Service Contract Providers Frequently Asked Questions

General Program Questions
  1. What is a service contract?
  2. What law and rules govern service contracts?
  3. Do all service contracts fall under the jurisdiction TDLR?
  4. What are the financial security requirements for service contract providers?
  5. If I was registered as a provider before September 1, 2011, can I keep the same financial security I have previously posted?
  6. Can an existing registered provider transition to the new security requirements before September 1, 2012?
  7. What are the responsibilities of sellers of service contract providers?

1. What is a service contract?

A service contract is an agreement for the repair, replacement, or maintenance of a product, or for payment to repair, replace or maintain a product for a specified period of time. The contract is entered into for a cost that is in addition to that paid for the product. The contract is between the service contract provider and the consumer.

2.  What law and rules govern service contracts?

The Service Contract Regulatory Act, Texas Occupations Code, Chapter 1304, and the TDLR rules under 16 Texas Administrative Code Chapter 77, govern service contracts.

3. Do all service contracts fall under the jurisdiction TDLR?

No, not all service contracts or extended warranties fall under the Service Contract Providers and Administrators statute and rules. TDLR only regulates service contracts:

  • that are purchased in Texas or are sold to consumers in Texas; and
  • where the consumer pays a fee for the contract that is in addition to the price of the product.

4. What are the financial security requirements for service contract providers?

Starting September 1, 2011, provider applicants have to show financial security by one of the three following options:

  • submit a reimbursement insurance policy with the required Texas endorsement;
  • maintain a funded reserve account, security deposit, and audited financial reports; OR
  • show proof that the company (or its parent company) has at least $100 million in net worth.

5. If I was registered as a provider before September 1, 2011, can I keep the same financial security I have previously posted?

Texas providers who were registered as of August 31, 2011, and who used the $100 million net worth option or the reimbursement insurance policy option for financial security were not affected by statutory changes made by SB 1169.

Texas providers who were registered as of August 31, 2011, and who used the funded reserve account and security deposit option have until September 1, 2012, to transition to the new financial security requirements. These providers have two options to secure existing contracts:

  • Maintain the funded reserve account and security deposit at the levels required on August 31, 2011, for contracts sold or issued in Texas before September 1, 2012, and until those contracts are no longer in effect; OR
  • Provide new financial security under the new statutory requirements that will cover all contracts sold or issued on or before and after September 1, 2012.

See Rule 77.44, Financial Security--Transition Provisions, for more information on the financial security transition.  Use Form #012 SCP, Service Contract Providers Funded Reserve and Security Deposit Financial Security Calculation Form, to calculate the amounts required to be maintained in the funded reserve account and security deposit.

6.  Can an existing registered provider transition to the new security requirements before September 1, 2012?

Yes, existing providers may submit new financial security and start meeting the new funded reserve and security deposit requirements any time, but it is normally done at renewal. These providers, however, must submit meet the new financial security requirements no later than September 1, 2012.

7. What are the responsibilities of sellers of service contract providers?

Senate Bill 1169 added the following provisions regarding sellers to the statute:

  • a provision regarding the responsibilities of sellers (§1304.1531); and
  • a provision regarding sellers refunding the full purchase price of the contract to the consumer if the seller fails to process a service contract application or a payment in accordance with the statute (§1304.205).
Licensing Questions – Providers and Administrators
  1. Who is a “Service Contract Provider” or “Provider”?
  2. Who is a “Service Contract Administrator” or an “Administrator”?
  3. Who is a “Service Contract Seller” or “Seller”?
  4. Does the administrator of a service contract need to register with TDLR?
  5. Does the seller of the service contract need to register?
  6. Does a motor vehicle dealer have to register as a Service Contract Provider?
  7. How do I become a Texas registered Provider or Administrator?
  8. What are the financial security requirements for being a Provider in Texas?
  9. How do I obtain a reimbursement insurance policy?
  10. Are SERFF (System for Electronic Rate & Form Filing) documents from the Texas Department of Insurance (TDI) acceptable?
  11. What are the requirements for using a funded reserve account to meet the financial obligations?
  12. Is there recommended wording for a letter of credit?
  13. What are the requirements for using a minimum net worth of $100 million to meet the financial security obligations?
  14. Are A.M. Best reports acceptable as insurer net worth documents?
  15. As a Provider how long do I have to maintain the financial security?
  16. What background information does TDLR ask for from the provider’s controlling persons?
  17. How soon should I report changes to my Provider or Administrator registration information?
  18. I am a registered provider and I am surrendering my registration or ceasing operations in Texas. What do I need to do?

