Basics of Service Contracts

Consumers - Insurance Products

Service contracts are defined by the Insurance Law as a contract or agreement, for a separate and additional payment over and above the cost of the property, that will perform the repair, provide payment for repair, or replacement of that property. This contract or agreement does not constitute the doing of an insurance business, so it does not cover losses caused by theft, collision, fire and flood or other fortuitous events that meet the definition of insurance.

In order to sell a service contract in New York, the provider must first become registered as a service contract provider with the New York State Department of Financial Services.  To see the current list of Registered Service Contract Providers, select this link.

If you have a complaint about a Registered Service Contract Provider or a provider which you feel should be registered, select this link.

If you wish to obtain a copy of an application to act as a service contract provider, select this link.

Maintenance agreements are not subject to the jurisdiction of the New York State Department of Financial Services.  Maintenance agreements are agreements in which one party agrees to actively perform regularly scheduled maintenance of property for a limited duration.

Extended Warranty, Accidental and Tire and/or Rim Road Hazard Coverage are three types of products offered in New York State that fall under the definition of a service contract.

Extended Warranty

A service contract provider that obligates itself to perform the repair, replacement or maintenance of property, or compensate for the repair, replacement or maintenance of property based upon a defect in materials or workmanship or wear and tear.  A service contract may also include incidental damages to the product (not to exceed the purchase price of the property), and coverage for towing, rental and emergency road service.

Some entities offering extended warranties do not fall under the jurisdiction of the NYS Department of Financial Services.  If you wish to seek an opinion clarifying what entities do and do not fall into our jurisdiction, select this link.

Accidental Damage

A service contract provider that obligates itself to perform the repair or replacement of property that result from power surges or accidental damage caused by droppage, liquid spillage, and other usual and customary fortuitous events.

All companies offering accidental damage coverage fall into the Department’s jurisdiction and must become registered as a service contract provider with the New York State Department of Financial Services.

Tire and/or Rim Road Hazard Coverage

A contract that obligates itself to perform the repair or replacement of a tire and/or rim that result from a road hazard.

Companies that do not sell or manufacture tires or rims are prohibited from offering tire and rim road hazard coverage, unless they are designated by a manufacturer or a seller of tires and rims.

All companies offering road hazard damage coverage fall into the Department’s jurisdiction and must become registered as a service contract provider with the New York State Insurance Department.

Updated 10/03/2011