Kansas Resources

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Summary

NHSCA sponsored and passed SB 178 in March, 2005 to define all service contracts as non insurance and exempt form the Kansas Insurance code. The original measure was to adopt the NHSCA model law for limited regulation of the home service contract industry. The measure handily passed the Kansas Senate but was rejected by the House. The net result is good for all service contract providers and solidifies yet one more state to make clear that the business of service contracts is not the business of insurance. It was effective immediately upon signature of Governor Sebelius in April, 2005. This does not change the status or requirements for any provider in Kansas but simply endorses the current position taken by the Insurance Department that service contracts are not insurance. The cooperation in this effort by the Kansas Department of Insurance, General Counsel John Campbell and Commissioner Sandy Praeger was greatly appreciated.

Statutes

For a link to the Kansas Statues, CLICK HERE.

40-201a. Service contract; exempt from regulation. (a) The marketing, sale, offering for sale, issuance, making, proposing to make and administration of a service contract shall not be construed to be the business of insurance and shall be exempt from regulation as insurance pursuant to chapter 40 of the Kansas Statutes Annotated, and amendments thereto.

(b) For the purposes of this section, "service contract" means a contract or agreement for a separate or additional consideration, for any specified duration, to service, repair, replace or maintain all or any part of any structural component, appliance or utility system of any residential property, consumer good or other property; or to indemnify for service, repair, replacement or maintenance for consumer good or other property, due to a defect in materials, workmanship, normal wear and tear; or as a result of power surges or as a result of accidental damage from the handling of any consumer good or other property, with or without additional provision for indemnity payments, when service repair or replacement is not reasonably, commercially or economically feasible. Service contract also includes any nonconsumer commercial service contract. Service contract does not include an automobile club service as defined in K.S.A. 40-2507, and amendments thereto.

(c) (1) No service contract which is exempt from regulation as insurance pursuant to chapter 40 of the Kansas Statutes Annotated, and amendments thereto, pursuant to this section shall contain any provision for consequential damages unless such consequential damages are caused by the failure of service, repair, replacement or maintenance rendered under the service contract.