1. Who is a “Service Contract Provider” or “Provider”?

The person, company or entity that is contractually obligated to the service contract purchaser under terms of the contract. The provider is required to register with TDLR.

2.  Who is a “Service Contract Administrator” or an “Administrator”?

An administrator is defined as a person, other than the provider of the service contract or an employee of the provider, who is responsible for the third-party administration of a service contract.

A Service Contract Administrator may perform the following third-party administration activities on behalf of a Service Contract Provider:

  • Perform or arrange the collection, maintenance, or disbursement of money to compensate any party for claims or repairs pursuant to a service contract;
  • Participate in processing or adjustment of claims arising under a service contract;
  • Maintain records required by Texas Occupations Code, Chapter 1304; or
  • Comply with the provider requirements, other than the financial security requirements, of Texas Occupations Code, Chapter 1304.

Third-party administration does not include the performance of repairs, or clerical functions ancillary to the performance of repairs, by a repair facility that performs no other activities with respect to a service contract.

3. Who is a “Service Contract Seller” or “Seller”?

A seller is defined as a person, other than the provider or administrator of a service contract, who markets, sells, offers to sell, negotiates, or issues a service contract to a consumer on behalf of a provider, but who is not contractually obligated to a service contract holder under the terms of a service contract.

4.  Does the administrator of a service contract need to register with TDLR?

Yes. The Act applies to administrators the same as it applies to providers, except that administrators are not subject to the financial security requirements.
If the administrator is a separate legal entity from the Service Contract Provider, then the administrator needs an Administrator registration. If the Service Contract Provider is administering its own contracts, it does not need a separate administrator registration.

5.  Does the seller of the service contract need to register?

No. Sellers are not required to register with TDLR, but the seller is required to comply with the same marketing and sales requirements as the registered provider.

See Occupations Code, Section 1304.1531, Service Contract Sellers, Responsibilities.

6.  Does a motor vehicle dealer have to register as a Service Contract Provider?

It depends:

  • If the motor vehicle dealer is only selling another company’s service contracts, but is not contractually or financially responsible under those contracts, then the motor vehicle dealer is a seller. As discussed in question #5, sellers do not register with TDLR.
  • If the motor vehicle dealer is selling its own service contracts, and it is contractually and financially responsible for those contracts, then the motor vehicle dealer is a service contract provider, and must register with TDLR.
  • If a motor vehicle dealer is a service contract provider but meets all of the following qualifications, the motor vehicle dealer does not have to register with TDLR:
    • The dealer is selling service contracts only on the vehicles the dealer sells; AND
    • The dealer is licensed as a motor vehicle dealer under Texas Occupations Code Chapter 2301 (Texas Motor Vehicle Commission); AND
    • The dealer is covering the dealer’s financial obligations under the service contracts with reimbursement insurance.

7.  How do I become a Texas registered Provider or Administrator?

Submit an application to TDLR using Form #002 SCP located on Service Contract Forms and paying the application fee of $250. Instructions for completing Form #002 SCP

The registration is valid for a one-year period.

See Rule 77.21, Registration Renewal Requirements - Provider, and Rule 77.22, Registration Renewal Requirements - Administrator, and the forms and instructions located on Service Contract Forms.

