{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/59.1-437.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/59.1-437.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/59.1-437.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/59.1-437.html"}],"law_id":74852,"edition_id":1,"section_id":74852,"structure_id":14618,"section_number":"59.1-437","catch_line":"Third party obligors; proof of financial stability","history":"1991, c. 654; 1996, c. 966; 2003, c. 411; 2019, cc. 396, 558.","full_text":"A\n\nIn order to ensure the faithful performance of a third party obligor’s obligations to its contract holders, each third party obligor shall furnish proof of its financial stability by complying with either of the following:1\n\nThe third party obligor shall show that it has a net worth of at least $100 million by providing the Commissioner with a copy of the third party obligor’s most recent annual audited financial statement; or2\n\nThe third party obligor shall show a net worth of the third party obligor or its parent company of at least $100 million by providing the Commissioner with a copy of the third party obligor’s, or if the third party obligor’s financial statements are consolidated with those of its parent company, the third party obligor’s parent company’s, most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission, provided the Form 10-K or Form 20-F was filed with the Securities and Exchange Commission within the last calendar year. If the third party obligor’s parent company’s Form 10-K or Form 20-F is filed to meet the third party obligor’s financial stability requirement, then the parent company shall agree to guarantee the obligations of the third party obligor relating to service contracts sold by the third party obligor in this Commonwealth.B\n\nIn lieu of compliance with subsection A, a third party obligor may demonstrate financial responsibility by filing with the Commissioner a copy of a liability insurance policy issued by an insurer authorized to transact business in this Commonwealth and which covers 100 percent of the obligor’s service contract liabilities, including the administration of claims and the cost for such administration. Reimbursement insurance policies filed pursuant to this section may not be cancelled by either the third party obligor or the issuing insurer without providing 60 days’ notice to the Commissioner.C\n\nEach service contract shall include a disclosure in substantially the form as follows or in such other form as the Commissioner directs:\n\t\t\t“If any promise made in the contract has been denied or has not been honored within 60 days after your request, you may contact the Virginia Department of Agriculture and Consumer Services, Office of Charitable and Regulatory Programs to file a complaint.”D\n\nUpon receipt of a complaint by a purchaser against an obligor asserting that a promise made in a contract has been denied or has not been honored within 60 days after the purchaser’s request, the Commissioner may conduct an investigation as authorized by § 59.1-439 to determine if the obligor or its insurance company, if complying with subsection B, has improperly denied or failed to honor a purchaser’s request. If the Commissioner determines that a purchaser’s request was improperly denied or failed to be honored by an obligor or its insurance company, if complying with subsection B, the Commissioner may issue an order requiring the obligor to rectify or justify the denial or failure. In addition to the penalties provided in § 59.1-441, if the denial or failure is not rectified or sufficiently justified by the obligor, the Commissioner may (i) issue a cease and desist order requiring the obligor to cease operations in the Commonwealth until the denial or failure has been rectified; (ii) deny, suspend, or revoke the obligor’s registration; or (iii) assess a civil penalty of up to $1,000 per violation not to exceed $10,000 in the aggregate for all similar violations. Any civil penalties collected pursuant to this subsection shall be payable to the State Treasurer for deposit to the general fund. If the Commissioner elects to assess such a civil penalty and an obligor does not pay the civil penalty within 60 days of its assessment, the Commissioner may (a) issue a cease and desist order requiring the obligor to cease operations in the Commonwealth until the civil penalty has been paid or (b) deny, suspend, or revoke the obligor’s registration.","order_by":null,"text":{"0":{"id":268947,"text":"In order to ensure the faithful performance of a third party obligor’s obligations to its contract holders, each third party obligor shall furnish proof of its financial stability by complying with either of the following:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":268948,"text":"The third party obligor shall show that it has a net worth of at least $100 million by providing the Commissioner with a copy of the third party obligor’s most recent annual audited financial statement; or","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"2":{"id":268949,"text":"The third party obligor shall show a net worth of the third party obligor or its parent company of at least $100 million by providing the Commissioner with a copy of the third party obligor’s, or if the third party obligor’s financial statements are consolidated with those of its parent company, the third party obligor’s parent company’s, most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission, provided