GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	3 

HOUSE BILL 242*
Second Edition Engrossed 3/21/89
Insurance Senate Committee Substitute Adopted 6/22/89

Short Title:  Private Passenger Motor Vehicle.	(Public)
─────────────────────────────────────── 
Sponsors:
─────────────────────────────────────── 
Referred to:
─────────────────────────────────────── 

February 16, 1989

A BILL TO BE ENTITLED
AN ACT TO AMEND THE DEFINITION OF PRIVATE PASSENGER MOTOR VEHICLE FOR INSURANCE RATING PURPOSES AND TO PROVIDE FOR THE REGULATION OF EXTENDED WARRANTIES BY THIRD PARTIES.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-131.35A(1) reads as rewritten:
"§ 58-131.35A.  Other definitions.
As used in this Article and in Articles 12B and 25A of this Chapter:
(1) ‘Private passenger motor vehicle' means:
a.	A motor vehicle of the private passenger or station wagon type that is owned or hired under a long-term contract by the policy named insured and that is neither used as a public or livery conveyance for passengers nor rented to others without a driver; or
b.	A motor vehicle that is a pickup truck or van that is owned by an individual or by husband and wife or individuals who are residents of the same household if it:
1.	Has a gross vehicle weight as specified by the manufacturer of less than 10,000 pounds; and
2.	Is not used for the delivery or transportation of goods or materials unless such use is (i) incidental to the insured's business of installing, maintaining, or repairing furnishings or equipment, or (ii) for farming or ranching.
	Such vehicles owned by a family farm copartnership or a family farm corporation shall be considered owned by an individual for the purposes of this section; or
c.	A motorcycle, motorized scooter or other similar motorized vehicle not used for commercial purposes."
Sec. 2.  G.S. 58-3.1 reads as rewritten:
"§ 58-3.1. Warranties by manufacturers, distributors, or sellers of goods or services.
(a)	As used in this section:
(1)	‘Goods' means all things that are moveable at the time of sale or at the time the buyer takes possession.  ‘Goods' includes things not in existence at the time the transaction is entered into; and includes things that are furnished or used at the time of sale or subsequently in modernization, rehabilitation, repair, alteration, improvement, or construction on real property so as to become a part of real property whether or not they are severable from real property.
(2)	‘Services' means work, labor, and other personal services.
(b)	Any warranty made solely by a manufacturer, distributor, or seller of goods or services without charge, or an extended warranty offered as an option and made solely by a manufacturer, distributor, or seller of goods or services for charge, that guarantees indemnity for defective parts, mechanical or electrical breakdown, labor, or any other remedial measure, including replacement of goods or repetition of services, shall not be a contract of insurance under this Chapter.
(c)	Nothing in this section affects the provisions of Article 3C of this Chapter.  Any warranty or extended warranty made by any person other than the manufacturer, distributor, or seller of the warranted goods or services is a contract of insurance.
(d)	Notwithstanding subsection (c) of this section, corporations organized to provide extended warranties for a manufacturer, distributor, or seller of goods or services shall be subject to regulation by the Commissioner.  Such corporations shall escrow or reserve, in a bank approved by the Commissioner, twenty-five percent (25%) of the corporations's fee for each extended warranty, or such higher percentage as required by the Commissioner.  Such escrow or reserve shall be used only for the payment of claims under such extended warranty during the period of the warranty.  The Commissioner is authorized to adopt rules to further the purposes of this subsection.  Upon compliance with the provisions of this subsection and rules adopted by the Commissioner, such corporations shall be issued certificates of authority to provide such extended warranties."
Sec. 3.  This act is effective upon ratification.