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HB 521 - Motor Vehicle Protection Product Deregulation

HB 521 - Motor Vehicle Protection Product Deregulation

Phil Haunschild
February 13, 2018

Bill description: HB 521 will move the regulatory structure for motor vehicle service contracts from the Office of the Attorney General into the Department of Insurance, simplifying the process for the providers of these contracts.

Rating: +1

Analyst’s Note: Motor vehicle service contracts are agreements that cover minor vehicle failures or damage. For example, these contracts could cover tire replacements, dent removal, or windshield replacements. Typical auto insurance does not offer the same coverage provided through these contracts.

HB 521 moves the authority for overseeing these products from the Office of the Attorney General’s Consumer Protection Division to the Department of Insurance. This is a more natural fit for these policies. HB 521 would, however, exempt these products from being classified as an insurance product for licensure purposes.

Nearly all of the language in the new chapter added in this legislation remains the same as it is transferred into Title 41, which covers insurance issues, with the exception of minor clarifying issues and a delineation of who holds the regulatory authority over these products. HB 521 will take away the full authority that the Attorney General has under the Consumer Protection Act, as concerns motor vehicle service contracts, and will grant comparable authority to the Director of the Department of Insurance.

Does it directly or indirectly create or increase penalties for victimless crimes or non-restorative penalties for non- violent crimes? Conversely, does it eliminate or decrease penalties for victimless crimes or non-restorative penalties for non-violent crimes? 

Under current law, motor vehicle service contract providers are charged a penalty of up to $1,000 each time they break a provision of the Idaho Motor Vehicle Service Contract Act. While a company is out of compliance, the law allows for each day to count as a separate offense, thus these companies can easily rack up enormous penalties. HB 521 would set a cap of $25,000 for all like penalties.


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