the Form 10-K or Form 20-F was filed with the Securities and Exchange Commission within the last calendar year. If the third party obligor’s parent company’s Form 10-K or Form 20-F is filed to meet the third party obligor’s financial stability requirement, then the parent company shall agree to guarantee the obligations of the third party obligor relating to service contracts sold by the third party obligor in this Commonwealth.","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"B"},"3":{"id":268950,"text":"In lieu of compliance with subsection A, a third party obligor may demonstrate financial responsibility by filing with the Commissioner a copy of a liability insurance policy issued by an insurer authorized to transact business in this Commonwealth and which covers 100 percent of the obligor’s service contract liabilities, including the administration of claims and the cost for such administration. Reimbursement insurance policies filed pursuant to this section may not be cancelled by either the third party obligor or the issuing insurer without providing 60 days’ notice to the Commissioner.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A2","next_prefix":"C"},"4":{"id":268951,"text":"Each service contract shall include a disclosure in substantially the form as follows or in such other form as the Commissioner directs:\n\t\t\t“If any promise made in the contract has been denied or has not been honored within 60 days after your request, you may contact the Virginia Department of Agriculture and Consumer Services, Office of Charitable and Regulatory Programs to file a complaint.”","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"5":{"id":268952,"text":"Upon receipt of a complaint by a purchaser against an obligor asserting that a promise made in a contract has been denied or has not been honored within 60 days after the purchaser’s request, the Commissioner may conduct an investigation as authorized by § 59.1-439 to determine if the obligor or its insurance company, if complying with subsection B, has improperly denied or failed to honor a purchaser’s request. If the Commissioner determines that a purchaser’s request was improperly denied or failed to be honored by an obligor or its insurance company, if complying with subsection B, the Commissioner may issue an order requiring the obligor to rectify or justify the denial or failure. In addition to the penalties provided in § 59.1-441, if the denial or failure is not rectified or sufficiently justified by the obligor, the Commissioner may (i) issue a cease and desist order requiring the obligor to cease operations in the Commonwealth until the denial or failure has been rectified; (ii) deny, suspend, or revoke the obligor’s registration; or (iii) assess a civil penalty of up to $1,000 per violation not to exceed $10,000 in the aggregate for all similar violations. Any civil penalties collected pursuant to this subsection shall be payable to the State Treasurer for deposit to the general fund. If the Commissioner elects to assess such a civil penalty and an obligor does not pay the civil penalty within 60 days of its assessment, the Commissioner may (a) issue a cease and desist order requiring the obligor to cease operations in the Commonwealth until the civil penalty has been paid or (b) deny, suspend, or revoke the obligor’s registration.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C"}},"ancestry":[{"id":14618,"edition_id":1,"name":"Extended Service Contract Act","identifier":"34","label":"chapter","depth":2,"order_by":1,"parent_id":12809,"metadata":{},"date_created":"2026-06-26 03:48:56","date_modified":"2026-06-26 03:48:56","permalink":{"id":261459,"object_type":"structure","relational_id":14618,"identifier":"34","token":"59.1\/34","url":"\/59.1\/34\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12809,"edition_id":1,"name":"Trade and Commerce","identifier":"59.1","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:54","date_modified":"2026-06-26 03:43:54","permalink":{"id":259521,"object_type":"structure","relational_id":12809,"identifier":"59.1","token":"59.1","url":"\/59.1\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":65655,"structure_id":14618,"section_number":"59.1-435","catch_line":"Definitions","url":"\/59.1-435\/","token":"59.1\/34\/59.1-435","metadata":false},{"id":77953,"structure_id":14618,"section_number":"59.1-436","catch_line":"Registration; fees; exemptions","url":"\/59.1-436\/","token":"59.1\/34\/59.1-436","metadata":false},{"id":74852,"structure_id":14618,"section_number":"59.1-437","catch_line":"Third party obligors; proof of financial stability","url":"\/59.1-437\/","token":"59.1\/34\/59.1-437","metadata":false},{"id":85861,"structure_id":14618,"section_number":"59.1-437.1","catch_line":"Denial, suspension, or revocation of registration","url":"\/59.1-437.1\/","token":"59.1\/34\/59.1-437.1","metadata":false},{"id":84052,"structure_id":14618,"section_number":"59.1-438","catch_line":"Regulations","url":"\/59.1-438\/","token":"59.1\/34\/59.1-438","metadata":false},{"id":74376,"structure_id":14618,"section_number":"59.1-439","catch_line":"Investigations","url":"\/59.1-439\/","token":"59.1\/34\/59.1-439","metadata":false},{"id":56458,"structure_id":14618,"section_number":"59.1-440","catch_line":"Production of records","url":"\/59.1-440\/","token":"59.1\/34\/59.1-440","metadata":false},{"id":56159,"structure_id":14618,"section_number":"59.1-440.1","catch_line":"Extended service contracts not insurance","url":"\/59.1-440.1\/","token":"59.1\/34\/59.1-440.1","metadata":false},{"id":57967,"structure_id":14618,"section_number":"59.1-441","catch_line":"Violations of chapter; penalty","url":"\/59.1-441\/","token":"59.1\/34\/59.1-441","metadata":false}],"previous_section":{"id":77953,"structure_id":14618,"section_number":"59.1-436","catch_line":"Registration; fees; exemptions","url":"\/59.1-436\/","token":"59.1\/34\/59.1-436","metadata":false},"next_section":{"id":85861,"structure_id":14618,"section_number":"59.1-437.1","catch_line":"Denial, suspension, or revocation of registration","url":"\/59.1-437.1\/","token":"59.1\/34\/59.1-437.1","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/59.1-437\/","history_text":"

