Home Warranty Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 203

Short Title: Home Warranty Act. (Public)
Sponsors: Representatives Logan, Belk, and Longest (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Rules, Calendar, and Operations of the House
February 26, 2025
*H203-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO PLACE CONS UMER PROTECTIONS ARO UND HOME SERVICE 2
AGREEMENTS AND TO DIFFERENTIATE THE STATUTE SECTIONS REGARDING 3
HOME AND VEHICLE SERVICE AGREEMENTS. 4
The General Assembly of North Carolina enacts: 5
SECTION 1. G.S. 66-371 reads as rewritten: 6
"§ 66-371. Home appliance service agreement companies.agreements. 7
(a) This section Article applies to all home appliance service agreement companies 8
soliciting business agreements in use in this State, but it State. For the purposes of this section, a 9
"home service agreement " is a service agreement for a set list of appliances and systems in a 10
residence, regardless of whether the agreement is titled as a contract, home warranty, extended 11
home warranty, home appliance warranty, or other. 12
(a1) In addition to the requirements of G.S. 66-369.2, home service agreements shall 13
contain the following: 14
(1) A list of covered items that is referenced each time the agreement is discussing 15
coverage. 16
(2) A detailed description of the types of loss or damage the agreement covers. 17
(3) A detailed description of what is excluded from the agreement, in a prominent 18
location in the agreement and in bold face type. 19
(4) A statement of the purchaser's rights under G.S. 66-369.2(d)(2), in immediate 20
proximity to the space reserved for the signature of the purchaser of the 21
agreement, in bold face type of a minimum size of 10 points, in substantially 22
the following form: 23
"You, the purchaser of this service agreement, may cancel this contract a t 24
anytime after purchase and receive a pro rata refund less any claims paid on 25
the agreement and a reasonable administrative fee, not to exceed ten percent 26
(10%) of the amount of the pro rata refund." 27
(a2) Home service agreement companies shall do all of the following: 28
(1) At the time of signing the agreement, provide either an electronic or paper 29
copy of the agreement to the purchasing consumer. The company shall also 30
have versions of the agreement available in formats that are accessible to 31
people with disabilities. 32
(2) Maintain a list of company -approved vendors available to perform services 33
under the agreement and allow customers the option to use an approved 34
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vendor. The vendor list shall be updated regularly to remove vendors that are 1
unresponsive or have declined to work with the company on a routine basis. 2
(3) Ensure that the repair, replacement, or maintenance requested under the 3
agreement is completed or scheduled for completion within five business days 4
of a consumer 's claim for any covered item tha t is necessary for heating, 5
air-conditioning, or the functioning of a bathroom if there is only one 6
bathroom in the residence. If the company cannot have the claim completed 7
or scheduled for completion within five days, the company shall pay to have 8
an out-of-network vendor complete the service. 9
(a3) This Article does not apply to any of the following: 10
(1) performance Performance guarantees or warranties made by manufacturers in 11
connection with the sale of new home appliances. 12
(2) This section does not apply to any Any home appliance dealer licensed to do 13
business in this State (i) whose primary business is the retail sale and service 14
of home appliances; (ii) who that makes and administers its own service 15
agreements without association with any other entity; and (iii) whose service 16
agreements cover primarily appliances sold by the dealer to its retail 17
customers, provided that customers so long as the dealer complies with 18
G.S. 66-372 G.S. 66-369.2 and G.S. 66-373.G.S. 66-369.3. 19
(3) This section does not apply to any A warranty made by a builder or seller of 20
real property relating to home appliances that are sold along with real 21
property. 22
(4) This section does not apply to any An issuer of credit cards or charge cards 23
that markets hom e appliance service agreements as an ancillary part of its 24
