Service Contract Obligor

Service Contract Obligor

There are four basic elements to a service contract program. These elements are:
  • Seller
  • Obligor
  • Administrator
  • Service (repair, replacement, or cash out)
The focus of this page is the Obligor, aka the Provider.

The Obligor is the legal entity issuing the Service Contract to the consumer in the states where the obligor operates.

Many states require the Obligor to complete some form of registration (licensing), address the creation and filing of the customer terms and conditions, and provide some form of financial guarantee to ensure the customer will receive the benefits of the contract in the event of a claim or refund. The financial guarantees range from reserving for each contract sold, a parental guarantee if the company has adequate net worth, or using a service contract reimbursement insurance policy.

This is on a state-by-state basis and varies on a product category level. Categories include vehicle service contracts, ancillary auto products, home warranties, mobile products, consumer appliances, and electronics products.

Here are a few examples of guides and regs for service contract obligors. The information contained on this page cannot be relied upon or construed as Legal Advice or Compliance Guidance since this is only a very small sample for example-only purposes, and the regs change regularly:


Don't Overpay for a Program with a Third-Party

There are multiple options for forming a Service Contract Company, including forming a completely in-house solution, using a third-party solution, and creating a hybrid structure to pick and choose the various elements to own in-house versus outsource. It is very easy to get started, and Meramec Secure can help you determine the right approach.

Meramec Secure℠ has extensive relationships with technology, regulatory & compliance, underwriting, actuarial, reinsurance, insurance, and service networks to assist you in building the most efficient and effective solution to serve your customers and maximize your income.

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Contact Meramec Secure. Inc. for more information.