NC H575

Allows service contract providers to maintain a funded reserve account in lieu of contractual liability insurance to cover their obligations under service contracts sold in North Carolina.

Reserve account must be funded at not less than 40% of gross consideration received (minus claims paid) for all in-force contracts.

Alternative to insurance requirement available only if provider maintains audited net worth of $100 million, has offered service agreements for at least 10 years, and files SEC forms or audited financial statements showing $100 million net worth (or uses parent company guarantee).

Becomes effective July 1, 2011.