business; provided, however, that such business so long as the issuer maintains 25
insurance in accordance with G.S. 66-373.G.S. 66-369.3. 26
(b) The following definitions apply in this section: 27
(1) "Home appliance" means a clothes washing machine or dryer; kitchen 28
appliance; vacuum cleaner; sewing machine; home audio or video electronic 29
equipment; home electronic data processing equipment; home exercise and 30
fitness equipment; home health care equipme nt; power tools; heater or air 31
conditioner, other than a permanently installed unit using internal ductwork; 32
or other personal consumer goods. 33
(2) "Home appliance service agreement" means any contract or agreement 34
indemnifying the home appliance service ag reement holder against loss 35
caused by damage or failure, arising out of a power surge or the ownership, 36
operation, use, or accidental damage from handling of a home appliance, of a 37
mechanical or other component part of the home appliance that is listed in the 38
agreement. The term does not include a contract or agreement that reimburses 39
the home appliance service agreement holder for damage occurring during 40
delivery or installation of a home appliance. 41
(3) "Home appliance service agreement company" means any person that issues 42
home appliance service agreements and that is not a licensed insurer. 43
…." 44
SECTION 2.(a) Subsection (b) of G.S. 66-372 is recodified as G.S. 66-369.1 (to be 45
entitled "Definitions") and reads as rewritten: 46
"§ 66-369.1. Definitions. 47
The following definitions apply in this section and in G.S. 66-373:Article: 48
(1) Consumer. – The purchaser or beneficiary of a service agreement. 49
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(2) Covered items. – The list of items in a service agreement that are subject to 1
the agreement, with each item identified in detail by brand, location, or other 2
feature of the consumer's specific item. 3
(1)(3) Service agreement. – Includes motor vehicle service agreements and home 4
appliance agreements. An agreement between a consumer and a service 5
agreement company in which a consumer agrees to pay a set fee or premium, 6
and may agree to pay a deductible, in exchange for a service provider 7
promising to repair, replace, or maintain a set list of covered items. This term 8
includes agreements where the service provider facilitates but does not 9
actually perform the repair, replacement, or maintenance of a covered item 10
and agreements where a service provider reimburses the consumer for 11
obtaining their own repair, replacement, or maintenance. 12
(2)(4) Service agreement company. – Includes motor vehicle service agreement 13
companies and home appliance service agreement companies.A person, other 14
than an insurer licensed to write liability insurance under Article 7 or 16 of 15
Chapter 58 of the General Statutes, that issues service agreements." 16
SECTION 2.(b) G.S. 66-372(e)(2) is recodified as G.S. 66-370(a2). Subsections (a), 17
(c), (d), the remainder of (e), (f), (h), (i), (j), and (l) of G.S. 66-372 are recodified as subsections 18
(a), (b), (c), (d), (e), (f), (g), (h), and (i), respectively, of G.S. 66-369.2 (to be entitled 19
"Miscellaneous requirements for service agreements") and read as rewritten: 20
"§ 66-369.2. Miscellaneous requirements for service agreements. 21
(a) The provisions of this section and G.S. 66-373 apply to companies specified in G.S. 22
66-370 and G.S. 66-371.apply to all service agreements subject to this Article. 23
(b) Before the sale of any service agreement, the service agreement company shall give 24
written notice to the customer clearly disclosing that the purchase of the agreement is not required 25
either to purchase or to obtain financing for the purchase of a motor vehicle or home appliance, 26
as the case may be.good. 27
(c) No service agreement may be A service agreement used in this State by any service 28
agreement company if the agreement:violates this Article if it does any of the following: 29
(1) In any respect violates, or does not comply with, the laws of this State;State. 30
(2) Contains, or incorporates by reference when incorporation is otherwise 31
permissible, any inconsistent, ambiguous, or misleading clauses or any 32
exceptions and conditions that deceptively affect the ri sk purported to be 33
assumed in the general coverage of the agreement;agreement. 34
