3905.425 Requirements for tire or wheel road hazard contracts.

(A) As used in this section:

(1) "Contract holder" means the person who purchased a motor vehicle tire or wheel road hazard contract, any authorized transferee or assignee of the purchaser, or any other person assuming the purchaser's rights under the motor vehicle tire or wheel road hazard contract.

(2) "Motor vehicle" has the same meaning as in section 4501.01 of the Revised Code and also includes utility vehicles as defined in that section.

(3) "Motor vehicle tire or wheel road hazard contract" means a contract or agreement to perform or pay for repairs or replacement of tires or wheels damaged because of a road hazard with or without additional provisions for incidental payment of indemnity under limited circumstances, including, without limitation, towing, rental, and emergency road services, that is effective for a specified duration and paid for by means other than the purchase of the motor vehicle tire or wheel. "Motor vehicle tire or wheel road hazard contract" does not include any of the following:

(a) A contract or agreement to perform or pay for the repair, replacement, or maintenance of a motor vehicle due to a defect in materials or workmanship, normal wear and tear, mechanical or electrical breakdown, or failure of parts or equipment of a motor vehicle that is effective for a specified duration and paid for by means other than the purchase of a motor vehicle;

(b) A vehicle protection product warranty as defined in section 3905.421 of the Revised Code;

(c) A home service contract as defined in section 3905.422 of the Revised Code;

(d) A consumer goods service contract as defined in section 3905.423 of the Revised Code;

(e) A motor vehicle ancillary product protection contract as defined in section 3905.426 of the Revised Code.

(4) "Provider" means a person who is contractually obligated to a contract holder under the terms of a motor vehicle tire or wheel road hazard contract.

(5) "Reimbursement insurance policy" means a policy of insurance issued by an insurer authorized or eligible to do business in this state to a provider to pay, on behalf of the provider in the event of the provider's nonperformance, all covered contractual obligations incurred by the provider under the terms and conditions of the motor vehicle tire or wheel road hazard contract.

(6) "Road hazard" means a condition that may cause damage or wear and tear to a tire or wheel on a public or private roadway, roadside, driveway, or parking lot or garage, including potholes, nails, glass, road debris, and curbs. "Road hazard" does not include fire, theft, vandalism or malicious mischief, or other perils normally covered by automobile physical damage insurance.

(7) "Supplier" has the same meaning as in section 1345.01 of the Revised Code.

(B)

(1) All motor vehicle tire or wheel road hazard contracts issued in this state shall be covered by a reimbursement insurance policy.

(2) A motor vehicle tire or wheel road hazard contract in which the provider is a tire manufacturer is exempt from the requirement of division (B)(1) of this section.

(C) A motor vehicle tire or wheel road hazard contract issued by a provider that is required to be covered by a reimbursement insurance policy under division (B) of this section shall conspicuously state all of the following:

(1) "This contract is not insurance and is not subject to the insurance laws of this state."

(2) That the obligations of the provider are guaranteed under a reimbursement insurance policy;

(3) That if a provider fails to perform or make payment due under the terms of the contract within sixty days after the contract holder requests performance or payment pursuant to the terms of the contract, the contract holder may request performance or payment directly from the provider's reimbursement insurance policy insurer, including any obligation in the contract by which the provider must refund the contract holder upon cancellation of a contract;

(4) The name, address, and telephone number of the provider's reimbursement insurance policy insurer.

(D) A motor vehicle tire or wheel road hazard contract in which the provider is a tire manufacturer shall conspicuously state all of the following:

(1) That this agreement is not an insurance contract;

(2) That any covered obligations or claims under this contract are the responsibility of the provider;

(3) The names, addresses, and telephone numbers of any administrator responsible for the administration of the contract, the provider obligated to perform under the contract, and the contract seller;

(4) The procedure for making a claim under the contract, including a toll-free telephone number for claims service and a procedure for obtaining emergency repairs or replacement performed outside normal business hours.

(E) A reimbursement insurance policy that is required to be issued under this section shall contain:

(1) A statement that if a provider fails to perform or make payment due under the terms of the motor vehicle tire or wheel road hazard contract within sixty days after the contract holder requests performance or payment pursuant to the terms of the contract, the contract holder may request performance or payment directly from the provider's reimbursement insurance policy insurer, including any obligation in the contract by which the provider must refund the contract holder upon cancellation of a contract;

(2) A statement that in the event of cancellation of the provider's reimbursement insurance policy, insurance coverage will continue for all contract holders whose motor vehicle tire or wheel road hazard contracts were issued by the provider and reported to the insurer for coverage during the term of the reimbursement insurance policy.

(F) The sale or issuance of a motor vehicle tire or wheel road hazard contract is a consumer transaction for purposes of sections 1345.01 to 1345.13 of the Revised Code. The provider is the supplier and the contract holder is the consumer for purposes of those sections.

(G) Unless issued by an insurer authorized or eligible to do business in this state, a motor vehicle tire or wheel road hazard contract does not constitute a contract substantially amounting to insurance, or the contract's issuance the business of insurance, under section 3905.42 of the Revised Code.

(H) The rights of a contract holder against a provider's reimbursement insurance policy insurer as provided in this section apply only in regard to a reimbursement insurance policy issued under this section. This section does not create any contractual rights in favor of a person that does not qualify as an insured under any other type of insurance policy described in Title XXXIX of the Revised Code. This section does not prohibit the insurer of a provider's reimbursement insurance policy from assuming liability for contracts issued prior to the effective date of the policy or this statute.

Added by 128th General Assemblych.18, HB 2, §101.01, eff. 7/1/2009.