§ 51:3163 — Requirements for doing business

§3163. Requirements for doing business
A. Motor vehicle service contracts shall not be issued, sold, or offered for sale in this
state unless the provider has done each of the following:
(1) Registered with the secretary of state and remains in good standing.
(2) Provided a receipt for, or other written evidence of, the purchase of the motor
vehicle service contract to the contract holder.
(3) Provided a copy of the motor vehicle service contract to the service contract
holder within a reasonable period of time from the date of purchase.
B. Each provider of a motor vehicle service contract sold in this state shall file an
application for an initial registration with the secretary of state consisting of the provider's
name, address, and contact person, designating a person in this state for service of process,
and providing a listing of all officers, all directors, and all owners of ten percent or more of
the business. Additionally, the provider shall file a copy of its basic organizational
documents, including articles of incorporation, articles of organization, articles of
association, or a partnership agreement.
C. A registration shall be effective for two years unless the registration is denied or
revoked. Ninety days prior to the expiration of a registration, a provider shall submit a
renewal application on a form prescribed by the secretary of state.
D. Each registrant shall notify the secretary of state of any material change in the
registration information within sixty days of the effective date of such change. The notice
shall be accompanied by supporting documentation.
E. In order to assure the faithful performance of a provider's obligations to its
contract holders and to insure its outstanding obligations, each provider shall comply with
the following:
(1) Each motor vehicle service contract shall be insured under a reimbursement
insurance policy issued by an insurer licensed, registered, or otherwise authorized to transact
the business of insurance in this state, and which complies with the provisions of Subsection
F of this Section.
(2) A provider that issues motor vehicle service contracts shall obtain and file with
the secretary of state a copy of the reimbursement insurance policy issued to the provider.
(3) The issuer of the reimbursement insurance policy required by this Subsection
shall do either of the following:
(a) Maintain surplus as to policyholders and paid-in capital of at least fifteen million
dollars.
(b) Maintain surplus as to policyholders and paid-in capital of less than fifteen
million dollars but at least equal to ten million dollars and maintain a ratio of net written
premiums, wherever written, to surplus as to policyholders and paid-in capital of not greater
than three to one.
F. An insurer issuing a reimbursement insurance policy to a provider for any motor
vehicle service contract issued, offered for sale, or sold in this state shall comply with all of
the following:
(1) Be deemed to have received the premium for the insurance upon the payment of
the provider fee by a consumer for a service contract issued by an insured provider.
(2) Provide reimbursement to, or payment on behalf of, the provider under the terms
of the insured service contracts issued or sold by the provider or, in the event of the
provider's nonperformance, provide or pay for, on behalf of the provider, all covered
contractual obligations incurred by the provider under the terms of the insured service
contracts issued or sold by the provider.
(3) Accept a claim arising under the contract directly from a contract holder, if the
provider does not comply with any contractual obligation pursuant to the contract within
sixty days of presentation of a valid claim by the contract holder.
(4)(a) Terminate or not renew the policy covering service contracts issued in this
state only after a notice of termination or nonrenewal is presented to the secretary of state and
commissioner of insurance, at least ten days prior to the termination or nonrenewal of the
policy.
(b) The termination or nonrenewal shall not reduce the insurer's responsibility for
any insured contract issued or sold prior to the date of termination or nonrenewal.
G. Except for the registration requirements of this Section, providers, administrators,
and persons marketing, selling, or offering to sell motor vehicle service contracts are exempt
from any licensing requirements of this state and shall not be subject to other registration
information or security requirements.
H. The marketing, sale, offering for sale, issuance, making, proposing to make, and
administration of motor vehicle service contracts by providers and related service contract
sellers, administrators, and other persons is not insurance and shall be exempt from all
provisions of the Louisiana Insurance Code.
I. Motor vehicle manufacturers are exempt from the registration and financial
responsibility requirements of this Section.
J. Nothing in this Section shall be construed to limit the right of the insurer to seek
indemnification or subrogation against the provider if the insurer provides or pays, or is
obligated to provide or pay, for any covered contractual obligation incurred by the provider.

Legislative History

Acts 2018, No. 592, §2, eff. Feb. 1, 2019; Acts 2020, No. 51, §1, eff. June 5, 2020; Acts 2024, No. 176, §1.