Last reviewed: 7 October 2026
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United StatesAlaska: vehicle service contract providers are licensed, their contracts are approved, and a holder may cancel within 30 days of delivery
Alaska treats service contracts generally as outside its insurance title, but it governs motor vehicle service contracts separately under AS 21.59.110 to 21.59.290. Those sections require a provider license, director approval of the contract, a way to show the provider can pay claims, and a return and refund rule. This page sets out what the text provides.
The short answer
- Licensed and approved: a provider of a vehicle service contract sold in Alaska applies for a license with the director of the Division of Insurance, renewed every two years, and may not issue a contract the director has not approved. 2
- Backing: insurance from an insurer or risk retention group with surplus and paid-in capital of at least $15,000,000 (or at least $10,000,000 with a 3 to 1 limit), or a net worth of $100,000,000 alone or with a parent. 2
- Return and cancellation: a holder may cancel within 30 days after delivery (10 days if delivered at sale) for a full refund if no claim was made, paid within 45 days, with a 10 percent monthly penalty if late. Later cancellation is prorated, with a fee of no more than 7.5 percent of the unearned fee. 2
- Provider cancellation is limited: a provider may cancel only for the six reasons the statute lists, on at least five days' written notice except for nonpayment, fraud or material misrepresentation. 2
Two places the statutes address service contracts
AS 21.03.021(e) says the insurance title "does not apply to a service contract offered, issued for delivery, delivered, or renewed in this state," using a definition that covers repair, replacement or maintenance of tangible personal property and of household consumer goods, appliances and systems. That definition does not include mechanical breakdown insurance, a contract requiring an indemnity payment for each incident that exceeds the purchase price of the property serviced, a "home warranty" (a warranty that covers the entire home, as opposed to one limited to a household system or appliance), or portable electronics insurance.1 Subsection (h) then says a motor vehicle service contract "shall be governed by" AS 21.59.110 through 21.59.290 except as expressly provided in the title.1 The rest of this page covers those sections.
What counts as a motor vehicle service contract
Under AS 21.59.110, a provider may, for separate or additional consideration, enter into a contract for a specific duration to maintain, service or repair a motor vehicle for an operational or structural failure due to a defect in materials or workmanship or normal wear and tear, or to indemnify for it, with or without incidental indemnity for towing, rental, emergency road service and road hazard protection. The section also covers repair or replacement of tires and wheels damaged by road hazards, paintless dent removal, repair of windshield chips or cracks or replacement of windshields, and replacement of a key or key fob.2 A contract may not include coverage for repair or replacement of a vehicle's interior surfaces or its exterior paint or finish.2 The statute defines the provider as "a person that is contractually obligated to provide motor vehicle services to a service contract holder under the terms of a motor vehicle service contract."2
Licensing, approval and administrators
A provider of a motor vehicle service contract sold in Alaska files an application for a license with the director of the Division of Insurance and pays a licensing fee. The application includes the applicant's name, address, a designated compliance officer, a person in Alaska for service of process, a list of officers and directors, and organizational documents (AS 21.59.140). The license is renewed every two years (AS 21.59.150). A licensee must report to the director any administrative action by a governmental agency within 30 days after final disposition, and any criminal prosecution within 30 days after the complaint, indictment or citation is filed (AS 21.59.140).2
A provider may not deliver or issue for delivery a motor vehicle service contract unless it files the contract with the division and receives the director's approval; a changed contract must be filed and approved again (AS 21.59.125).2 A person acting as an administrator must register with the director, though a licensed provider administering its own program need not register separately (AS 21.59.160). A provider may appoint an administrator under a written agreement and "is liable for the acts of an administrator appointed by the provider" to the extent the acts relate to the provider's Alaska contracts (AS 21.59.130(f)).2
How a provider shows it can pay claims
AS 21.59.180 requires a provider to either obtain insurance or maintain a net worth.2
| Route | What the statute says |
|---|---|
| Insurance | Obtain, from an insurer or risk retention group authorized to transact the business of insurance in the state, insurance that reimburses the provider, or pays the holder if the provider fails to perform. The insurer must keep surplus and paid-in capital of at least $15,000,000, or at least $10,000,000 (but not more than $15,000,000) with a ratio of net written premiums to that capital of no more than 3 to 1, and file the annual materials the section lists.2 |
| Net worth | Maintain, alone or with its parent company, a net worth or stockholders' equity of $100,000,000 and, on the director's request, provide the latest SEC annual report or audited financial statements. If a parent's filings are used, the parent must agree to guarantee the provider's Alaska obligations.2 |
A provider that has insurance must state in the contract that performance or payment of its obligations is insured, with its name and address. A provider without insurance must state that its obligations "are not insured and are guaranteed only by the assets of the provider." If a provider fails to provide a covered service within 30 days after the holder notifies it of the claim, the holder may apply directly to the insurer for payment.2
What the contract must say
A contract must be in clear, understandable language, in eight-point or larger type, and include the following (AS 21.59.110(c)).2
| Subject | What the statute requires |
|---|---|
