OGC Opinion No. 08-01-01

The Office of General Counsel issued the following opinion on January 3, 2008, representing the position of the New York State Insurance Department.

RE: Guaranteed Price Refund Agreement

The inquirer asked whether the automobile dealer in New York State through whom she purchased a service contract and guaranteed price refund agreement¹ was responsible for making payments to her under the guaranteed price refund agreement.

The service contract that the inquirer purchased from the automobile dealer was issued by ABC Co. ABC Co. is an Illinois-domiciled service contract provider, and has filed for bankruptcy protection in the United States Bankruptcy Court in Illinois. ABC Co.'s subsidiary, DEF Co., was registered in New York as a service contract provider, but its registration lapsed in 2006. The inquirer asserts that she has filed a claim under her guaranteed price refund agreement with ABC Co., but has been unable to obtain any information regarding the status of her claim.

The United States Trustee in Bankruptcy is in the process of negotiating settlements, subject to court approval, with certain automobile dealers to pay consumer claims filed with ABC Co. The court presiding over the bankruptcy proceeding will, in all likelihood, determine the respective liabilities of the parties involved in the type of transaction about which the inquirer asked. To learn more about the status of her claim, the inquirer was directed to contact the United States Trustee in Bankruptcy for ABC Co.

For further information, you may contact Associate Attorney Pascale Jean Baptiste at the New York City office.

¹ A guaranteed price refund agreement is an agreement between a consumer and either the obligor under a service contract issued pursuant to Article 79 of the Insurance Law, or the obligor under an extended warranty. If no claim or benefit is paid under the service contract or extended warranty, a claim may be made under the guaranteed price refund agreement for reimbursement of the service contract or extended warranty price, up to a maximum dollar amount. The Department has previously opined that a guaranteed price refund agreement issued by a service contract provider or warrantor is not a service contract, an insurance contract or a warranty. See Office of General Counsel Opinion No. 02-10-02, dated October 1, 2002 (available at http://www.ins.state.ny.us).