in repairs. They must inform you of any
exclusions to coverage. Contracts must explain anything you have to do to keep
them in effect, such as performing scheduled maintenance. If consequential
damages or preexisting conditions aren’t covered, that has to be disclosed in
the contract.

If you buy a contract and change your mind, you must be allowed to cancel for a
full refund within 10 days, or 20 if the contract was mailed to you. After that
deadline, you can still cancel for a prorated refund minus a maximum 10%
administrative fee. If your car is destroyed, as in a wreck, you have the right
to cancel for the pro-rated refund without the administrative fee.

Companies violating Wisconsin’s service contract laws can be barred from doing
business in the state, and face up to $1,000 in fines per violation.

Read full Wisconsin car warranty laws here.

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WYOMING

A pioneer in laws involving women’s suffrage, Wyoming isn’t breaking quite as
much ground in its extended warranty laws. They look a lot like laws in many
other states.

Wyoming extended warranty companies must register with the state each year.
Their policies must be insured to guarantee payment of claims, and they must
specify the insurance company’s name and address in the contracts. Barring
insurance, a company can instead fund a reserve account with at least 40% of the
income from active contracts and place $25,000 or 5% of income, whichever is
greater, in a trust. Companies with net worths greater than $100 million do not
need to comply with either the insurance or reserve requirements.

If you change your mind after buying a contract, you must be allowed to return
it within 10 days, or 20 if the contract was mailed to you, for a full refund as
long as no claims were made.

Extended warranties must specify any deductibles for service, and their amounts.
Any exclusions to coverage have to be disclosed. If the company wants to use
non-original parts to fix your car, they must tell you in the contract. Anything
you must do to keep the contract valid, such as making sure to maintain the car
according to schedule, must be outlined in the contract. Consequential damages
and pre-existing conditions can be excluded from coverage, but only if the
contract says they will be.

No company is allowed to make buying a car or getting a car loan contingent on
buying an extended warranty.

Companies violating Wyoming’s service contract laws can be ordered to stop doing
business in the state. Fines of between $500 and $10,000 may be levied against
individuals who violate the laws.

Read full Wyoming car warranty laws here.

Editor's note and disclaimer: Car Talk is supported by our fans, readers and
listeners. When you click on some of the links on our website, we may receive
referral compensation. However, you should know that the recommendations we make
are based on our independent editorial review and analyses.

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