(3) Has any title, heading, or other indication of its provisions that is misleading; 35
ormisleading. 36
(4) Is printed or otherwise reproduced in a manner that renders any material 37
provision of the agreement substantially illegible. 38
(5) Contains provisions that allow the company to cancel the agreement in its 39
discretion other than for nonpayment of premiums or for a direct violation of 40
the agreement by the consumer where the service agreement states that 41
violation of the agreement would subject the agreement to cancellation. 42
(d) All service agreements used in this State by a service agreement company shall:shall 43
satisfy both of the following requirements: 44
(1) Not contain provisions that allow the company to cancel the agreement in its 45
discretion other than for nonpayment of premiums or for a direct violation of 46
the agreement by the consumer where the service agreement states that 47
violation of the agreement would subject the agreement to cancellation; 48
(3)(1) Contain a cancellation provision allowing the consumer to cancel at any time 49
after purchase and receive a pro rata refund less any claims paid on the 50
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agreement and a reasonable administrative fee, not to exceed ten percent 1
(10%) of the amount of the pro rata refund. 2
(2) Contain a list of covered items. 3
…." 4
SECTION 2.(c) G.S. 66-373 is recodified as G.S. 66-369.3 and reads as rewritten: 5
"§ 66-369.3. Insurance policy requirements. 6
(a) Each company or person subject to this section Article shall maintain contractual 7
liability insurance or service agreement reimbursement insurance with an authorized insurer 8
authorized to write liability insurance under Article 7, 16, 21, or 22 of Chapter 58 of the General 9
Statutes for one hundred percent (100%) of claims exposure, including reported and incurred but 10
not reported claims and claims expenses, on business written in this State unless the company or 11
person complies with all of the following: 12
… 13
(e) Persons and companies subject to G.S. 58-1-15, 58-1-20, 66-370, 66-371, and 66-374 14
G.S. 58-1-20, and this Article are subject to and shall comply with this section." 15
SECTION 2.(d) G.S. 66-370, as amended by subsection (b) of this section, reads as 16
rewritten: 17
"§ 66-370. Motor vehicle service agreement companies.agreements. 18
(a) For purposes of this section, "motor vehicle" is as defined in G.S. 20-4.01(23) and 19
includes mopeds as defined in G.S. 20-4.01(27)j. 20
(a1) This section Article applies to all motor vehicle service agreement companies 21
soliciting business agreements in use in this State, State. A motor vehicle service agreement is 22
either of the following: 23
(1) Any contract or agreement (i) indemnifying a consumer against loss caused 24
by a motor vehicle failure that is l isted in the agreement or (ii) providing for 25
the repair of a motor vehicle failure that is listed in the agreement. For 26
purposes of this subsection, "motor vehicle failure " is the failure of a 27
mechanical or other component part of the motor vehicle arising out of the 28
ownership, operation, or use of the vehicle. 29
(2) A contract or agreement to perform or to indemnify a consumer for 30
performance of any of the following services: 31
a. The repair or replacement of tires or wheels on a motor vehicle 32
damaged as a result of coming into contact with road hazards. 33
b. The removal of dents, dings, or creases on a motor vehicle that can be 34
repaired using the process of paintless dent removal without affecting 35
the existing paint or finish and without replacing vehicle body panels, 36
sanding, bonding, or painting. 37
c. The repair of chips or cracks in or the replacement of motor vehicle 38
windshields as a result of damage caused by road hazards. 39
d. The replacement of a motor vehicle key or key fob in the event that 40
the key or key fob becomes inoperable or is lost or stolen. 41
e. Other services that may be approved by the Commissioner of 42
Insurance, if not inconsistent with other provisions of this Article. 43
(a2) With respect to a motor vehicle service agreement as defined in G.S. 66 -370, In 44
addition to the requirements of G.S. 66-369.2, motor vehicle service agreements shall provide 45
for a right of assignability by the consumer to a subsequent purchaser before expiration of 46
