New York Laws
Article 79 - Service Contracts
7903 - Requirements for Doing Business.

(b) Service contracts shall not be issued, sold or offered for sale in
this state unless the provider:
(1) provides a receipt for, or other written evidence of, the purchase
of the service contract and a copy of the terms and conditions of the
service contract to the service contract holder where the sale takes
place in a retail store or other place of business. A copy of the
service contract in all cases shall be provided to the service contract
holder within a reasonable period of time after the date of purchase of
the service contract; and
(2) otherwise complies with this article.
(c) In order to assure the faithful performance of a provider's
obligations to its contract holders, each provider who is contractually
obligated to provide service under a service contract shall comply with
one of the following three paragraphs of this subsection:
(1) insure the performance of all its obligations under all service
contracts pursuant to a service contract reimbursement insurance policy
issued by an insurer authorized to issue service contract reimbursement
insurance in this state or procured by an excess line licensee pursuant
to section two thousand one hundred eighteen of this chapter. In the
event the provider fails to insure its obligations pursuant to this
paragraph or in the event that such insurance shall lapse or be
terminated, the provider shall comply with either paragraph two or three
of this subsection within forty-five days of the insurance lapse or
termination;
(2) (A) maintain a funded reserve account for its obligations under
its service contracts issued and outstanding in this state, which
reserve account (i) contains reserves in an amount not less than forty
percent of the gross consideration received upon the sale of, less
claims paid under, all its service contracts then in force, but not less
than zero, and (ii) shall be subject to examination and review by the
superintendent; and
(B) place in trust with the superintendent a financial security
deposit, having a value of not less than five percent of the gross
consideration received upon the sale of, less claims paid under, all
service contracts issued and then in force, but not less than fifty
thousand dollars, consisting of one or more of the following:
(i) a surety bond issued by an authorized surety;
(ii) securities of the type eligible for deposit by authorized
insurers in this state;
(iii) cash; or
(iv) a letter of credit issued by a qualified United States financial
institution; or
(3) (A) maintain a net worth or stockholders' equity of at least one
hundred million dollars; and
(B) provide the superintendent with a copy of the financial statements
of the provider, either on a stand alone basis or consolidated with its
consolidated affiliates, included in its or its direct or indirect
parent company's most recent annual report on form 10-K or form 20-F
filed with the securities and exchange commission within the last
calendar year, or if the provider or its direct or indirect parent
company is not required to file such reports with the securities and
exchange commission, a copy of the audited financial statements of the
provider, either on a stand alone basis or consolidated with its
consolidated affiliates. If the net worth or stockholders' equity of the
provider, either on a stand alone basis or consolidated with its
consolidated affiliates, as shown in the foregoing financial statements
is at least one hundred million dollars, the provider shall be deemed to
meet the requirements of this paragraph and there shall be no
requirement of a guarantee, reimbursement insurance, or other form of
financial stability arrangement. In the event the net worth or
stockholders' equity of the provider, either on a stand alone basis or
consolidated with its consolidated affiliates, is not at least one
hundred million dollars, or the net worth or stockholders' equity of the
provider, as aforesaid, is not determinable from the foregoing audited
financial statements, the provider shall comply with paragraph one or
two of this subsection within forty-five days of becoming aware of such
deficiency. If the provider's direct or indirect parent company's form
10-K, form 20-F, or audited financial statements are filed to meet the
provider's financial stability requirement, then the parent company
shall agree to guarantee the obligations of the provider relating to
service contracts sold by the provider in this state.
(d) Premium taxes. (1) Provider fees shall not be subject to premium
taxes.
(2) Premiums collected on service contract reimbursement insurance
policies shall be subject to applicable premium taxes.
(e) Service contracts shall require every provider to permit the
service contract holder to return the contract within at least twenty
days of the date of mailing of the service contract or within at least
ten days if the service contract is delivered at the time of the sale or
within a longer time period permitted under the contract. If no claim
has been made under the contract, the contract shall be void and the
provider shall refund to the contract holder the full purchase price of
the contract. A ten percent penalty per month shall be added to a refund
that is not made within thirty days of return of the contract to the
provider. The provisions of this subsection only apply to the original
purchaser of the service contract.