8.  What are the financial security requirements for being a Provider in Texas?

A provider must submit proof of one of the following three forms of financial security:

  • a reimbursement insurance policy with Texas endorsement;
  • a funded reserve account, security deposit, and audited financial statements; OR
  • proof of net worth of at least $100 million.

Any form of financial security listed above must be approved by the Department prior to use.

See Occupations Code, Section 1304.151, Financial Security Requirements and Rule 77.40, Financial Security-General Requirements.
Administrators are not subject to the financial security requirements.

9.  How do I obtain a reimbursement insurance policy?

You should contact an insurance agent or company to obtain this type of policy. You can search the Texas Department of Insurance website or call 1-800-578-4677 (Texas only) or 512-463-6169 to find out if a specific insurance company is authorized to write this type of liability insurance in Texas.

The reimbursement insurance policy or contractual liability insurance policy (CLIP) must include:

The reimbursement insurance policy must cover all obligations for all service contracts issued and outstanding in Texas. 

10.  Are SERFF (System for Electronic Rate & Form Filing) documents from the Texas Department of Insurance (TDI) acceptable?

Yes. SERFF is TDI’s electronic filing system. The SERFF disposition report to companies replaces the approval letter. TDLR will accept this document as TDI’s approval of an insurer’s policy or endorsements.

11.  What are the requirements for using a funded reserve account to meet the financial obligations?

This financial security option has three required parts:

  1. A funded reserve account.
    The account must be maintained by the provider and:
    • have a balance of not less than an amount equal to 40% of the gross consideration the provider received from consumers from the sale of all service contracts issued and outstanding in Texas minus any claims paid (Form #012 SCP);
    • be kept separate from the provider’s operating accounts;
    • be clearly identified as the “Texas Service Contracts Funded Reserve Account”; and
    • not be used for any purpose other than to cover the provider’s obligations under its service contracts that are issued and outstanding in Texas.
  2. A security deposit.
    The security deposit must be filed with TDLR and:
    • be in the amount of $250,000; and
    • be in the form of either:
      • a certificate of deposit assigned to TDLR’s Executive Director;
      • cash deposited with TDLR’s executive director; OR
      • a letter of credit (Form #005 SCP).
  3. Audited financial statements.
    The provider must submit to TDLR its most recent financial statements that have been audited by an independent certified public accountant.

Any form of financial security listed above must be approved by the Department prior to use. Once a Letter of Credit or Certificate of Deposit has been received by TDLR, it is considered a government document and will not be returned.

12. Is there recommended wording for a letter of credit?

Yes, the recommended wording is located on Form #005 SCP located on the Service Contract Provider Forms page.

13. What are the requirements for using a minimum net worth of $100 million to meet the financial security obligations?

The provider must submit:

  • a copy of the provider’s or provider’s parent company’s most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission; OR
  • a copy of the provider’s or the provider’s parent company’s audited financial statements showing a net worth of the provider or its parent company of at least $100 million.

14.  Are A.M. Best reports acceptable as insurer net worth documents?

No. A.M. Best reports are NOT acceptable.

15.  As a Provider how long do I have to maintain the financial security?

As long as the provider does business or is registered in Texas and until the provider satisfied all liabilities and obligations to its service contract holders in Texas.

16. What background information does TDLR ask for from the provider’s controlling persons?

A controlling person of a provider must submit a Service Contract Provider Personal Information Form, Form #009 SCP, located on the Service Contract Forms web page.

TDLR does not accept the NAIC Biographical Affidavit.

17. How soon should I report changes to my Provider or Administrator registration information?

Any changes affecting your Texas registration must be reported in writing to the Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, TX 78711, within 30 days of the change.

18.  I am a registered provider and I am surrendering my registration or ceasing operations in Texas.  What do I need to do?

If you are ceasing operation in Texas you must notify TDLR as soon as possible when ceasing operations or discontinuing business in Texas. Within 10 days after notifying the department, the provider must submit to the department specific information and/or documents. The provider remains financially responsible to all service contract holders with active service contracts in this state.

