SB 1381 Summary

• Amends Arizona service contract law to expand the definition of "service contract" to include road hazard tire/wheel coverage, paintless dent removal, motor vehicle key replacement, and home warranty services for residential property.

• Requires service companies to obtain permits from the Director of Insurance and submit all service contract forms for approval at least 30 days before use, with specific disclosure requirements including obligor information, coverage limits, exclusions, deductibles, and cancellation terms.

• Establishes that service contracts must not be cancelable or voidable due to service company failures, preexisting conditions known to the company, or misrepresentation by the company, and requires pro rata refunds with administrative expenses capped at 10% of the contract price.

• Allows service companies to comply with bonding requirements through either a $100,000 surety bond, cash alternatives (securities or U.S. government bonds), or mechanical reimbursement insurance policies authorized to do business in Arizona.

• Exempts service companies from other insurance licensing requirements under Arizona law while maintaining regulatory oversight of service contract forms and consumer protections.