coverage if the subsequent purchaser meets the same criteria for motor vehicle service agreement 47
acceptability as the original purchaser; andpurchaser. 48
(a3) but it This Article does not apply to any of the following: 49
(1) maintenance Maintenance agreements, performance guarantees, warranties, 50
or motor vehicle service agreements made byby any of the following: 51
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(1)a. A manufacturer,manufacturer. 1
(2)b. A distributor, ordistributor. 2
(3)c. A subsidiary or affiliate of a manufacturer or a distributor, where 3
fifty-one percent (51%) or more of the subsidiary or affiliate is owned 4
directly or indirectly byby any of the following: 5
a.1. The manufacturer,manufacturer. 6
b.2. The distributor, ordistributor. 7
c.3. The common owner of fifty-one percent (51%) or more of the 8
manufacturer or distributor in connection with the sale of 9
motor vehicles. 10
(2) This section does not apply to any A motor vehicle dealer lice nsed to do 11
business in this State (i) whose primary business is the retail sale and service 12
of motor vehicles; (ii) who that makes and administers its own service 13
agreements with or without association with a third -party administrator or 14
who that makes its own service agreements in association with a 15
manufacturer, distributor, or their subsidiaries or affiliates; and (iii) whose 16
service agreements cover only vehicles sold by the dealer to its retail 17
customer; provided that customer so long as the d ealer complies with 18
G.S. 66-372 G.S. 66-369.2 and G.S. 66-373.G.S. 66-369.3. 19
(3) A motor vehicle dealer who sells a motor vehicle service agreement to a 20
consumer, as defined in 15 U.S.C. § 2301(3), is not deemed to have made a 21
written warranty to the consumer with respect to the motor vehicle sold or to 22
have entered into a service cont ract with the consumer that applies to the 23
motor vehicle, as provided in 15 U.S.C. § 2308(a), if: (i) the motor vehicle 24
dealer acts as a mere agent of a third party in selling the motor vehicle service 25
agreement; and (ii) the motor vehicle dealer would, after the sale of the motor 26
vehicle service agreement, have no further obligation under the motor vehicle 27
service agreement to the consumer to service or repair the vehicle sold to the 28
consumer at or within 90 days before the dealer sold the motor vehicle service 29
agreement to the consumer. An agreement whereby an employer, or a third 30
party contracted by the employer, provides mileage reimbursement and 31
incidental maintenance and repairs to its employees for personal vehicles used 32
for business purposes shall is not be considered a motor vehicle service 33
agreement or a contract of insurance. 34
(4) A contract or agreement guaranteeing the performance of parts or lubricants 35
manufactured or distributed by the guarantor and sold for use in connection 36
with a motor vehicle where no additional consideration is paid or given to the 37
guarantor for the contract or agreement beyond the price of the parts or 38
lubricants. 39
(a4) A motor vehicle dealer that sells a motor vehicle service agreement to a consumer, as 40
defined in 15 U.S.C. § 2301(3), is not deemed to have made a written warranty to the consumer 41
with respect to the motor vehicle sold or to have entered into a service contract with the consumer 42
that applies to the motor vehicle, as provided in 15 U.S.C. § 2308(a), if (i) the motor vehicle 43
dealer acts as a mere agent of a third party in selling the motor vehicle service agreement and (ii) 44
the motor vehicle dealer would, after the sale of the motor ve hicle service agreement, have no 45
further obligation under the motor vehicle service agreement to the consumer to service or repair 46
the vehicle sold to the consumer at or within 90 days before the dealer sold the motor vehicle 47
service agreement to the consumer. 48
(b) The following definitions apply in this section and in G.S. 66-371, 66 -372, and 49
66-373: 50
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(1) Ancillary anti -theft protection program. – A device or system that (i) is 1
installed on or applied to a motor vehicle, (ii) is designed to prevent loss or 2
damage to a motor vehicle from theft, and (iii) includes an ancillary anti-theft 3
protection program warranty. For purposes of this section, the term "ancillary 4
