Subject to change: Source Date April 13, 2018
What are the financial security requirements for a provider?
Except for a provider that is a motor vehicle manufacturer or licensed motor vehicle dealer, a provider must either buy a reimbursement insurance policy or meet the Act’s net worth requirements.
- A reimbursement insurance policy, sometimes called a CLIP (contractual liability insurance policy), covers a provider’s liability under a service contract. An example of this liability would be the provider’s promise to repair the covered item.
- Alternatively, a provider must have a tangible net worth of at least $100,000,000, either on its own or combined with its parent. If a provider relies on its parent’s net worth, the parent must sign a guaranty agreement concerning the subsidiary provider’s service contract obligations.