AN ACT to amend Tennessee Code Annotated, Title 47; Title 55 and Title 56, relative to vehicle value protection agreements.
SB2342 creates the “Tennessee Vehicle Value Protection Product Act” and places vehicle value protection agreements under a new regulatory framework in Title 56. The bill defines these agreements as contracts that provide a benefit when a covered vehicle is traded in, totaled, stolen and unrecovered, or otherwise loses value due to certain adverse events, and it also covers related loyalty or replacement-vehicle benefits. It expressly excludes these products from being treated as insurance if they comply with the chapter.
The bill sets out detailed requirements for how these products may be offered and sold. Providers may not condition vehicle financing, lease terms, or the vehicle sale itself on the purchase of the agreement. The contract must identify the parties, describe the coverage and exclusions, disclose cancellation and refund terms, and explain how a consumer can file a claim or request benefits. Providers must also back their obligations with a contractual liability insurance policy, and consumers may seek payment directly from the insurer if the provider does not pay within 60 days after proof of loss or trade-in.
The bill also establishes cancellation rules. Providers must generally give at least five days’ written notice before canceling, but cancellation can be immediate for nonpayment, material misrepresentation, or a substantial breach related to the vehicle or its use. If the provider cancels for reasons other than nonpayment, it must refund unearned fees on a pro rata basis, subject to a possible administrative fee of up to $75, and may offset benefits already paid. The commissioner of commerce and insurance is directed to adopt rules covering disclosures, recordkeeping, fees, penalties, complaints, and insurer-related standards.
The bill’s impact is to create a new consumer-protection and licensing-style framework for a product commonly marketed by auto dealers and finance companies as gap-like or depreciation-protection coverage. It affects motor vehicle and recreational vehicle dealers, providers, administrators, insurers, and consumers who purchase these agreements, while clarifying that compliant agreements are not regulated as insurance. The act applies prospectively to agreements entered into, renewed, or amended on or after July 1, 2026.
No committee transcript or vote history was provided, so there is no recorded debate or voting sentiment in the supplied materials. Based on the bill text alone, the measure appears largely technical and regulatory, with an emphasis on consumer disclosures, refund rights, and insurer backing rather than on expanding or restricting the underlying product category. Potential points of contention would likely center on whether the agreements should be treated as insurance, the scope of required disclosures and refunds, and the administrative burden on dealers and providers versus the consumer protections added by the bill.
The bill repeals and replaces Tennessee Code Annotated, Title 56, Chapter 55 with a new chapter governing vehicle value protection agreements. It creates definitions, sales restrictions, disclosure requirements, cancellation and refund rules, insurer backing requirements, and rulemaking authority for the commissioner of commerce and insurance. It also clarifies that compliant agreements are not insurance and are exempt from insurance regulation, while still requiring contractual liability coverage to protect consumers if the provider fails to perform.
No committee discussion or vote record was provided, so there is no direct evidence of support or opposition from the legislative process in the supplied materials. The bill text suggests a generally pro-consumer regulatory approach, with protections against forced purchase, refund rights, and direct claims against insurers, while also preserving the ability of dealers and providers to offer the product under defined conditions.
Because no transcripts or votes were included, specific objections cannot be attributed to any legislator or stakeholder. The most likely areas of contention are the bill’s decision to classify these products as not insurance, the requirement that providers secure contractual liability insurance, the limits on cancellation and refund practices, and the compliance costs for dealers, providers, and administrators. Consumer advocates would likely favor the disclosure and refund provisions, while industry participants may focus on administrative burden and the scope of rulemaking authority.