Chapter 616

616.09(2)(a) (a) Except as provided in par. (b), corporations organized under s. 616.08 are subject to all applicable provisions of chs. 600 to 646.

616.09(2)(b) (b) Corporations organized under s. 616.08 may elect to be subject to one or more of the following sections in place of corresponding provisions of ch. 611: s. 185.11, 185.12, 185.13, 185.14, 185.15, 185.38 or 185.45.

616.09 History History: 1979 c. 261; 1981 c. 205; 1981 c. 314 s. 144; 1987 a. 307, 403; 1991 a. 70; 1995 a. 27; 2005 a. 441; 2007 a. 96; 2021 a. 9; 2021 a. 240 s. 30.

616.10 616.10 Exemption from taxation. Every mutual designated a school benefit insurer under s. 616.03, every plan authorized under s. 616.06, and every corporation organized under s. 616.08 is declared to be a charitable and benevolent corporation, and its property, real, personal and mixed, and its income and property transferred to it, are exempt from taxation as provided in ss. 70.11, 71.26 (1) (a) and 71.45 (1) (a).

616.10 History History: 1979 c. 261; 1987 a. 27 s. 3202 (47) (a); 1987 a. 312 s. 17; 2007 a. 20.

616.14 616.14 Limitations applicable to plans under s. 616.06.

616.14(1) (1) Governing body. The governing body of a plan shall be the same as the governing body of the sponsoring organization, but must have at least 3 members. If the governing body of the sponsoring organization consists of fewer than 3 members, the governing body of the sponsoring organization shall appoint to the governing body of the plan the number of persons necessary to comply with this subsection. Appointments under this subsection shall be made under rules adopted by the governing body of the sponsoring organization.

616.14(2) (2) Size. No plan under s. 616.03, 616.06 or 616.08 may operate unless the plan covers a number of students large enough to give stability to its loss experience.

616.14 History History: 1979 c. 261.

616.18 616.18 Restrictions on transactions.

616.18(1) (1) Voidable transactions. Any material transaction between a plan or corporation authorized under this subchapter and one or more of its management or members of its governing board, or with any person in a position to influence the vote of any member of its governing board or the decision of any of its management or with any person having power to control the plan or corporation is voidable by the plan or corporation unless:

616.18(1)(a) (a) The transaction at the time it is entered into is reasonable and fair to the interests of the plan or corporation and its members;

616.18(1)(b) (b) The transaction has, with full knowledge of its terms and of the interests involved, been approved in advance by the governing board or by the members; and

616.18(1)(c) (c) The transaction has been reported to the commissioner immediately after approval under par. (b).

616.18(2) (2) Excepted transactions.

616.18(2)(a) (a) This section does not apply to policies of insurance issued by the plan or corporation in the normal course of its business.

616.18(2)(b) (b) The commissioner may by rule exempt other classes of transactions from the reporting requirement of sub. (1) (c), if the purposes of this section can be achieved without the report.

616.18 History History: 1979 c. 261.

616.20 616.20 Conversion of plans under s. 616.06 to mutuals under ch. 611 or service insurance corporations under ch. 613.

616.20(1) (1) Authorization. Under a proposal proposed by the officers of a plan operating under s. 616.06 and approved by the commissioner and by a majority of the members voting, the plan may be converted to a mutual under ch. 611 or a service insurance corporation under ch. 613.

616.20(2) (2) Notice and voting rights. Voting on the conversion is required only if the bylaws provide for it. Voting shall be as provided in the bylaws. If voting is required, but there is no notice provision in the bylaws, the officers shall give notice of the plan to convert under sub. (1) to all members entitled to vote on the conversion at least 30 days before the plan is submitted to the members for a vote. Whether or not voting is required, any member who feels aggrieved by the conversion plan may communicate objections to the commissioner who shall give them consideration before approving the plan. If voting is required by the bylaws, the commissioner may not approve the plan until at least 60 days after notice has been given to all members and 30 days after the voting on the plan. In all cases the commissioner may approve the plan only if the conversion plan protects the legitimate interests of the members.

616.20(3) (3) Membership and ownership of assets. Members of the plan shall be the members of the mutual or service insurance corporation created by conversion under this section. Assets of the plan shall become assets of the new corporation, and all existing contracts shall become the contracts of the new corporation.

616.20(4) (4) Liability of officers. If the commissioner approves a conversion under this section, no officer is liable to any member for losses suffered solely as a result of the conversion.

616.20(5) (5) Fees. A new corporation formed under this section is not subject to the fees under s. 601.31 (1) or (2).

