Last reviewed: 7 October 2026
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United StatesDistrict of Columbia: service contract providers register, back their claims one of three ways, and may not include an automatic renewal term without clear disclosure and the consumer's consent
Chapter 23M of Title 31 of the D.C. Code says service contracts are not insurance, requires providers to register with the Commissioner of the Department of Insurance, Securities, and Banking, and sets what a contract must say, a return and cancellation rule, and limits on automatic renewal. This page sets out what the text provides.
The short answer
- Not insurance, but registered: service contracts under the chapter are "not insurance." Each provider files a registration with the Commissioner and pays $200 initially and every year. 2 3
- Backing: reimbursement insurance from an insurer with at least $15 million (or at least $10 million with a 3 to 1 limit) in surplus and paid-in capital; or a funded reserve of at least 40% plus a deposit of at least 5% and not less than $25,000; or a net worth of $100 million. 3
- Return and cancellation: a holder may return a contract within 30 days of mailing or delivery for a full refund if no claim was made. Later, the refund is 100% of the unearned pro rata fee less claims paid and an administrative fee of no more than 10%. 3
- Automatic renewal: a provider or seller may not include an automatic renewal provision unless it discloses the terms clearly and conspicuously and the consumer consents, in writing or electronically, or on a recorded call for phone sales. 6
What the chapter covers
Chapter 23M of Title 31 is the District's Service Contract Regulation Act of 2018 (D.C. Law 22-216). Its definition of a service contract is a contract for a separately stated consideration for any duration to perform the repair, replacement or maintenance of property, or to indemnify for it, for the operational or structural failure of "any motor vehicle or residential or other property" due to a defect in materials, workmanship, accidental damage from handling, or normal wear and tear. It includes several listed vehicle add-ons, such as 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 key or key-fob replacement, and "does not include insurance as regulated" under the District's insurance subchapter, except as the enforcement section addresses.1 The provider is "a person that is contractually obligated to the service contract holder under the terms of the service contract."1
Section 31-2351.02 says the agreements it lists and the service contracts governed by the chapter "are not insurance."2
Registration and how a provider shows it can pay claims
Each provider of a service contract sold in the District files a registration with the Commissioner of the Department of Insurance, Securities, and Banking that includes its name, full corporate address, telephone number and contact person, and designates a person in the District for service of process. It pays a $200 fee on initial registration and every year after, and updates the registration when material changes occur.3 Apart from those registration requirements, providers and related sellers and administrators are exempt from any District licensing requirement.3
Section 31-2351.03(e) requires a provider to comply with one of three paragraphs.3
| Route | What the statute says |
|---|---|
| Reimbursement insurance | Insure all service contracts under a policy from an insurer licensed, registered or authorized in the District that keeps surplus as to policyholders and paid-in capital of at least $15 million, or less than $15 million but at least $10 million with a ratio of net written premiums to that capital of no more than 3 to 1, and files its annual financial statements and actuarial certification.3 |
| Funded reserve and deposit | Maintain a funded reserve account of not less than 40% of gross consideration received, less claims paid, on in-force contracts, subject to the Commissioner's examination, and place in trust with the Commissioner a financial security deposit of not less than 5% of that gross consideration (less claims paid), and not less than $25,000, in a surety bond, eligible securities, cash, a letter of credit or another prescribed form.3 |
| Net worth | Maintain, alone or with its parent company, a net worth or stockholders' equity of $100 million and, on request, provide the latest SEC Form 10-K or 20-F or audited financial statement. If a parent's filings are used, the parent must guarantee the provider's District obligations.3 |
Subsection (f) adds that, except for the requirements in subsections (d) and (e), the Commissioner may not require other financial security of providers.3 A reimbursement insurance policy must state that the insurer will reimburse or pay on the provider's behalf the covered sums the provider is obligated to pay or, if the provider does not perform, provide the service. If a covered service is not provided within 60 days of proof of loss, the holder may apply directly to the insurer.4
What the contract must say
A contract must be in eight-point type or larger and disclose the items in section 31-2351.05.5
| Subject | What the statute requires |
|---|---|
| Who backs it | If insured under a reimbursement policy, a statement that the provider's obligations are insured under a service contract reimbursement insurance policy, plus the insurer's name and address. If not, a statement that the obligations are "backed by the full faith and credit of the provider."5 |
| Parties and price | The provider's name and address; the administrator if different, the seller and the holder, as furnished (these may be added at sale); the total purchase price and terms of sale, which may be negotiated at sale.5 |
| Coverage | Any deductible; the merchandise and services provided and any limitations, exceptions or exclusions; for a motor vehicle, whether nonoriginal manufacturers' parts are allowed; whether consequential damages or preexisting conditions are provided for or excluded.5 |
