Vehicle Protection Product Warrantors Frequently Asked Questions

General Program Questions

Licensing Questions

Renewal Questions

Compliance Questions

Consumer Protection Questions

Enforcement Questions

How to Stay Informed on Program Changes


GENERAL PROGRAM QUESTIONS
  1. What is a vehicle protection product (VPP)?
  2. What law governs vehicle protection products and when did the law become effective?
  3. Do all VPPs fall under the jurisdiction of this Act?
  4. Who is a “consumer” under the Act?
  5. Have there been any recent changes to the Act?

1. What is a vehicle protection product (VPP)?

A vehicle protection product or VPP is a product or system, which includes a written warranty, that is installed or applied to a vehicle, designed to prevent loss or damage to a vehicle from a specific cause, and in which a warrantor is required to pay for loss or damage resulting from the failure of the product to perform as represented in the warranty.

Examples of VPPs include car alarms, window etching, fabric protectors, and paint protectors. This list is not exhaustive.

2. What law governs vehicle protection products and when did the law become effective?

The Vehicle Protection Product Regulatory Act (“Act”) took effect September 1, 2001. Under this Act, TDLR registers and regulates companies and individuals (“warrantors”) who offer products to protect vehicles from theft or damage and who offer compensation to consumers for the loss or damage to those vehicles.

3. Do all VPPs fall under the jurisdiction of this Act?

No. This Act does not apply to the following types of contracts or agreements:

  • warranties or guarantees, other than those provided as part of a vehicle protection product;
  • service contracts regulated by Occupations Code, Chapter 1304; and
  • agreements issued by an automobile service club that holds a certificate of authority under Transportation Code, Chapter 722.

4. Who is a “consumer” under the Act?

A consumer is defined as a person in this state who purchases or otherwise possesses a vehicle protection product.

5. Have there been any recent changes to the Act?

No. The last legislative change to the Act was effective September 1, 2009.


LICENSING QUESTIONS
  1. Who is a “Vehicle Protection Product Warrantor” or “Warrantor”?
  2. Does the seller of the vehicle protection product warranty have to register?
  3. Does the administrator of the VPP warranty have to register?
  4. How much does it cost to register as a VPP warrantor?
  5. For how long is a VPP warrantor registration valid?
  6. What are the requirements to register as a warrantor of vehicle protection products?
  7. What are the financial requirements for being a VPP warrantor?
  8. How do I obtain a reimbursement insurance policy?
  9. How do I obtain the Vehicle Protection Product Warrantor Texas Endorsement language?
  10. How do I obtain an approval letter from the Texas Department of Insurance (TDI) for the VPP warrantor endorsement language?
  11. Are SERFF (System for Electronic Rate & Form Filings) documents from the Texas Department of Insurance (TDI) acceptable?
  12. Are A.M. Best Reports acceptable as insurer net worth documents?
  13. What documentation or information is required for a VPP Warrantor to change the reimbursement insurance policy submitted to TDLR and/or to change the insurance company that issued the insurance policy?
  14. What are the requirements for using a minimum net worth of $50 million to meet the financial security requirements?
  15. How long do I have to maintain the financial security?
  16. How do I change information on my VPP warrantor registration?
  17. How do I get a duplicate or replacement copy of my registration?

1. Who is a “Vehicle Protection Product Warrantor” or “Warrantor”?

The VPP warrantor is the person, company or entity that is contractually obligated to the vehicle protection product purchaser under terms of the warranty. The warrantor is required to register with TDLR.

2. Does the seller of the vehicle protection product warranty have to register?

No. A person who sells or solicits a vehicle protection product but who is not a warrantor is not required to register with TDLR.

For example, an automobile dealer may sell a consumer a vehicle protection product in which another party, such as the manufacturer of the product, is obligated to pay any claims made against the warranty. In this example, the product manufacturer is required to register as a warrantor. The automobile dealer is not required to register.

However, if the seller, in addition to acting as a seller, is the person named under the terms of a vehicle protection product warranty as the contractual obligor to the consumer, then the seller must register as a warrantor.

For example, if a retailer sells a VPP warranty and the retailer is obligated to pay any claims made against the warranty, then the retailer must register as a warrantor.

3. Does the administrator of the VPP warranty have to register?

No. The Act does not require VPP administrators to register with TDLR.

