§ 31–2351.05. Required disclosure – service contracts.

(a) Service contracts marketed, sold, offered for sale, issued, or made or proposed to be made, or administered in the District shall be written, printed, or typed in eight-point type size, or larger and shall disclose the requirements set forth in this section, as applicable.

(b)(1) Service contracts insured under a reimbursement insurance policy pursuant to § 31-2351.03(e)(1) shall contain a statement that reads in substantially the following form:

"Obligations of the provider under this service contract are insured under a service contract reimbursement insurance policy.".

(2) The service contract shall also state the name and address of the insurer.

(c) Service contracts not insured under a reimbursement insurance policy pursuant to § 31-2351.03(e)(1) shall contain a statement that reads in substantially the following form:

"Obligations of the provider under this service contract are backed by the full faith and credit of the provider.".

(d) Service contracts shall state the name and address of the provider and shall identify the administrator, if different from the provider, the service contract seller, and the service contract holder to the extent that the name of the service contract holder has been furnished by the service contract holder. The identities of these parties are not required to be preprinted on the service contract and may be added to the service contract at the time of sale.

(e) Service contracts shall state the total purchase price and the terms under which the service contract is sold. The purchase price is not required to be pre-printed on the service contract and may be negotiated at the time of sale with the service contract holder.

(f) Service contracts shall state the existence of any deductible amount.

(g) Service contracts shall specify the merchandise and services to be provided and any limitations, exceptions, or exclusions.

(h) Service contracts covering motor vehicles shall state whether the use of non-original manufacturers' parts is allowed.

(i) Service contracts shall state any restrictions governing the transferability of the service contract.

(j)(1) Service contracts shall state the terms, restrictions, and conditions governing cancellation of the service contract prior to the termination or expiration date of the service contract by either the provider or the service contract holder.

(2) The provider of the service contract shall mail a written notice to the contract holder at the last known address of the service contract holder contained in the records of the provider at least 5 days before cancellation by the provider; except, that prior notice shall not be required if the reason for cancellation is nonpayment of the provider fee, a material misrepresentation by the service contract holder to the provider, or a substantial breach of duties by the service contract holder relating to the covered product or its use.

(3)(A) The notice required by this subsection shall state the effective date of the cancellation and the reason for the cancellation.

(B) If a service contract is cancelled by the provider for a reason other than nonpayment of the provider fee, the provider shall refund to the contract holder 100% of the unearned pro rata provider fee, less any claims paid.

(C) A reasonable administrative fee may be charged by the provider not to exceed 10% of the gross provider fee paid by the service contract holder.

(k) Service contracts shall set forth all of the obligations and duties of the service contract holder, such as the duty to protect against any further damage and any requirement to follow an owner's manual.

(l) Service contracts shall state whether or not the service contract provides for or excludes consequential damages or pre-existing conditions. Service contracts may, but shall not be required to, cover damage resulting from rust, corrosion, or damage caused by a non-covered part or system.