Under which law must the insurer backing an extended warranty on a used car be licensed?

The federal Insurance Companies Act

Ontario's Motor Vehicle Dealers Act

A buyer is offered an extended warranty on a used car. What does it cover?

Repair or replacement of parts, labour included

Theft, collision damage and third-party liability

Routine maintenance such as oil changes and rotations

The manufacturer's original warranty only

What must a service plan contract state about the deductible for goods and services?

The amount of the deductible, if any

The deductible amount for each claim made

The deductible amount, only where the plan is insured

That a deductible may apply, amount set later

A dealer facilitates a service plan sale. What must the contract say about the plan's seller?

The seller's name and registration number

The seller's name, plus the dealer's own details

The dealer's own name and address instead

Who must sign an extended warranty contract the dealership sells itself?

The dealership owner and the salesperson

The dealer and the warranty company

What two backings let a dealer sell an extended warranty to a buyer?

Licensed insurance or a Compensation Fund letter of credit

The manufacturer's backing or a dealer cash reserve

A surety bond or the dealer's own written guarantee

Licensed insurance or a cash deposit held by OMVIC

Warranties and service plans: quiz

Warranties and service plans

6 questions. Pick an answer and the explanation reveals below it. Your score updates as you go.

Warranties and service plans · 6 questions Free set

Question 1 of 6 Warranties and service plans

Under which law must the insurer backing an extended warranty on a used car be licensed?
- The federal Insurance Companies Act
- Ontario's Motor Vehicle Dealers Act
- The Corporations Act
- Ontario's Insurance Act
O. Reg. 333/08 under the MVDA, 2002 · reproduced on this site Press to read the wording here

(1) A registered motor vehicle dealer shall not sell an extended warranty to a purchaser or lessee of a motor vehicle who is not another registered motor vehicle dealer or facilitate the sale of an extended warranty to that purchaser or lessee through the dealer where the dealer is not selling the warranty unless,
(a) the performance of the warranty is insured by an insurer licensed under the Insurance Act; or
(b) the seller of the warranty has provided security to the Fund for extended warranties that it supplies, where the security is in the form of an irrevocable letter of credit in the following amounts,
(i) $100,000, if the seller of the warranty is the dealer who sold or leased the vehicle to the purchaser or lessee, as the case may be, or
(ii) $500,000, in any other case. O. Reg. 333/08, s. 47 (1).

Read section 47 in full

Section 47(1)(a) requires that the warranty's performance be insured by an insurer licensed under the Insurance Act, the Ontario statute that licenses insurers. Chapter 9 covers extended warranties and service plans.
Question 2 of 6 Warranties and service plans

A buyer is offered an extended warranty on a used car. What does it cover?
- Theft, collision damage and third-party liability
- Routine maintenance such as oil changes and rotations
- The manufacturer's original warranty only
- Repair or replacement of parts, labour included
O. Reg. 333/08, s. 1 Source for this answer

Section 1 of O. Reg. 333/08 defines an extended warranty as a contract covering the costs of repairing or replacing motor vehicle components, including the labour to do so, that is in addition to a warranty supplied by law or implied by the operation of law. Chapter 9 covers extended warranties and service plans.
Question 3 of 6 Warranties and service plans

What must a service plan contract state about the deductible for goods and services?
- The amount of the deductible, if any
- The deductible amount for each claim made
- The deductible amount, only where the plan is insured
- That a deductible may apply, amount set later
O. Reg. 333/08, s. 48(2) para. 11 Source for this answer

Paragraph 11 of section 48(2) of O. Reg. 333/08 requires the amount of the deductible, if any, for goods and services provided under the service plan. A plan that carries a deductible must therefore print the figure on the contract rather than leave it to a brochure, and a plan with no deductible has nothing to state. Chapter 9 covers extended warranties and service plans.
Question 4 of 6 Warranties and service plans

A dealer facilitates a service plan sale. What must the contract say about the plan's seller?
- The seller's name and registration number
- The seller's name, plus the dealer's own details
- The dealer's own name and address instead
- The seller's name and address
O. Reg. 333/08 under the MVDA, 2002 · reproduced on this site Press to read the wording here

(4) A registered motor vehicle dealer shall not facilitate the sale of a service plan through the dealer to a purchaser or lessee of a motor vehicle who is not a registered motor vehicle dealer unless the contract for the plan includes, in a clear, comprehensible and prominent manner,
(a) the information required by subsection (2), except for paragraphs 3 and 4;
(b) the name and address of the seller of the plan;
(c) a registered name and the registration number of the dealer who facilitated the sale of the contract, together with the legal name of that dealer if it is different from the registered name; and
(d) the registered name and registration number of the salesperson, if any, who is acting on behalf of the dealer who facilitated the sale of the contract. O. Reg. 333/08, s. 48 (4).

Read section 48 in full

Clause 48(4)(b) of O. Reg. 333/08 requires the name and address of the seller of the plan on a facilitated contract. The buyer's claim under the plan lies against that seller rather than against the dealership that handed the form over, so the buyer needs a name and somewhere to send it. Chapter 9 covers extended warranties and service plans.
Question 5 of 6 Warranties and service plans

Who must sign an extended warranty contract the dealership sells itself?
- The buyer and the salesperson
- The dealership owner and the salesperson
- The dealer and the warranty company
- The buyer and the dealer
O. Reg. 333/08 under the MVDA, 2002 · reproduced on this site Press to read the wording here

(5) For each contract for an extended warranty mentioned in subsection (4) into which the registered motor vehicle dealer enters, the dealer shall ensure that,
(a) the contract is signed by the parties;
(b) if a registered salesperson is acting on behalf of the dealer, the salesperson signs next to the indication on the contract of the information described in paragraph 4 of subsection (4); and
(c) the purchaser receives a copy of the contract immediately after signing it. O. Reg. 333/08, s. 47 (5).

Read section 47 in full

O. Reg. 333/08, s. 47(5) requires the dealer to make sure the contract is signed by the parties, and on a warranty the dealership sells itself those parties are the buyer and the dealer. 9.03 covers the signing rule.
Question 6 of 6 Warranties and service plans

What two backings let a dealer sell an extended warranty to a buyer?
- Licensed insurance or a Compensation Fund letter of credit
- The manufacturer's backing or a dealer cash reserve
- A surety bond or the dealer's own written guarantee
- Licensed insurance or a cash deposit held by OMVIC
O. Reg. 333/08 under the MVDA, 2002 · reproduced on this site Press to read the wording here

(1) A registered motor vehicle dealer shall not sell an extended warranty to a purchaser or lessee of a motor vehicle who is not another registered motor vehicle dealer or facilitate the sale of an extended warranty to that purchaser or lessee through the dealer where the dealer is not selling the warranty unless,
(a) the performance of the warranty is insured by an insurer licensed under the Insurance Act; or
(b) the seller of the warranty has provided security to the Fund for extended warranties that it supplies, where the security is in the form of an irrevocable letter of credit in the following amounts,
(i) $100,000, if the seller of the warranty is the dealer who sold or leased the vehicle to the purchaser or lessee, as the case may be, or
(ii) $500,000, in any other case. O. Reg. 333/08, s. 47 (1).

Read section 47 in full

Section 47(1) of O. Reg. 333/08 lets a dealer sell an extended warranty only where its performance is insured by an insurer licensed under the Insurance Act or the seller has provided security to the Fund as an irrevocable letter of credit, so those are the only two backings. 9.03 covers how an extended warranty must be backed.

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