4. How much does it cost to register as a VPP warrantor?

The initial VPP warrantor registration fee is $250 for less than 1000 warranties, and $500 for 1000 or more warranties..

5. For how long is a VPP warrantor registration valid?

A warrantor registration is valid for a one-year period from the date of issue.

6. What are the requirements to register as a warrantor of vehicle protection products?

To obtain your initial warrantor registration, you must provide TDLR with all of the following required information, using the most recent TDLR forms available:

  • A completed application form;
  • Assumed name certificate;
  • Certificate of account status;
  • Completed criminal history questionnaire, if applicable;
  • Proof of financial security; and
  • Registration fee of $250 for less than 1000 warranties, and $500 for 1000 or more warranties..

The forms and instructions are located on the website under Vehicle Protection Product Warrantor Forms.

7. What are the financial requirements for being a VPP warrantor?

A warrantor must maintain financial security to ensure the performance of a warrantor’s obligations to its VPP warranty customers. A warrantor must submit one of the following forms of financial security:

  • A reimbursement insurance policy; OR
  • Proof of net worth of at least $50 million.

For additional information on the financial security requirements, see Occupations Code, Section 2306.202, Financial Security Requirements; and Rule 71.22, Registration Requirements - Financial Security Requirements.

8. How do I obtain a reimbursement insurance policy?

You should contact an insurance company to obtain this type of policy. You can search the Texas Department of Insurance website or call (800) 578-4677 (Texas only) or (512) 463-6169 to find out if a specific insurance company is authorized to write this type of insurance in Texas.

Please note that the insurance company you purchase the policy from must be authorized by the Texas Department of Insurance to engage in the business of insurance in this state or be on the list of surplus lines insurance companies that the Texas Department of Insurance maintains.

The reimbursement insurance policy must include:

  • the Vehicle Protection Product Warrantor Texas Endorsement; AND
  • a copy of the approval letter from the Texas Department of Insurance to use the endorsement.

For additional information on reimbursement insurance policy requirements, see Occupations Code, Section 2306.202, Financial Security Requirements; Occupations Code, Section 2306.203, Reimbursement Insurance Policy; and Rule 71.22, Registration Requirements - Financial Security Requirements.

9. How do I obtain the Vehicle Protection Product Warrantor Texas Endorsement language?

You may obtain the VPP Endorsement Form from the TDLR website under VPP Forms.

10. How do I obtain an approval letter from the Texas Department of Insurance (TDI) for the VPP warrantor endorsement language?

You should contact the insurance company (insurer) that wrote the policy and request a copy of the approval letter from TDI. If the endorsement language has not been filed with TDI, the insurer must file for approval with TDI. For more information, contact TDI at (512) 463-6169 or (800) 578-4677.

11. Are SERFF (System for Electronic Rate & Form Filings) documents from the Texas Department of Insurance (TDI) acceptable?

Yes. SERFF is TDI’s electronic filing system. The SERFF disposition report to companies replaces the approval letter. TDLR will accept this document as TDI’s approval of an insurer’s policy or endorsements.

12. Are A.M. Best Reports acceptable as insurer net worth documents?

No. TDLR will not accept these documents.

13. What documentation or information is required for a VPP Warrantor to change the reimbursement insurance policy submitted to TDLR and/or to change the insurance company that issued the insurance policy?

The warrantor must submit the following documentation to TDLR:

  • Complete copy of new “active” reimbursement insurance policy;
  • VPP Texas Endorsement attached to the policy; and
  • TDI approval letter for endorsement.

The warrantor cannot have a lapse in coverage when changing policies or insurance companies.

14. What are the requirements for using a minimum net worth of $50 million to meet the financial security requirements?

The warrantor must submit one of the following to TDLR:

  • an audit report and audited financial statements for its most recent fiscal year which demonstrate that the warrantor had a net worth of at least $50 million as of the end of its most recent fiscal year;
  • the audit report of an independent certified public accountant stating the auditor’s unqualified opinion concerning the financial statements of the warrantor as of the end of its most recent fiscal year, together with a certification from the same accountant who performed the audit that the warrantor had a net worth in excess of $50 million as of the end of the period audited;
  • an audit report and audited financial statements for its most recent fiscal year which demonstrate that the warrantor’s parent corporation had a net worth of at least $50 million as of the end of its most recent fiscal year; or
  • the audit report of an independent certified public accountant stating the auditor’s unqualified opinion concerning the financial statements of the warrantor’s parent corporation as of the end of the parent corporation’s most recent fiscal year, together with a certification from the same accountant who performed the audit of the parent corporation that it had a net worth in excess of $50 million as of the end of the period audited.