616.20 History History: 1979 c. 261.

subch. III of ch. 616 SUBCHAPTER III

PROPERTY SERVICE CONTRACTS

616.50 616.50 Definitions. In this subchapter:

616.50(1) (1) “Administration” includes any of the following activities performed on behalf of a provider:

616.50(1)(a) (a) Approving or disapproving claims, paying claims, or controlling the claims adjustment process.

616.50(1)(b) (b) Arranging for or controlling the purchase of insurance associated with the offering of service contracts.

616.50(1)(c) (c) Maintaining records or submitting filings required under this subchapter on behalf of a provider.

616.50(1)(d) (d) Collecting provider fees from service contract sellers and remitting the provider fees to the provider.

616.50(2) (2) “Administrator” means a person appointed by a provider under s. 616.54 (1) to be responsible for any or all of the administration of service contracts and compliance with this subchapter.

616.50(3) (3) “Commissioner” means the commissioner of insurance.

616.50(4) (4) “Consumer” means an individual who buys other than for purposes of resale any tangible personal property that is distributed in commerce and that is normally used for personal, family, or household purposes and not for business or research purposes.

616.50(5) (5) “Maintenance agreement” means a contract of a specified duration that provides for scheduled maintenance only and does not include repair or replacement.

616.50(6) (6) “Motor vehicle manufacturer” means a person that does or satisfies any of the following:

616.50(6)(a) (a) Manufactures or produces motor vehicles and sells motor vehicles under its own name or label.

616.50(6)(b) (b) Is a subsidiary of the person that manufactures or produces motor vehicles.

616.50(6)(c) (c) Is a corporation that owns 100 percent of the person that manufactures or produces motor vehicles.

616.50(6)(d) (d) Manufactures or produces motor vehicles and sells motor vehicles under the trade name or label of another person that manufactures or produces motor vehicles.

616.50(6)(e) (e) Does not manufacture or produce motor vehicles but, pursuant to a written contract, licenses the use of its trade name or label to another person that manufactures or produces motor vehicles and that sells motor vehicles under the licensor’s trade name or label.

616.50(7) (7) “Nonoriginal manufacturer’s parts” means replacement parts for property that are not made for or by the original manufacturer of the property.

616.50(8) (8) “Provider” means a person that is contractually obligated to a service contract holder under the terms of a service contract.

616.50(9) (9) “Provider fee” means the consideration paid for a service contract.

616.50(10) (10) “Reimbursement insurance policy” means any of the following:

616.50(10)(a) (a) A policy of insurance issued to a provider under the terms of the insured service contracts issued or sold by the provider that, in the event of the provider’s or administrator’s nonperformance, will pay or perform on behalf of the provider or administrator all covered contractual obligations or services under the terms of the insured service contracts issued or sold by the provider.

616.50(10)(b) (b) A policy of insurance issued to a provider that provides the coverage specified in par. (a) and additional coverage that does not conflict with par. (a).

616.50(11) (11) “Service contract” means a contract or agreement for a separately stated consideration for a specific duration to perform the repair, replacement, or maintenance of property, or to provide indemnification for the repair, replacement, or maintenance of property, for the operational or structural failure of property, due to a defect in materials or workmanship, accidental damage from handling, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances, including towing, rental, and emergency road service and road hazard protection. “Service contract” includes a contract or agreement that provides for any of the following:

616.50(11)(a) (a) The repair, replacement, or maintenance of property or indemnification for the repair, replacement, or maintenance of property for damage resulting from a power surge or interruption.

616.50(11)(b) (b) The repair or replacement or indemnification for the repair or replacement of a motor vehicle for the operational or structural failure of one or more parts or systems of the motor vehicle brought about by the failure of an additive product to perform as represented.

616.50(11)(c) (c) The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards including potholes, rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps.

616.50(11)(d) (d) 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.

616.50(11)(e) (e) The repair or replacement of motor vehicle windshield chips or cracks.

616.50(11)(f) (f) The repair of damage to the interior components of a motor vehicle caused by wear and tear, but does not include the replacement of any part or component of a motor vehicle’s interior.

616.50(11)(g) (g) The repair or 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.

616.50(11)(h) (h) The repair, replacement, or maintenance of a motor vehicle, or indemnification for the repair, replacement, or maintenance, for excess wear to the motor vehicle that results in excess wear and use charges at the end of a lease that are assessed by a lessor under a motor vehicle lease agreement, if the value of any benefits under the contract or agreement does not exceed the purchase price of the motor vehicle.

616.50(12) (12) “Service contract holder” means a person who is the purchaser or holder of a service contract.

616.50(13) (13) “Service contract seller” means a person, including a real estate agent, who is engaged only in the selling or soliciting of a service contract, but who is not acting as a provider or involved in the administration of service contracts.

