A BILL TO BE ENTITLED
AN ACT to clarify that motor vehicle and home appliance service agreement companies must file all service agreements and contractual liability policies with the commissioner, and if submitted on paper, be in a specified format; authorize the commissioner to protect consumers of warranty and service agreements under jurisdiction of the department by cease and desist powers and by the power to examine and seize warranty and service agreement company VIOLATOR'S  records; and reorganize and add clarifying definitions regarding mechanical service breakdown agreements.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 58‑1‑35(m) reads as rewritten:
"(m)	All service agreements and contractual liability policies shall be filed with the Commissioner of Insurance. All contracts, literature, advertising materials, letters, and other documents submitted to the Department to comply with the filing requirements of this Chapter or an administrative rule adopted pursuant to this Chapter  shall, if submitted on paper, be submitted on paper eight and one‑half inches by eleven inches. Brochures and pamphlets shall not be stapled or bound."
SECTION 2.  G.S. 58‑1‑36 is amended by adding two new subsections to read:
"(f)	In addition to the penalties and other enforcement provisions provided herein, if any person violates this section or any  rule implementing this section, the Commissioner may seek an injunction in a court of competent jurisdiction and may apply for temporary and permanent orders that the Commissioner determines are necessary to restrain the person from committing the violation.
The Commissioner may issue, in accordance with G.S. 58‑63‑32, a cease and desist order upon a person that violates any provision of this section, any rule or order adopted by the Commissioner, or any written agreement entered into with the Commissioner. The cease and desist order may be subject to judicial review under G.S. 58‑63‑35.
When the Commissioner finds that an activity in violation of this section presents an immediate danger to the public that requires an immediate final order, the Commissioner may issue an emergency cease and desist order reciting with particularity the facts underlying the findings. The emergency cease and desist order is effective immediately upon service of a copy of the order on the respondent and remains effective for 90 days. If the Commissioner begins nonemergency cease and desist proceedings, the emergency cease and desist order remains effective, absent an order by a court of competent jurisdiction in accordance with G.S. 58‑63‑35.
The Commissioner is not required to post a bond for injunctive relief under this subsection.
(g)	If any person violates this section or any rule implementing this section, the Commissioner may examine and seize the records of the violating person."
SECTION 3.  G.S. 58‑1‑42 reads as rewritten:
"§ 58‑1‑42.  Mechanical breakdown service agreements; applicability.
(a)	Except as provided in subsection (c) of this section, all mechanical breakdown service agreement companies soliciting business in this State shall comply with G.S. 58‑1‑35 and G.S. 58‑1‑36.
(b)	As used in this  section:
(1)	"Mechanical breakdown service agreement companies" include any person that issues mechanical breakdown service agreements and is not a licensed insurer.
(2)	"Mechanical breakdown service agreements" are applicable to mechanical equipment, including automobiles, riding mowers, scooters, generators, farm implements, logging equipment, road graders, bulldozers, and power equipment not licensed for road use, whether mobile or not.
(3)	"Parts" include all mechanical parts that are associated with the object of this agreement.
(4)	"Service" means work, labor, and other personal services.
(c)	This section does not apply to performance guarantees, warranties, mechanical breakdown service agreements, or motor vehicle service agreements made by:
(1)	A manufacturer.
(2)	A distributor.
(3)	A subsidiary of a manufacturer or distributor."
SECTION 4.  This act becomes effective October 1, 2005, and applies to warranties and service agreements issued, renewed, or purchased on or after that date.