If the warrantor relies upon the net worth of its parent corporation to satisfy the financial security requirements, then the warrantor must provide sufficient written proof that the parent corporation has agreed to guarantee the liabilities and obligations of the warrantor relating to vehicle protection products sold or offered for sale by the warrantor in Texas.

For additional information on financial security requirements, see Occupations Code, Section 2306.202, Financial Security Requirements; and Rule 71.22, Registration Requirements - Financial Security Requirements.

15. How long do I have to maintain the financial security?

A warrantor must maintain financial security for the entire time the warrantor is registered to do business in this state. The purpose of the financial security is to ensure performance of the warrantor’s obligations to its VPP warranty customers. The financial security should be maintained until all of the warrantor’s obligations to its Texas customers have been met.

16. How do I change information on my VPP warrantor registration?

You must submit any changes in writing to the Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, TX 78711 within 30 days of the change.

17. How do I get a duplicate or replacement copy of my registration?

Send a check or money order in the amount of $25 payable to TDLR with a written request for a duplicate registration to Texas Department of Licensing and Regulation, P.O. Box 12157, Austin TX 78711-2157.


RENEWAL QUESTIONS
  1. How often is a VPP warrantor required to renew its registration?
  2. How much does it cost to renew my registration as a VPP warrantor?
  3. What are the requirements to renew a VPP warrantor registration?
  4. Do I have to submit financial security documents upon renewal every year?
  5. My VPP Warrantor license has expired. How do I get it back?

1. How often is a VPP warrantor required to renew its registration?

In order for a warrantor to lawfully continue operating in Texas, a registration must be renewed annually. A warrantor registration is valid for a period of one year from the date of issue.

2. How much does it cost to renew my registration as a VPP warrantor?

The renewal registration fee is based on the number of vehicle protection product warranties sold in Texas during the previous 12-month period:

  • $350 for 0 – 999 warranties;
  • $750 for 1,000 - 1,999 warranties; and
  • $1,000 for 2000 or more warranties.

3. What are the requirements to renew a VPP warrantor registration?

To renew your warrantor registration, you must provide TDLR with all of the following required information, using the most recent TDLR forms available:

  • A completed application form;
  • Assumed name certificate;
  • Certificate of account status;
  • Completed criminal history questionnaire, if applicable;
  • Proof of financial security; and
  • Renewal registration fee.

The forms and instructions are located on the website under Vehicle Protection Product Warrantor Forms.

4. Do I have to submit financial security documents upon renewal every year?

Yes, a warrantor must submit proof of new or continuing financial security every year.

5. My VPP Warrantor license has expired. How do I get it back?

You must submit a renewal application, all required attachments, and the appropriate late renewal fees. The late renewal fee is based on the number of VPP warranties sold to consumers in Texas during the prior 12 months.

License Type 1 to 90 days late 91 days to 18 months late
0 – 999 warranties sold $525.00 $700.00
1000 – 1999 warranties sold $1125.00 $1500.00
2000 or more warranties sold $1500.00 $2000.00

NOTE: All renewal fees are non-refundable.

If your license has been expired for more than 18 months but less than 3 years, you may submit for approval a written request stating the reason your license should be renewed or “Request to Executive Director for Expired Renewal” form with a fee in the amount of two times the normal renewal fee.

If your license has been expired for 3 years or more, you may not renew your license. You must re-apply for a new license.

You may be subject to enforcement actions, including administrative penalties and sanctions, for operating with an expired license (expired less than 18 months) or operating without a license (expired 18 months or more).

If your renewal application is received postmarked before your expiration date, it is considered a timely renewal.


COMPLIANCE QUESTIONS
  1. Are vehicle protection product warranties required to be approved by the Department?
  2. Are there any required disclosures or information that must be included in the VPP warranties?
  3. I am a registered VPP warrantor. Do I also need to register as a Service Contract Provider?
  4. Can I combine a VPP warranty and a service contract into one contract?
  5. What records must a VPP warrantor keep, and how long does the warrantor have to keep them?