616.50(14) (14) “Warranty” means a warranty made solely by the manufacturer, importer, or seller of property or services without consideration, that is not negotiated or separated from the sale of the product or services, that is incidental to the sale of the product or services, and that guarantees indemnity for defective parts, mechanical or electrical breakdown, labor, or other remedial measures, such as repair or replacement of the property or repetition of services.

616.50 History History: 2011 a. 226; 2021 a. 129.

616.52 616.52 Applicability.

616.52(1) (1) This subchapter does not apply to any of the following:

616.52(1)(a) (a) Warranties, as defined in s. 100.203 (1) (g), 100.205 (1) (g), or 616.50 (14).

616.52(1)(b) (b) Maintenance agreements.

616.52(1)(c) (c) Service contracts offered by public utilities on their devices for the transmission of public utility service to customers to the extent such service contracts are regulated by the public service commission.

616.52(1)(cm) (cm) Service contracts offered by cooperative associations organized under ch. 185, for the purpose of producing or furnishing heat, light, power, or water to their members, or by subsidiaries or affiliates of such cooperative associations.

616.52(1)(d) (d) Service contracts sold or offered for sale to persons other than consumers.

616.52(1)(e) (e) Service contracts for inside wire protection plans associated with the offering of telecommunications service, as defined in s. 182.017 (1g) (cq), or video service, as defined in s. 66.0420 (2) (y).

616.52(1)(f) (f) Service contracts with respect to commercial property used in the provision of telecommunications service, as defined in s. 182.017 (1g) (cq), or video service, as defined in s. 66.0420 (2) (y).

616.52(2) (2) Motor vehicle manufacturer’s service contracts on the motor vehicle manufacturer’s products are exempt from this subchapter, except for ss. 616.56 (1) to (3) and (6) to (16), 616.58, and 616.62, and motor vehicle manufacturers offering service contracts on the motor vehicle manufacturer’s products are exempt from licensure under s. 616.54 (4).

616.52(3) (3) A person who holds a valid certificate of authority under s. Ins 15.01, Wis. Adm. Code may elect to do one of the following:

616.52(3)(a) (a) Continue to operate in this state under the certificate of authority. If the person makes such an election, s. Ins 15.01, Wis. Adm. Code shall continue to apply to the person and this section shall not apply to the person.

616.52(3)(b) (b) Apply for a license as a provider pursuant to s. 616.54 (4). If the person is licensed, this subchapter shall apply to the person and s. Ins 15.01, Wis. Adm. Code shall not apply to the person for any service contracts issued subsequent to licensure.

616.52 History History: 2011 a. 226; 2015 a. 197 s. 51.

616.54 616.54 Requirements for doing business.

616.54(1) (1) Appointment of administrator. A provider may, but is not required to, appoint an administrator to be responsible for any or all of the administration of service contracts and compliance with this subchapter. Except as provided in s. 616.58 (2) (b), a provider shall be liable for the acts of an administrator appointed by the provider to assist with the administration of the provider’s service contracts to the extent such acts relate to the provider’s service contracts offered in or from this state. No person may act as an administrator of service contracts sold in this state unless the person registers with the commissioner by providing the following information:

616.54(1)(a) (a) The name, business address, and other information required by the commissioner for an employee or officer of the administrator that is designated by the applicant as the person responsible for the administration of service contracts in this state.

616.54(1)(b) (b) The location of the administrator’s home office.

616.54(1)(c) (c) The names of the service contract providers for whom the administrator performs administration.

616.54(2) (2) Receipt and copy of contract. A service contract may not be issued, sold, or offered for sale in this state unless the provider of the service contract has done all of the following:

616.54(2)(a) (a) Provided a receipt for, or other written evidence of, the purchase of the service contract to the service contract holder.

616.54(2)(b) (b) Provided a copy of the service contract to the service contract holder within a reasonable period of time from the date of purchase.

616.54(3) (3) Sample contract. A provider shall provide a consumer with a complete sample copy of the service contract terms and conditions prior to the time of sale upon a request for the same by the consumer. A provider may comply with this subsection by providing the consumer with a complete sample copy of the terms and conditions or by directing the consumer to an Internet website containing a complete sample of the terms and conditions of the service contract.

616.54(4) (4) Licensure.

616.54(4)(a) (a) No person may act as a provider in this state unless the commissioner issues a license to the person under par. (c).

616.54(4)(b) (b) A person seeking to act as a provider in this state shall submit an application for licensure with the commissioner consisting of all of the following:

616.54(4)(b)1. 1. The applicant’s name.