This section requires service contracts sold or administered in the state to include specific disclosures, and it sets extra wording rules for insured, uninsured, and residential service contracts.
Sec. 1304.156. FORM OF SERVICE CONTRACT AND REQUIRED DISCLOSURES. (a) A service contract marketed, sold, offered for sale, issued, made, proposed to be made, or administered in this state must: (1) be written, printed, or typed in clear, understandable language that is easy to read; (2) state the name and address of the provider; (3) state the purchase price of the contract and the terms under which the contract is sold; (4) state the terms and restrictions governing cancellation of the contract by the provider or the service contract holder before the expiration date of the contract; (5) identify: (A) any administrator and any registration number issued to the administrator under this chapter; (B) the seller; and (C) the service contract holder, if the service contract holder provides the holder's name; (6) state the amount of any deductible; (7) specify the products and services to be provided under the contract and any limitation, exception, or exclusion; (8) specify any restriction governing the transferability of the contract; (9) state the duties of the service contract holder, including any duty to protect against any further damage and any requirement to follow the instructions in the owner's manual; and (10) state whether the contract provides for or excludes consequential damages or preexisting conditions, if applicable. (b) The identity and, if applicable, registration number issued under this chapter of a person described by Subsection (a)(5) is not required to be preprinted on the service contract and may be added to the contract at the time of sale. (c) The purchase price is not required to be preprinted on the service contract and may be negotiated with the service contract holder at the time of sale. (d) A service contract insured under a reimbursement insurance policy under Section 1304.152 must: (1) state the name and address of the insurer; (2) state that the service contract holder may apply for reimbursement directly to the insurer if: (A) a covered service is not provided to the service contract holder by the provider before the 61st day after the date of proof of loss; or (B) a refund or credit is not paid before the 46th day after the date on which the contract is canceled under Section 1304.1581; and (3) contain a statement substantially similar to the following: "Obligations of the provider under this service contract are insured under a service contract reimbursement insurance policy." (e) A service contract that is not insured under a reimbursement insurance policy must contain a statement substantially similar to the following: "Obligations of the provider under this service contract are backed by the full faith and credit of the provider." (f) A residential service contract must state that the provider agrees that, under normal circumstances, the provider will initiate the performance of services not later than 48 hours after the contract holder requests the services. Added by Acts 2001, 77th Leg., ch. 1421, Sec. 3, eff. June 1, 2003. Amended by: Acts 2005, 79th Leg., Ch. 63 (H.B. 1286), Sec. 12, eff. January 1, 2006. Acts 2011, 82nd Leg., R.S., Ch. 1081 (S.B. 1169), Sec. 1.13, eff. September 1, 2011. Acts 2021, 87th Leg., R.S., Ch. 663 (H.B. 1560), Sec. 4.08, eff. September 1, 2021.