PA 09-24—sHB 6356

Insurance and Real Estate Committee


SUMMARY: This act requires an insurer issuing an extended warranty reimbursement insurance policy in Connecticut to meet certain requirements when filing a policy form with the insurance commissioner and continuously thereafter. By law, insurers must file extended warranty insurance policies and endorsements with the insurance commissioner for his review prior to use.

Specifically, the act requires an extended warranty insurer to:

1. maintain surplus and paid-in capital of at least $15 million;

2. demonstrate to the commissioner's satisfaction that it maintains a value of net written premiums that is no more than three times the amount of surplus and paid-in capital; and

3. annually file with the commissioner copies of (a) its audited financial statements, (b) the annual statement it files with the National Association of Insurance Commissioners, and (c) any actuarial certification that it must file with its domicile state.

The act is silent with respect to penalties should an insurer fail to comply with the new requirements.

EFFECTIVE DATE: October 1, 2009



The law defines “extended warranty” as a contract or agreement to perform or indemnify a product's repair, replacement, or maintenance in case of an operational or structural failure that a defect in material, skill, or workmanship or normal wear and tear caused in exchange for a price separate from that charged for the product's lease or purchase price.

An “extended warranty reimbursement insurance policy” is an insurance policy covering an extended warranty provider's obligations and liabilities under an extended warranty the provider sold.

An “extended warranty provider” is a person who (1) issues, makes, provides, or offers an extended warranty to a buyer and (2) is contractually obligated under the warranty to provide service. It excludes a retail seller if (1) the seller, or its subsidiary, manufactured the product the warranty covers; (2) the extended warranty it offers or sells obligates the manufacturer or its subsidiary, distributor, or importer to provide the service or indemnity the warranty requires; or (3) under the warranty's terms, the seller performs at least 90% of the repair service.

Extended Warranty

By law, an extended warranty cannot be issued, sold, or offered unless the extended warranty provider (1) is insured under an extended warranty reimbursement insurance policy issued by insurer authorized to do business in Connecticut or (2) can demonstrate that its claim reserves do not exceed 50% of its audited net worth. If they do, the provider must have an independent trustee hold the reserves in trust and an actuary annually certify their adequacy. The law does not apply to a home warranty contract or home warranty service agreement.

The law requires an extended warranty provider to file with the insurance commissioner a copy of its (1) extended warranty form and (2) extended warranty reimbursement insurance policy or certification from a certified public accountant attesting to the adequacy of its claim reserves.

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