Frequently Asked Questions

A service contract is defined as a contract or agreement for a separately stated consideration for a specific duration to perform the repair, replacement, or maintenance of property or indemnification for repair, replacement, or maintenance for the operational or structural failure due to a defect in materials, workmanship, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances including, but not limited to, towing, rental, and emergency road service. Service contracts may provide for the repair, replacement, or maintenance of property for damage resulting from power surges and accidental damage from handling, according to §38-78-20(12) .

A warranty is made solely by the manufacturer, importer, or seller of property or services without charge, is not negotiated or separated from the sale of the product, that is incidental to the sale of the product, and guarantees indemnity for defective parts, mechanical or electrical breakdown, labor, or other remedial measures, such as repair or replacement of the property or repetition of services, as according to §38-78-20(14).

A provider is defined as a person who is contractually obligated to the service contract holder under the terms of the service contract, as according to §38-78-20(9).

Provider fees collected on service contracts are not subject to premium taxes, as according to §38-78-30(H).

Reimbursement insurance policies insuring service contracts issued, sold, or offered for sale in this state shall conspicuously state that the insurer that issued the policy shall either reimburse or pay on behalf of the provider any covered sums the provider is legally obligated to pay or in the event of the provider's nonperformance, shall provide the service that the provider is legally obligated to perform according to the provider's contractual obligations under the service contracts issued or sold by the provider, as according to §38-78-40.

Service contracts not insured under a reimbursement insurance policy shall contain a statement stating, "Obligations of the provider under this service contract are backed by the full faith and credit of the provider," as according to §38-78-50(C).

The provider should preserve its records for a period of no less than one year after the specified period of coverage has expired, as according to §38-78-70(4).

The insurer who issued the reimbursement insurance policy may not terminate the policy until a notice of termination has been mailed or delivered to the department in accordance with Chapter 75 of the SC Code of Laws (§38-78-80).

Yes, the service contract holder has 20 days to review the service agreement and to return the contract to the service contract provider for a full refund, as according to §38-78-30(F).

Yes, service contracts marketed, issued, sold, or offered for sale should be easy to read and must disclose the requirements set forth in § 38-78-50 of the SC Code of Laws. In addition, the department requires that all service contract providers disclose the department name and address regarding disputed claims on their contracts.

No, service contract providers are restricted from using the word “insurance” in the contract. The agreement is not an insurance contract, as according to §38-78-60.

No bank, savings and loan association, lending institution, manufacturer, or seller of any product shall require the purchase of a service contract as a condition of a loan or a condition for the sale of any property, as according to §38-78-60(c).