| Parties | The name and address of the provider, the administrator if different, the seller and the holder (as furnished); these may be added at the time of sale.2 |
| Price and deductible | The provider fee and terms of the contract (the fee need not be preprinted and may be negotiated at sale); the applicable deductible.2 |
| Coverage and exclusions | A description of the materials and services provided and limitations, exceptions or exclusions, including whether consequential damages or preexisting conditions are provided for or excluded.2 |
| Duties, parts, transfer | The holder's obligations and duties; whether nonoriginal manufacturer's parts are allowed; transfer restrictions.2 |
| Return and cancellation | The terms for return and cancellation.2 |
On request, a provider must give a prospective purchaser a sample copy of its contract terms, and may comply by directing the purchaser to a website with a complete sample (AS 21.59.130(b)).2
Return, cancellation and refunds
AS 21.59.170 requires a contract to allow the holder to cancel not later than 30 days after the contract was delivered, or not later than 10 days after delivery if it was delivered at the time of sale, or within a longer period set in the contract. If no claim was made before the return, the contract is void and the provider must refund the full provider fee, or credit the account, not later than 45 days after the return. A penalty of 10 percent of the provider fee for each month the refund stays unpaid is added.2
After that period, or if a claim was made, the holder may cancel and the provider must refund or credit the prorated unearned provider fee, less claims paid, not later than 45 days after return, with the same monthly penalty on the unearned fee. The provider may charge a reasonable cancellation fee not exceeding 7.5 percent of the unearned provider fee paid.2
The statute limits when a provider may cancel. It may cancel only for nonpayment of the provider fee; conviction of the holder of a crime having as one of its necessary elements an act increasing a hazard covered by the contract; discovery of fraud or material misrepresentation by the holder or its representative in obtaining the contract or pursuing a claim; discovery of a grossly negligent act or omission by the holder that substantially increases the covered hazards; physical changes in the covered property that make it ineligible; or a substantial breach of duties by the holder related to the covered vehicle. It must mail written notice at least five days before cancellation, stating the effective date and reason; prior notice is not required for nonpayment, fraud or material misrepresentation. A provider's cancellation triggers a prorated refund of the unearned fee, less claims, within 45 days.2
Prohibited practices
AS 21.59.130 bars a provider from using the word "insurance," "casualty," "surety," "mutual" or similar words in its name (the name may include "guaranty") and from false or misleading statements or deliberate omissions in a contract or literature. Subsection (e) bars any person from requiring the purchase of a motor vehicle service contract as a condition of a loan or a vehicle sale. A provider or a third party acting for it may not make a false, deceptive or misleading statement in a solicitation, during telemarketing or in other advertising about its affiliation with a vehicle manufacturer, information it holds about an owner's manufacturer warranty, the expiration of that warranty, or a requirement to register for a new contract to keep existing coverage.2
What the sections exempt
AS 21.59.120 exempts from AS 21.59.110 to 21.59.290 a motor vehicle warranty or a product warranty under the federal Magnuson-Moss Warranty Act, a motor vehicle maintenance agreement, a contract sold to a person other than a consumer, and a towing, rental or emergency road service subscriber's contract with an automobile service corporation holding a certificate of authority under AS 21.59. A manufacturer's own service contract on its product is exempt from AS 21.59.120 to 21.59.160 and 21.59.180 to 21.59.200, and a manufacturer is exempt from AS 21.59.180 and the license requirement in the title.2
Records, enforcement and a holder's own action
A provider must keep records, including copies of each contract type and claim files, for at least five years after a contract expires, and must reply in writing to the director's records inquiry within 10 working days (AS 21.59.190). The director may investigate, issue cease and desist orders, and summarily suspend a license in listed circumstances. A civil penalty may be up to $2,500 for each violation, or $5,000 for each knowing violation, with an aggregate cap of $50,000 for violations of a similar nature except where the violation was knowing. A holder may bring an action in court for damages, injunctive relief, restitution or other appropriate relief for a threatened or existing violation relating to a motor vehicle service contract (AS 21.59.200).2
Where this fits our standard
Points 1 to 4 of our standard look at contract terms disclosed before purchase, cancellation and refund rights, state licensing, and funded-claims backing. Alaska's license, contract approval, backing routes and refund rule are what those points would check for a covered vehicle contract. The Register describes a method, not a verdict on any company.
How to verify this yourself
- Open the Alaska Legislature's pages for AS 21.03.021 and AS 21.59.110 to 21.59.290 (references 1 and 2). Every Alaska statement above comes from them.
- AS 21.59.180(b) requires a contract to carry one of two statutory statements, insured or not insured.2
- This page does not describe what the Division of Insurance will tell the public about a particular provider's license or approved contract; ask it directly.
What this page is not
This is general information about the text of the Alaska statutes, not legal advice. It does not say whether any contract or provider meets them. It covers motor vehicle service contracts under AS 21.59 and the service contract exemption in AS 21.03.021; it does not cover other Alaska consumer law. Statutes change; confirm the current text before relying on it.
What to do next
The tables above summarize the statute. For general guides, see how to compare vehicle service contracts and vehicle service contract cancellation and refund rights, or return to the vehicle warranty hub.