anti-theft protection program" includes alarm systems, body part marking 5
products, steering locks, window etch products, pedal and ignition locks, fuel 6
and ignition kill switches, and electronic, radio, and satellite tracking devices. 7
"Ancillary anti-theft protection program" does not include fuel additives, oil 8
additives, or other chemical products applied to the engine, transmission, or 9
fuel system or interior or exterior surfaces of a motor vehicle. 10
(1a) Ancillary anti-theft protection program warranty. – A written agreement by a 11
warrantor that provides if the ancillary anti -theft protection program fails to 12
prevent loss or damage to a motor vehicle from a theft, that the warrantor will 13
pay to or on behalf of the warranty holder specified incidental costs, as a result 14
of the failure of the ancillary anti-theft protection program to perform pursuant 15
to the terms of the ancillary anti-theft protection program warranty. Incidental 16
costs may be reimbursed in either a fixed amount specified in the ancillary 17
anti-theft protection program warranty or by use of a formula itemizing 18
specific incidental costs incurred by the warranty holder. 19
(1b) Authorized insurer. – An insurance company authorized to write liability 20
insurance under Articles 7, 16, 21, or 22 of Chapter 58 of the General Statutes. 21
(2) Distributor. – Defined in G.S. 20-286(3). 22
(3) Licensed insurer. – An insurance company licensed to write liability insurance 23
under Article 7 or 16 of Chapter 58 of the General Statutes. 24
(4) Motor vehicle. – Defined in G.S. 20-4.01(23), but also including mopeds as 25
defined in G.S. 20-4.01(27)j. 26
(4a) Motor vehicle failure. – The failure of a mechanical or other component part 27
of the motor vehicle arising out of the ownership, operation, or use of the 28
vehicle. 29
(5) Motor vehicle service agreement. – 30
a. Any contract or agreement (i) indemnifying the motor vehicle service 31
agreement holder against loss caused by a motor vehicle failure that is 32
listed in the agreement or (ii) providing for the repair of a motor 33
vehicle failure that is listed in the agreement. 34
b. A motor vehicle service agreement includes a contract or agreement to 35
perform or to indemnify the holder of the motor vehicle service 36
agreement for performance of any of the following services: 37
1. The repair or replacement of tires or wheels on a motor vehicle 38
damaged as a result of coming into contact with road hazards. 39
2. The removal of dents, dings, or creases on a motor vehicle that 40
can be repaired using the process of paintless dent removal 41
without affecting the existing paint or finish and without 42
replacing vehicle body panels, sanding, bonding, or painting. 43
3. The repair of chips or cracks in or the replacement of motor 44
vehicle windshields as a result of damage caused by road 45
hazards. 46
4. The replacement of a motor vehicle key or key fob in the event 47
that the key or key fob becomes inoperable or is lost or stolen. 48
5. Other services which may be approved by the Commissioner 49
of Insurance, if not inconsistent with other provisions of this 50
Article. 51
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c. A motor vehicle service agreement does not include a contract or 1
agreement guaranteeing the performance of parts or lubr icants 2
manufactured or distributed by the guarantor and sold for use in 3
connection with a motor vehicle where no additional consideration is 4
paid or given to the guarantor for the contract or agreement beyond the 5
price of the parts or lubricants. 6
(6) Motor vehicle service agreement company. – Any person that issues motor 7
vehicle service agreements and that is not a licensed insurer. 8
…." 9
SECTION 3. There is appropriated from the General Fund to the Department of 10
Justice the sum of fifty thousand dollars ($5 0,000) in recurring funds for the 2025 -2026 fiscal 11
year to be allocated to the Office of the Attorney General to enforce the provisions of Article 43 12
of Chapter 66 of the General Statutes, as amended by this act. 13
SECTION 4. Sections 1 and 2 of this act be come effective October 1, 2025, and 14
apply to service agreements entered into on or after that date. Section 3 of this act becomes 15
effective July 1, 2025. The remainder of this act is effective when it becomes law. 16