| Transfer, duties, cancellation | Restrictions on transfer; the holder's obligations and duties; and the terms, restrictions and conditions governing cancellation by either side.5 |
Section 31-2351.03(c) requires a provider, on a consumer's request, to give a complete sample copy of the terms before the time of sale, and a provider complies by directing the consumer to a website that has a complete sample.3
Return, cancellation and refunds
A contract must let the holder return it within 30 days of the date it was mailed to the holder, or of delivery if delivered at the time of sale, or within a longer period the contract permits. If no claim was made, the contract is void and the provider refunds or credits the full purchase price; a 10% penalty per month is added to a refund not paid or credited within 45 days after return.3 After that period, or if a claim was made, the holder may cancel and the provider must refund 100% of the unearned pro rata provider fee, less claims paid and an administrative fee the provider may charge of no more than 10% of the gross provider fee paid.3
If the provider cancels, it must mail written notice at least 5 days before cancellation, except that prior notice is not required for nonpayment of the provider fee, a material misrepresentation by the holder to the provider, or a substantial breach of duties by the holder relating to the covered product or its use. The notice states the effective date and reason. If the reason is other than nonpayment, the provider refunds 100% of the unearned pro rata provider fee, less claims paid, and may charge an administrative fee of no more than 10% of the gross provider fee.5
Prohibited acts, including automatic renewal rules
Section 31-2351.06 bars a provider from using the words "insurance," "casualty," "surety," "mutual" or similar words, or a deceptively similar name (the word "guaranty" may be used; a company using such words before the statute's cutoff must include in its contracts "This agreement is not an insurance contract"), from false or misleading statements or deliberate misleading omissions in its contracts or literature. Subsection (c) bars any person, such as a bank, lender, manufacturer or seller, from requiring the purchase of a service contract as a condition of a loan or a sale of property. A motor vehicle service contract provider or its representative may not misrepresent its affiliation with a vehicle manufacturer, its possession of information about the owner's manufacturer warranty, that warranty's expiration, or a requirement to register for a new contract to keep existing coverage.6
The same section limits automatic renewal. A provider or seller may not include an automatic renewal provision in a service contract unless, for in-person or online sales, it discloses the terms clearly and conspicuously near the request for consent and the consumer consents by signature or electronic acknowledgment, or, for telephone sales, it discloses the terms clearly and conspicuously on a recorded call, available to the Department on request, and the consumer consents. The statute defines an automatic renewal provision as one under which a contract renews for a specified period of more than one month if the renewal puts the contract in effect more than 6 months after it began, and the renewal takes effect unless the consumer gives notice of an intention to terminate.6
What the chapter exempts
Section 31-2351.02 exempts warranties; maintenance agreements; warranties, service contracts or maintenance agreements offered by public utilities on their transmission devices to the extent regulated by the Public Service Commission; service contracts sold to persons other than consumers; and service contracts on tangible property with a purchase price of $100 or less, exclusive of sales tax. A motor vehicle manufacturer's service contract on its own products need only comply with the sections the statute lists, and manufacturers are exempt from the registration requirement.2
Records and enforcement
A provider must keep accurate records, including a copy of each type of service contract sold and written claims files, for at least one year after the coverage period ends.7 The Commissioner may examine providers and insurers, order a provider to stop, prohibit it from selling in violation of the chapter, or impose a civil penalty of not more than $500 per violation and no more than $10,000 in the aggregate for violations of a similar nature. The Commissioner may also bring a court action, including one seeking restitution for a person aggrieved by a violation. A person aggrieved by a Commissioner's order may request a hearing within 20 days after the order's effective date.8
Where this fits our standard
Points 1 to 4 of our standard look at contract terms disclosed before purchase, cancellation and refund rights, registration, and funded-claims backing. The District's registration, three backing routes and disclosure list are what those points would check for a covered contract. The Register describes a method, not a verdict on any company.
How to verify this yourself
- Open the sections cited on the Council's code site (references 1 to 8). Every figure above comes from them.
- Section 31-2351.05 requires a contract to carry one of two statutory statements on who backs it.5
- This page does not describe what the Department of Insurance, Securities, and Banking will tell the public about a particular provider's registration; ask it directly.
What this page is not
This is general information about the text of one jurisdiction's chapter, not legal advice. It does not say whether any contract or provider meets the chapter. It does not cover the chapter's sections on termination of a reimbursement insurance policy (§ 31-2351.08), insurers' obligations (§ 31-2351.09), a provider's conditional right to continue business, or rulemaking. 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 verify a home warranty company and auto-renewal clauses in warranties, or start from the state regulation hub.