See Rule 77.71, Responsibilities of Providers Ceasing Operations or Discontinuing Business, for more information.

Renewal Questions – Providers and Administrators
  1. How often is a Service Contract Provider or Administrator required to renew its registration?
  2. How much are the Provider and Administrator registration renewal fees?
  3. What are the requirements to renew a Provider or Administrator registration?
  4. Are Personal Information Forms for provider’s controlling persons required every year with the renewal application even if there are no changes?
  5. How do I change information on my Service Contract Provider or Administrator registration?
  6. How do I get a duplicate or replacement copy of my registration certificate?
  7. My Service Contract Provider registration has expired. How do I get it back?
  8. My Service Contract Administrator registration has expired. How do I get it back?

1.  How often is a Service Contract Provider or Administrator required to renew its registration?

The Texas Provider and Administrator registrations are valid for one year and must be renewed annually.

2.  How much are the Provider and Administrator registration renewal fees?

The Provider registration renewal fee is based on the number of service contracts sold or issued to consumers in Texas during the 12-month period preceding the expiration date of the registration:

  • 0 - 250 contracts sold: $250
  • 251 - 499 contracts sold: $500
  • 500 or more contracts: $1,000

The Administrator registration renewal fee is $250.

3.  What are the requirements to renew a Provider or Administrator registration?

TDLR will send you the renewal application. Along with the completed renewal form, you will provide the Personal Information Form (Form #009 SCP) for the controlling persons and financial security documents for the Providers.

See Rule 77.21, Registration Renewal Requirements—Provider, and Rule 77.23, Registration Renewal Requirements—Administrator, and the forms and instructions located at Service Contract Forms.

4. Are Personal Information Forms for provider’s controlling persons required every year with the renewal application even if there are no changes?

Due to the statutory changes under Texas Occupations Code §1304.102 and §1304.1025, for the first registration renewal on or after March 1, 2012, each controlling person of a provider must complete a Personal Information Form, Form #009 SCP.

A controlling person will need to complete a Personal Information Form at subsequent renewals only if the person has had a change in any of the information previously provided by the controlling person or has not previously submitted a personal information form to the department.  The “no change form” has been eliminated.

The provider applicant must indicate on the registration renewal form if there has or has not been any change in the information previously provided by any of the provider’s controlling persons to the department.

See Rule 77.21, Registration Renewal Requirements—Provider.

5.  How do I change information on my Service Contract Provider or Administrator registration?

Within 30 days of the change, submit any changes in writing to: Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, TX 78711.

6.  How do I get a duplicate or replacement copy of my registration certificate?

Make a written request for a duplicate registration along with a check or money order for $25 to Texas Department of Licensing and Regulation, PO Box 12157, Austin, TX 78711.

7. My Service Contract Provider registration has expired. How do I get it back?

You must submit a renewal application and all required attachments along with the appropriate late renewal fee. The late renewal fee is based on the number of service contracts sold to consumers in Texas during the 12-month period preceding the expiration date of the registration.

License Type

1 to 90 days late

91 days to 18 months late

0 – 250 contracts sold

$375.00

$500.00

251 - 499 contracts sold

$750.00

$1,000.00

500 or more contracts

$1,500.00

$2,000.00

If your license has been expired for more than 18 months but less than 3 years, you may submit for approval a written request stating the reason your license should be renewed or "Request to Executive Director for Expired Renewal" form with a fee in the amount of two times the normal renewal fee.

If your license has been expired for more than 3 years, you may not renew your license. You must re-apply for a new license.

You may be subject to enforcement actions, including administrative penalties and sanctions, for operating with an expired license (expired less than 18 months) or operating without a license (expired 18 months or more).

If your renewal application is received postmarked before your expiration date, it is considered a timely renewal.

