87R1545 JES-D     By: Campbell S.B. No. 1080       A BILL TO BE ENTITLED   AN ACT   relating to service contracts for leased or purchased motor   vehicles.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Sections 1304.003(a)(2) and (3), Occupations   Code, are amended to read as follows:                (2)  "Service contract" means an agreement that is   entered into for a separately stated consideration and for a   specified term under which a provider agrees to:                      (A)  repair, replace, or maintain a product, or   provide indemnification for the repair, replacement, or   maintenance of a product, for operational or structural failure or   damage caused by a defect in materials or workmanship or by normal   wear;                      (B)  provide identity recovery, if the service   contract is financed under Chapter 348 or 353, Finance Code; or                      (C)  provide compensation to the lessee or buyer   of a vehicle on the total constructive loss under a depreciation   benefit optional member program.                (3)  "Depreciation benefit optional member program"   means a service contract for a vehicle, regardless of whether the   vehicle is purchased for cash, financed, or leased [financed under   Chapter 348 or 353, Finance Code], that pays to the lessee or buyer   a specified amount, as a credit that may be used toward the lease or   purchase of a replacement vehicle at a participating dealer after   [, an amount less than or equal to the difference between the   purchase price and actual cash value for] a total constructive loss   of the vehicle.          SECTION 2.  Section 1304.003(e), Occupations Code, is   amended to read as follows:          (e)  A service contract described by Subsection (a)(2)(C):                (1)  may not be required as a condition of approval of a   lease of a vehicle or a loan for the purchase of a vehicle;                (2)  may not be offered by a dealer who requires a loan   for the purchase of a vehicle to be financed exclusively with the   dealer;                (3)  may be canceled by the buyer of the service   contract not later than the 30th day after the [a] buyer enters into   the contract, without a penalty;                (4)  may be canceled by the buyer of the service   contract later than the 30th day after the [a] buyer enters into the   contract, with a pro rata refund to be provided to the buyer; and                (5)  may only charge a fee that is reasonable in   relation to the benefit provided by the service contract.          SECTION 3.  The changes in law made by this Act apply only to   a service contract entered into or renewed on or after the effective   date of this Act.  A service contract entered into or renewed before   the effective date of this Act is governed by the law in effect   immediately before the effective date of this Act, and that law is   continued in effect for that purpose.          SECTION 4.  This Act takes effect September 1, 2021.