1. Are vehicle protection product warranties required to be approved by the Department?

No. While all vehicle protection product (VPP) warranties must comply with the Act and the rules, the Department does not review or approve VPP warranties as a prerequisite to issuing an initial or renewal registration.

Upon request, the Department may inspect a warrantor's records, which must include a copy of each unique form of VPP warranty sold, to determine compliance with the Act and the rules.

2. Are there any required disclosures or information that must be included in the VPP warranties?

Yes. Lists of requirements regarding the format and contents of a VPP warranty are found in Occupations Code Sections 2306.205 and 2306.206, and Rule 71.70(a).

3. I am a registered VPP warrantor. Do I also need to register as a Service Contract Provider?

If a VPP warrantor is also offering products that would fall under the Service Contract Regulatory Act, Occupations Code Chapter 1304, the VPP warrantor would also have to register as a service contract provider.

4. Can I combine a VPP warranty and a service contract into one contract?

No. VPP warranties are governed by Occupations Code Chapter 2306, and service contracts are governed by Occupations Code Chapter 1304. These laws have different requirements for these types of contracts and different requirements for the companies issuing these contracts. As such, coverages that would fall under the VPP statute must be in a separate agreement from the coverages that would fall under the service contract statute.

5. What records must a VPP warrantor keep, and how long does the warrantor have to keep them?

A list of the records that a VPP warrantor must maintain is located under Occupations Code Section 2306.204. The records may be kept electronically. The warrantor must retain the records for at least one year after the expiration date of the specified period of coverage under the VPP warranty.

A warrantor that discontinues business in this state shall retain its records until the warrantor furnishes the Executive Director of TDLR with proof satisfactory to the Executive Director that the warrantor has discharged all obligations to consumers in this state.


CONSUMER PROTECTION QUESTIONS
  1. How can I find out if a VPP warrantor is registered?
  2. How do I get a list of all registered VPP warrantors?
  3. I bought a VPP warranty. When should I expect to get a copy of the warranty?

1. How can I find out if a VPP warrantor is registered?

You may search for registered companies on the VPP Registrant List page. You may also contact TDLR at (800) 803-9202 (Texas only) or (512) 463-6599, and speak with a customer service representative.

2. How do I get a list of all registered VPP warrantors?

To get a list of all registered vehicle protection product warrantors, you may search the VPP Registrant List or contact TDLR at (800) 803-9202 (Texas only) or (512) 463-6599.

3. I bought a VPP warranty. When should I expect to get a copy of the warranty?

A VPP warrantor must provide a copy of the VPP warranty to you within 10 days from the date of purchase. Some warrantors will give you a copy of the warranty at the time of purchase.


ENFORCEMENT QUESTIONS
  1. How do I file a complaint?
  2. How do I find out if a VPP warrantor has been assessed penalties or sanctions for violating the Act or the rules?
  3. What are the administrative penalties or sanctions for violating the Act or the rules?

1. How do I file a complaint?

To file a complaint, you may:

If you are a consumer and have a complaint about your vehicle protection product warranty, TDLR suggests contacting the vehicle protection product warrantor first to find out if your complaint can be resolved. If you are unable to resolve the complaint with the company, you may file a complaint with TDLR by any of the methods stated above.

2. How do I find out if a VPP warrantor has been assessed penalties or sanctions for violating the Act or the rules?

To get a list of final enforcement actions against all VPP Warrantors, you may search the TDLR website. Select “Vehicle Protection Product Warrantors” as the license type.

3. What are the administrative penalties or sanctions for violating the Act or the rules?

The list of violations and the administrative penalties and sanctions for each violation is posted on the TDLR website.


HOW TO STAY INFORMED ABOUT PROGRAM CHANGES
  1. How may I receive notification of new and changing information from your department?
  2. Who do I contact if I have questions regarding the regulation of vehicle protection product warranties in Texas?

1. How may I receive notification of new and changing information from your department?

You may sign up on the TDLR E-mail Subscriber Notification Lists on our website. These lists were established to allow subscribers to receive automated notification of new and changing information.

2. Who do I contact if I have questions regarding the regulation of vehicle protection product warranties in Texas?

Questions may be directed to TDLR at vehicle.protection@tdlr.texas.gov.

 

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