8.  My Service Contract Administrator registration has expired. How do I get it back?

You must submit a renewal application and all required attachments along with the appropriate late renewal fee:

  • 1 - 90 days late: $375
  • 91 days - less than 18 months late: $500
  • 18 months - less than 3 years: $500

If your license has been expired for more than 18 months but less than 3 years, you may submit for approval a written request stating the reason your license should be renewed or “Request to Executive Director for Expired Renewal’ form with a fee in the amount of two times the normal renewal fee.

Compliance Questions
  1. Are service contracts required to be approved by the Department?
  2. Are there any required disclosures or information that must be included in the service contracts?
  3. I am a registered service contract provider. Do I have to register as an Identity Recovery Service Contract Provider too?
  4. Can windshield repair and windshield replacement services be included in a service contract?
  5. I offer an automobile service contract that covers windshields. Do I need to register with TDLR or the Texas Department of Insurance (TDI)?
  6. Are there any advertising and disclosure requirements for providers?
  7. As a provider doing TV commercials do I have to put my name on the commercials?
  8. What records must a service contract provider keep, and how long does the provider have to keep them?

1.  Are service contracts required to be approved by the Department?

No, the Department does not review or approve service contracts.

2.  Are there any required disclosures or information that must be included in the service contracts?

Yes. Lists of requirements regarding the format and contents of a service contract are found in Occupations Code Section 1304.156 and Rule 77.70.

3.  I am a registered service contract provider.  Do I have to register as an Identity Recovery Service Contract Provider too?

You do not need a separate provider registration if you are already registered as a service contract provider and you want to add identity recovery services to your existing automobile service contracts that are sold to consumers at the time of a vehicle purchase where the vehicle and the service contract are financed.

You do need a separate Identity Recovery Service Contract Provider registration if you plan to offer a stand-alone identity recovery service contract to consumers at the time of a vehicle purchase where the vehicle and the contract are financed.

4.  Can windshield repair and windshield replacement services be included in a service contract?

The provisions of the contract that provide for windshield repair fall within the scope of the service contract statute, but the windshield replacement services do not.

A service contract may provide for repair of a product for damage caused by normal wear. “Normal wear” for a motor vehicle may include minor and reasonable wear and tear that a vehicle sustains in everyday ordinary operation including “small windshield chips and cracks repairable without replacement of the entire windshield.”

A company offering windshield repair and replacement services would need to be registered as a service contract provider with TDLR for the repair services and would need to be licensed/authorized by TDI for the replacement services.

5.  I offer an automobile service contract that covers windshields. Do I need to register with TDLR or the Texas Department of Insurance (TDI)?

If the contract covers both types of windshield services, you must be registered with TDLR and licensed/authorized by TDI.

6.  Are there any advertising and disclosure requirements for providers?

Yes, the provider and administrator must comply with the advertising and disclosure requirements Rule 77.70, Responsibilities of Providers and Administrators. If a provider uses a seller to market its service contracts, the provider is responsible for the seller per Occupations Code §1304.1531.

7.  As a provider doing TV commercials do I have to put my name on the commercials?

The provider’s name is not required to be on TV commercials but per Rule 77.70, the provider’s name is to be on all written service contracts and written advertising materials.

8.  What records must a service contract provider keep, and how long does the provider have to keep them?

The provider must retain the records for at least one year after the expiration date of the specified period of coverage under the service contract. A list of the records that a provider must maintain is located under Occupations Code Section 1304.155. The records may be kept electronically.

A provider that discontinues business in this state must retain its records until that the provider has discharged all obligations to contract holders in this state and has provided proof satisfactory to TDLR’s Executive Director.

Consumer Questions
  1. How can I determine if a Service Contract Provider or Administrator is registered in Texas?
  2. How do I get a list of Texas registered Service Contract Providers and Administrators?
  3. Are home warranties or home service contracts regulated by TDLR?
  4. I bought a service contract, but I have changed my mind. Can I return or cancel it? Can I get a refund?
  5. I cancelled my contract more than 45 days ago, and I still have not received my refund. How much does the service contract provider have to pay?
  6. When should I expect to get a copy of the service contract after purchasing it?
  7. Can a service contract provider cancel my service contract without my permission or consent?
  8. What are a contract holder’s / consumer’s rights if the person buys a service contract from a person or company that presents themselves as a service contract provider but is not licensed in Texas?
  9. How do I file a complaint?
  10. How do I find out if a Service Contract Provider or Service Contract Administrator has been assessed penalties or sanctions for violating the Act or the rules?

