Expands the exemption for motor vehicle warranty contracts
covering materials and work to include coverage for towing and
substitute transportation.

HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Section 431:1-209, Hawaii Revised Statutes, is
 2 amended to read as follows:
 3      "431:1-209  General casualty insurance defined.  General
 4 casualty insurance includes vehicle insurance as defined in
 5 section 431:1-208, disability insurance defined in section
 6 431:1-205 and in addition is insurance:
 7      (1)  Against legal liability for the death, injury or
 8           disability of any human being, or from damage to
 9           property.
10      (2)  Of medical, hospital, surgical, and funeral benefits to
11           persons injured, irrespective of legal liability of the
12           insured, when issued with or supplemental to insurance
13           against legal liability for the death, injury or
14           disability of human beings.
15      (3)  Of the obligation accepted by, imposed upon, or assumed
16           by employers under law for death, disablement or injury
17           to employees.
18      (4)  Against loss or damage by burglary, theft, larceny,
19           robbery, forgery, fraud, vandalism, malicious mischief,
20           confiscation, or wrongful conversion, disposal or

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                                     H.B. NO.           

 1           concealment, or from any attempt of any of the
 2           foregoing; also insurance against loss or damage to
 3           moneys, coins, bullion, securities, notes, drafts,
 4           acceptances, or any other valuable papers or documents,
 5           resulting from any cause, except while in the mail.
 6      (5)  Upon personal effects of individuals, by an all-risk
 7           type of policy commonly known as the personal property
 8           floater.
 9      (6)  Against loss or damage to glass and its appurtenances
10           resulting from any cause.
11      (7)  Against any liability and loss or damage to property
12           resulting from accidents to or explosions of boilers,
13           pipes, pressure containers, machinery, or apparatus.
14      (8)  Against loss of or damage to any property of the
15           insured resulting from the ownership, maintenance or
16           use of elevators, except loss or damage by fire.
17      (9)  Against loss or damage to any property caused by the
18           breakage or leakage of sprinklers, water pipes or
19           containers, or by water entering through leaks or
20           openings in buildings.
21     (10)  Against loss or damage resulting from failure of
22           debtors to pay their obligations to the insured (credit
23           insurance).

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                                     H.B. NO.           

 1     (11)  Against loss of or damage to any domesticated or wild
 2           animal resulting from any cause (livestock insurance).
 3     (12)  Against loss of or damage to any property of the
 4           insured resulting from collision of any other object
 5           with such property, but not including collision to or
 6           by vessels, craft, piers, or other instrumentalities of
 7           ocean or inland navigation (collision insurance).
 8     (13)  Against legal liability of the insured, and against
 9           loss, damage or expense incident to a claim of such
10           liability, and including any obligation of the insured
11           to pay medical, hospital, surgical, and funeral
12           benefits to injured persons, irrespective of legal
13           liability of the insured, arising out of the death or
14           injury of any person, or arising out of injury to the
15           economic interest of any person as the result of
16           negligence in rendering expert, fiduciary or
17           professional service (malpractice insurance).
18     (14)  Against any contract of warranty or guaranty which
19           promises service maintenance, parts replacement,
20           repair, money, or any other indemnity in the event of
21           loss of or damage to a motor vehicle or any part
22           thereof from any cause, including loss of or damage to
23           or loss of use of the motor vehicle by reason of

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                                     H.B. NO.           

 1           depreciation, deterioration, wear and tear, use,
 2           obsolescence, or breakage if made by a warrantor or
 3           guarantor who or which as such is doing an insurance
 4           business.
 5                The making of a contract covering only defects in
 6           material and work, but which may include coverage for
 7           towing and substitute transportation, in exchange for a
 8           separately stated charge where it is incidental to the
 9           business of selling or leasing motor vehicles, shall
10           not be deemed insurance; provided the maker of the
11           contract has an insurance policy, with an insurer as
12           defined in section 431:1-202, providing coverage for
13           the making of those contracts.  The policy shall assume
14           the legal liability created by each contract or,
15           alternatively, the ultimate legal liability of all
16           contracts made by the issuer.  If the maker of the
17           contract is unable to perform the duties imposed by the
18           contract, the purchaser of the contract then shall be
19           considered a policyholder of the insurer.  The policy
20           shall include a loss payee endorsement that provides
21           coverage to any lending institution as its interest may
22           appear.  In addition, the contract conspicuously shall
23           state the name and address of the licensed underwriting

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                                     H.B. NO.           

 1           insurer and contain a statement that the policyholder
 2           shall be entitled to make a direct claim against the
 3           insurer upon the failure of the issuer to pay any claim
 4           within sixty days after proof of loss has been filed
 5           with the issuer.  The requirement that the maker of the
 6           contract have an insurance policy with an insurer shall
 7           not apply if the maker is a manufacturer, distributor
 8           or importer of automobiles.
 9                The doing or proposing to do any business in
10           substance equivalent to the business described in this
11           section in a manner designed to evade the provisions of
12           this section is the doing of an insurance business.
13      (15) Against any other kind of loss, damage or liability
14           properly the subject of insurance and not within any
15           other class or classes of insurance as defined in
16           section 431:1-204 to section 431:1-211, if such
17           insurance is not contrary to law or public policy."
18      SECTION 2.  New statutory material is underscored.
19      SECTION 3.  This Act shall take effect upon its approval.
21                           INTRODUCED BY:  _______________________