4-90-502. Definitions.

4-90-502. Definitions. As used in this subchapter: (1) “Affiliate” means an entity that is owned at least fifty-one percent (51%) by the same entity that holds at least fifty-one percent (51%) of the seller of a motor vehicle; (2) “Commissioner” means the Insurance Commissioner for the State of Arkansas; (3)(A) “Incidental costs” means expenses specified in a theft protection program warranty that are incurred by the warranty holder due to the failure of a theft protection program to perform as provided in the contract. (B) “Incidental costs” may include without limitation: (i) Insurance policy deductibles; (ii) Rental vehicle charges; (iii) The difference between the actual value of the stolen motor vehicle at the time of theft and the cost of a replacement motor vehicle; (iv) Sales tax; (v) Registration fees; (vi) Transaction fees; and (vii) Mechanical inspection fees. (C) Incidental costs may be reimbursed in either: (i) A fixed amount specified in the theft protection program warranty; or (ii) By use of a formula itemizing specific incidental costs incurred by the warranty holder; (4) “Mechanical breakdown insurance” means a policy, contract, or agreement that undertakes to perform or provide repair or replacement service, or indemnification for such service, for the operational or structural failure of a motor vehicle due to a defect in materials or workmanship or normal wear and tear and that is issued by an insurer that is authorized or approved to transact the business of insurance in this state; (5) “Motor vehicle” means a vehicle designed for highway use and subject to registration under § 27-14-701 et seq.; (6)(A) “Motor vehicle service contract” or “service contract” means a contract or agreement given for separate and identifiable consideration that a service contract provider undertakes to perform or provide repair or replacement service, or indemnification for such service, for the operational or structural failure of a motor vehicle or any of its component parts due to a defect in materials or workmanship or normal wear and tear, with or without an additional provision for incidental payment of indemnity under limited circumstances, including without limitation towing, rental vehicle expense, and emergency road service, but does not include mechanical breakdown insurance. (B) “Motor vehicle service contract” includes a contract that provides any of the following services: (i) The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards; (ii) The removal of dents, dings, or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without replacing vehicle body panels, sanding, bonding, or painting; (iii) The repair of chips or cracks in or the replacement of motor vehicle windshields as a result of damage caused by road hazards; (iv) The replacement of a motor vehicle key or key fob in the event that the key or key fob becomes inoperable or is lost or stolen; or (v) Other services that may be approved by the commissioner, if not inconsistent with this subchapter; (7) “Motor vehicle service contract provider” or “provider” means a person who, as the principal or obligor, issues, makes, sells, or offers to sell a motor vehicle service contract; (8) “Reimbursement insurance policy” means a policy of insurance providing coverage for all obligations and liabilities incurred by a motor vehicle service contract provider or a warrantor under the terms of the motor vehicle service contracts issued or sold by the motor vehicle service contract provider or theft protection program warranties issued by a warrantor; (9)(A) “Road hazard” means a condition that is encountered while driving a motor vehicle. (B) “Road hazard” includes without limitation: (i) Potholes; (ii) Rocks; (iii) Wood debris; (iv) Metal parts; (v) Glass; (vi) Plastic; (vii) Curbs; or (viii) Composite scraps; (10) “Service contract holder” or “holder” means a person who purchases a service contract or a permitted transferee; (11)(A) “Theft protection program” means a device or system that: (i) Is installed on or applied to a motor vehicle; (ii) Is designed to prevent loss or damage to a motor vehicle from theft; and (iii) Includes a theft protection program warranty. (B) “Theft protection program” includes without limitation: (i) Alarm systems; (ii) Body part marking products; (iii) Steering locks; (iv) Window etch products; (v) Pedal and ignition locks; (vi) Fuel and ignition kill switches; and (vii) Electronic, radio, and satellite tracking devices. (C) “Theft protection program” does not include fuel additives, oil additives, or other chemical products that are applied to the engine, transmission, fuel system, or interior or exterior surfaces of a motor vehicle; (12) “Theft protection program warranty” means a written agreement by a warrantor that provides that if the theft protection program fails to prevent loss or damage to a motor vehicle from theft, the warrantor shall pay to or on behalf of the warranty holder any specified incidental costs as a result of the failure of the theft protection program to perform under the terms of the theft protection program warranty; (13) “Warrantor” means a person who is contractually obligated to the warranty holder under the terms of the theft protection program warranty; and (14) “Warranty holder” means a person who purchases a theft protection program, any authorized transferee or assignee of the purchaser, or any other person legally assuming the purchaser's rights under the theft protection program contract.