1. How can I determine if a Service Contract Provider or Administrator is registered in Texas?

You may search the Licensing Database on the TDLR website. Select “Service Contract Providers” as the license type. Providers and administrators are combined into one list, with Administrators indicated with an “(a)” in the registration number. Example: “SCP(a)-001” is an administrator registration number, “SCP-001” is a provider registration number.

You can also call TDLR at 1-800-803-9202 (Texas only) or 512-463-6599, and speak with a customer service representative.

2.  How do I get a list of Texas registered Service Contract Providers and Administrators?

To get a list of all registered Service Contract Providers and Administrators, you may search the Licensing Database on the TDLR website.

3.  Are home warranties or home service contracts regulated by TDLR?

No. Residential service contracts are regulated by the Texas Real Estate Commission.

4. I bought a service contract, but I have changed my mind.  Can I return or cancel it? Can I get a refund?

Yes. The amount of time you have to cancel the service contract and the terms for cancellation are determined by when you bought your service contract. Your service contract should state the terms and requirements for cancelling your contract and obtaining a refund.

Before January 1, 2012

If you bought your service contract before January 1, 2012, and you have not made any claims under the service contract, you may cancel and return the service contract to the provider not later than:

  • the 20th day after the date the contract is mailed to you; or
  • the 10th day after the date of delivery, if the contract is delivered to you at the time of sale.

You may be able to cancel the service contract at a later time as provided by the service contract.

The provider must pay the refund or credit your account before the 46th day after the date the contract is returned to the provider. If the provider does not meet this time period, the provider owes you a penalty amount for each month an amount remains outstanding. The monthly penalty may not exceed 10 percent of the amount outstanding.

For more information, see Occupations Code §1304.157, Returning a Service Contract; and §1304.158, Voiding a Service Contract.

On or after January 1, 2012

If you bought your service contract on or after January 1, 2012, you may cancel the service contract at any time, even if you have made a claim under the service contract. The amount of refund will be determined based on when you canceled the contract and if you had any claims.

If you cancel a service contract before the 31st day after the date of purchase, the provider:

(1)  must refund to you or credit to your account the full purchase price of the contract, decreased by the amount of any claims paid under the contract; and

(2)  may not impose a cancellation fee.

If you cancel a service contract on or after the 31st day after the date of purchase, the provider:

(1)  must refund to you or credit your account the prorated purchase price of the contract reflecting the remaining term of the contract, based on mileage, time, or another reasonably applicable measure of the remaining term that must be disclosed in the contract, decreased by the amount of any claims paid under the contract; and

(2)  may impose a reasonable cancellation fee not to exceed $50.

The provider must pay the refund or credit your account before the 46th day after the date notice of cancellation is received by the provider. If the provider does not meet this time period, the provider owes you a penalty amount for each month an amount remains outstanding equal to 10 percent of the amount outstanding. This penalty is in addition to the full or prorated purchase price of the contract that is owed to you.

For more information, see Occupations Code §1304.1581, Cancellation by Service Contract Holder; Refund.  

5.  I cancelled my contract more than 45 days ago, and I still have not received my refund. How much does the service contract provider have to pay?

A service contract provider who does not pay a refund or credit your account before the 46th day after the date they receive the notice of cancellation must pay a penalty equal to 10 percent of the amount outstanding for each month an amount remains outstanding. This penalty is in addition to the full or prorated purchase price of the contract that is owed to you.

For example:

Purchase price of the contract/amount owed: $100 – this is considered the “amount outstanding”.

10% penalty = $10 – this penalty amount will be added every thirty days that the amount outstanding is not refunded.