This law was first created in 1991. The record of its establishment is cataloged in chapter 654 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1991 \u201cActs\u201d aren\u2019t available online. It has been modified 3 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1996, chapter 966<\/a>; in 2003, chapter 411<\/a>; in 2019, chapters 396<\/a> and 558<\/a>.<\/p>","references":[{"id":85861,"section_number":"59.1-437.1","catch_line":"Denial, suspension, or revocation of registration","order_by":null,"url":"\/59.1-437.1\/"}],"refers_to":[{"id":74376,"section_number":"59.1-439","catch_line":"Investigations","order_by":null,"url":"\/59.1-439\/"},{"id":57967,"section_number":"59.1-441","catch_line":"Violations of chapter; penalty","order_by":null,"url":"\/59.1-441\/"}],"permalink":{"id":261469,"object_type":"law","relational_id":74852,"identifier":"59.1-437","token":"59.1\/34\/59.1-437","url":"\/59.1-437\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/59.1-437\/","token":"59.1\/34\/59.1-437","dublin_core":{"Title":"Third party obligors; proof of financial stability","Type":"Text","Format":"text\/html","Identifier":"\u00a7 59.1-437","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> In order<\/span> to ensure the faithful performance of a third party<\/span> obligor<\/span>’s obligations to its contract<\/span> holders, each third party<\/span> obligor<\/span> shall furnish proof of its financial stability by complying with either of the following: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The third party<\/span> obligor<\/span> shall show that it has a net worth of at least $100 million by providing the Commissioner<\/span> with a copy of the third party<\/span> obligor<\/span>’s most recent annual audited financial statement; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The third party<\/span> obligor<\/span> shall show a net worth of the third party<\/span> obligor<\/span> or its parent company of at least $100 million by providing the Commissioner<\/span> with a copy of the third party<\/span> obligor<\/span>’s, or if the third party<\/span> obligor<\/span>’s financial statements are consolidated with those of its parent company, the third party<\/span> obligor<\/span>’s parent company’s, most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission, provided the Form 10-K or Form 20-F was filed with the Securities and Exchange Commission within the last calendar year. If the third party<\/span> obligor<\/span>’s parent company’s Form 10-K or Form 20-F is filed to meet the third party<\/span> obligor<\/span>’s financial stability requirement, then the parent company shall agree to guarantee the obligations of the third party<\/span> obligor<\/span> relating to service contracts<\/span> sold by the third party<\/span> obligor<\/span> in this Commonwealth. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> In lieu of compliance with subsection A, a third party<\/span> obligor<\/span> may demonstrate financial responsibility by filing with the Commissioner<\/span> a copy of a liability insurance policy issued by an insurer authorized to transact business in this Commonwealth and which covers 100 percent of the obligor<\/span>’s service contract<\/span> liabilities, including the administration of claims and the cost for such administration. Reimbursement insurance policies filed pursuant to this section may not be cancelled by either the third party<\/span> obligor<\/span> or the issuing insurer without providing 60 days’ notice to the Commissioner<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> Each service contract<\/span> shall include a disclosure in substantially the form as follows or in such other form as the Commissioner<\/span> directs:\n\t\t\t“If any promise made in the contract<\/span> has been denied or has not been honored within 60 days after your request, you may contact the Virginia Department of Agriculture and Consumer Services, Office of Charitable and Regulatory Programs to file a complaint.” <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> Upon receipt of a complaint by a purchaser<\/span> against an obligor<\/span> asserting that a promise made in a contract<\/span> has been denied or has not been honored within 60 days after the purchaser<\/span>’s request, the Commissioner<\/span> may conduct an investigation as authorized by § 59.1-439<\/a> to determine if the obligor<\/span> or its insurance company, if complying with subsection B, has improperly denied or failed to honor a purchaser<\/span>’s request. If the Commissioner<\/span> determines that a purchaser<\/span>’s request was improperly denied or failed to be honored by an obligor<\/span> or its insurance company, if complying with subsection B, the Commissioner<\/span> may issue<\/span> an