Maryland hvac contractors who offer service contracts may need added insurance to cover those contracts.
The Maryland Alliance for Fair Competition (MAFC) announced that legislation will be introduced in the state’s General Assembly to regulate service contracts. This bill would require all contractors who sell residential service contracts to do one of the following:
Insure all service contracts under a reimbursement insurance policy issued by an insurer approved by the Maryland Insurance Administration;
Maintain a funded reserve of not less than 40% of the sold contracts in trust or a financial security deposit of 5% of proceeds from sold contracts, but not less than $25,000, with the Dept. of Labor, Licensing, and Regulation (DLLR); or
Maintain a net worth of $100 million of stockholder’s equity (equity subject to DLLR review).
According to the MACF, the bill is an outgrowth of model legislation developed two years ago by the National Association of Insurance Commissioners. Similar legislation has been enacted in Alabama, Illinois, Nevada, New York, Texas, Vermont, Washington, and Wyoming.
For more information, contact MAFC at 410-560-3576.
Publication date: 02/05/2001