The Oklahoma Supreme Court has held that vehicle service contracts meet the definition of “insurance”. The ruling does not apply to warranties that are provided by the seller or the manufacturer. It does, however, make a significant difference in the interpretation of agreements between buyers of used vehicles and third parties to cover vehicle repair costs for covered items.
The impact of the ruling is to clarify that those providing service contracts are under the same duty as an insurer to act in good faith. If they do not, they can be sued for bad faith punitive damages. Here is the Court’s conclusion:
“Although vehicle service providers may not be subject to the exact same requirements and regulations as insurance providers, vehicle service contracts meet the definition of and are designed to function and perform as “insurance.” The consumer pays for indemnity and pays to shift the risk of paying for high repair costs to the vehicle service provider in exchange for a pre-paid premium. Because these contracts function like insurance, their providers should be subject to the same covenants of good faith that insurers must meet.”
Here is a link to the full text of the case.
Other posts about this and other topics of Oklahoma Law can be found at myOklahoma Law Website.
Find more information at the Oklahoma Law Website
Like and Follow my Facebook Page
Follow @marshalldyerFiled under: General Oklahoma Law |
Marshall's Oklahoma Law Blog 
Leave a comment