order<\/span> requiring the obligor<\/span> to rectify or justify the denial or failure. In addition to the penalties provided in § 59.1-441<\/a>, if the denial or failure is not rectified or sufficiently justified by the obligor<\/span>, the Commissioner<\/span> may (i) issue<\/span> a cease and desist order<\/span> requiring the obligor<\/span> to cease operations in the Commonwealth until the denial or failure has been rectified; (ii) deny, suspend, or revoke the obligor<\/span>’s registration; or (iii) assess a civil penalty<\/span> of up to $1,000 per violation not to exceed $10,000 in the aggregate for all similar violations. Any civil penalties collected pursuant to this subsection shall be payable to the State Treasurer for deposit to the general fund. If the Commissioner<\/span> elects to assess such a civil penalty<\/span> and an obligor<\/span> does not pay the civil penalty<\/span> within 60 days of its assessment, the Commissioner<\/span> may (a) issue<\/span> a cease and desist order<\/span> requiring the obligor<\/span> to cease operations in the Commonwealth until the civil penalty<\/span> has been paid or (b) deny, suspend, or revoke the obligor<\/span>’s registration. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nTHIRD PARTY OBLIGORS; PROOF OF FINANCIAL STABILITY (\u00a7 59.1-437)\n\nA. In order to ensure the faithful performance of a third party obligor’s\nobligations to its contract holders, each third party obligor shall furnish\nproof of its financial stability by complying with either of the following:\n\n 1. The third party obligor shall show that it has a net worth of at least $100\n million by providing the Commissioner with a copy of the third party\n obligor’s most recent annual audited financial statement; or\n\n 2. The third party obligor shall show a net worth of the third party obligor\n or its parent company of at least $100 million by providing the Commissioner\n with a copy of the third party obligor’s, or if the third party\n obligor’s financial statements are consolidated with those of its parent\n company, the third party obligor’s parent company’s, most recent\n Form 10-K or Form 20-F filed with the Securities and Exchange Commission,\n provided the Form 10-K or Form 20-F was filed with the Securities and Exchange\n Commission within the last calendar year. If the third party obligor’s\n parent company’s Form 10-K or Form 20-F is filed to meet the third party\n obligor’s financial stability requirement, then the parent company shall\n agree to guarantee the obligations of the third party obligor relating to\n service contracts sold by the third party obligor in this Commonwealth.\n\nB. In lieu of compliance with subsection A, a third party obligor may\ndemonstrate financial responsibility by filing with the Commissioner a copy of a\nliability insurance policy issued by an insurer authorized to transact business\nin this Commonwealth and which covers 100 percent of the obligor’s service\ncontract liabilities, including the administration of claims and the cost for\nsuch administration. Reimbursement insurance policies filed pursuant to this\nsection may not be cancelled by either the third party obligor or the issuing\ninsurer without providing 60 days’ notice to the Commissioner.\n\nC. Each service contract shall include a disclosure in substantially the form as\nfollows or in such other form as the Commissioner directs:\n\t\t\t“If any promise made in the contract has been denied or has not been\nhonored within 60 days after your request, you may contact the Virginia\nDepartment of Agriculture and Consumer Services, Office of Charitable and\nRegulatory Programs to file a complaint.”\n\nD. Upon receipt of a complaint by a purchaser against an obligor asserting that\na promise made in a contract has been denied or has not been honored within 60\ndays after the purchaser’s request, the Commissioner may conduct an\ninvestigation as authorized by § 59.1-439 to determine if the obligor or\nits insurance company, if complying with subsection B, has improperly denied or\nfailed to honor a purchaser’s request. If the Commissioner determines that\na purchaser’s request was improperly denied or failed to be honored by an\nobligor or its insurance company, if complying with subsection B, the\nCommissioner may issue an order requiring the obligor to rectify or justify the\ndenial or failure. In addition to the penalties provided in § 59.1-441, if\nthe denial or failure is not rectified or sufficiently justified by the obligor,\nthe Commissioner may (i) issue a cease and desist order requiring the obligor to\ncease operations in the Commonwealth until the denial or failure has been\nrectified; (ii) deny, suspend, or revoke the obligor’s registration; or\n(iii) assess a civil penalty of up to $1,000 per violation not to exceed $10,000\nin the aggregate for all similar violations. Any civil penalties collected\npursuant to this subsection shall be payable to the State Treasurer for deposit\nto the general fund. If the Commissioner elects to assess such a civil penalty\nand an obligor does not pay the civil penalty within 60 days of its assessment,\nthe Commissioner may (a) issue a cease and desist order requiring the obligor to\ncease operations in the Commonwealth until the civil penalty has been paid or\n(b) deny, suspend, or revoke the obligor’s registration.\n\nHISTORY: 1991, c. 654; 1996, c. 966; 2003, c. 411; 2019, cc. 396, 558.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}