Provider must pay:

  • 46th day after provider receives notice of cancellation: $100 + $10 = $110
  • 30 days after 46th day: $100 + $20 = $120
  • 60 days after 46th day: $100 + $30 = $130
    Etc.

6. When should I expect to get a copy of the service contract after purchasing it?

The seller may provide you with a copy of the service contract at the time of purchase. If the seller does not provide a copy at the time of purchase, the provider or administrator must give you a copy of the service contract within a reasonable amount of time after the date of purchase that still allows you the opportunity to cancel the contract and receive a full refund. If you don’t receive a copy of the contract, you should contact the person or company you purchased it from.

See Rules 77.70(e) and (f), Responsibilities of Providers and Administrators.

7. Can a service contract provider cancel my service contract without my permission or consent?

Yes. A provider may cancel a contract, but the reasons for doing so and whether you can obtain a refund is determined by when you bought your service contract. Your service contract should state the terms and requirements for the provider cancelling your contract.

Before January 1, 2012

If you bought your service contract before January 1, 2012, a provider may cancel a service contract by mailing a written notice of cancellation to you at your last known address according to the records of the provider. The provider must mail the notice before the fifth day preceding the effective date of the cancellation. The notice must state the effective date of the cancellation and the reason for the cancellation.

The provider is not required to give you prior notice of cancellation if the service contract is canceled because of:

  • nonpayment by you of the price for the contract ;
  • a material misrepresentation by you to the provider; or
  • a substantial breach of a duty by you relating to the covered product or its use.

For more information, see Occupations Code §1304.159, Canceling a Service Contract.

On or after January 1, 2012

If you bought your service contract on or after January 1, 2012, a provider may cancel a service contract by mailing a written notice of cancellation to you at your last known address according to the records of the provider. The provider must mail the notice before the fifth day preceding the effective date of the cancellation. The notice must state the effective date of the cancellation and the reason for the cancellation.

The provider is not required to give you prior notice of cancellation if the service contract is canceled because of:

  • nonpayment by you of the price for the contract;
  • fraud or a material misrepresentation by you to the provider or the provider’s administrator; or
  • a substantial breach of a duty by you relating to the covered product or its use.

If your service contract is canceled by the provider, the provider must give you a prorated refund of the purchase price of the contract reflecting the remaining term of the contract, based on mileage, time, or another reasonably applicable measure of the remaining term that must be disclosed in the contract, decreased by the amount of any claims paid under the contract. The provider may not charge you a cancellation fee.

For more information, see Occupations Code §1304.159, Cancellation By Provider; Refund.

8. What are a contract holder’s / consumer’s rights if the person buys a service contract from a person or company that presents themselves as a service contract provider but is not licensed in Texas?

 If TDLR determines that a person or company has operated as a service contract provider or administrator in Texas without holding the appropriate registration, the contract holder may: (1) cancel the contract and obtain a refund of the full purchase price; or (2) retain the contract.

9. How do I file a complaint?

If you have a complaint, you may:

If you are a consumer, TDLR suggests contacting the service contract provider first. The provider is required to provide you with its complaint resolution procedures and if you are unable to resolve the complaint with the provider, you may file a complaint with TDLR.

10. How do I find out if a Service Contract Provider or Service Contract Administrator has been assessed penalties or sanctions for violating the Act or the rules?

To get a list of final enforcement actions against all Service Contract Providers and Administrators, you may search the TDLR website.

Select “Service Contract Providers” as the license type. Providers and administrators are combined into one list, with Administrators indicated with an “(a)” in the registration number. Example: “SCP(a)-001” is an administrator registration number, “SCP-001” is a provider registration number.

Stay Informed on Program Changes

You can sign up to the TDLR E-mail Subscriber Notification Lists on our website. These lists were established to allow subscribers to receive automated notification of new and changing information.

Questions may be directed to TDLR at service.contract.providers@license.state.tx.us. 

 

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