Last reviewed: 28 October 2026
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United StatesHawaii service contracts: Insurance Commissioner registration and what the contract must say
Hawaii regulates service contracts under chapter 481X of the Hawaii Revised Statutes. The chapter exempts service contracts from the state's other insurance laws. It requires a provider to register with the insurance commissioner, to meet one of three financial responsibility options, and to put specific terms in the contract.2345 This page walks through the main sections of chapter 481X and notes what the chapter does not say about home warranties.
In short
- Who registers providers: "Before conducting business in this State, a provider shall register with the commissioner," and the registration "shall be updated annually" (HRS 481X-3). The chapter defines the commissioner as "the insurance commissioner" (481X-2).31
- What backs the promise: one of three options: a contractual liability insurance policy; a funded reserve of at least 40 per cent of the gross consideration received, less claims paid, plus a security deposit placed in trust with the commissioner; or a net worth or stockholders' equity of at least $100,000,000 (481X-4).4
- Not regulated as insurance: selling and administering service contracts "shall be exempt from regulation under the insurance laws of this State other than laws included in this chapter" (481X-1(b)).2
- Return right: the contract must let the holder return it within 30 days of mailing, or 20 days of delivery at the time of sale, for a full refund if no claim has been made (481X-7).6
- Home warranties: chapter 481X does not use the words "home warranty." Its definition of a service contract covers "property" without listing home systems or appliances, and the NAIC's 2023 state chart shows "No provision" for Hawaii in its homeowner warranties column.116
Who regulates a Hawaii service contract provider
Under HRS 481X-3, a provider must register with the commissioner "on a form prescribed by the commissioner" before conducting business in Hawaii, and must pay the fee set under section 431:7-101. The registration is updated every year and lists the provider's principal office, its agent for service of process in Hawaii if that is someone else, the executive officers responsible for its service contract business, any administrators it has designated, and a statement, with proof, of how it meets the financial responsibility rules in 481X-4.3 Chapter 481X defines "commissioner" as "the insurance commissioner," and a "provider" as "a person who is contractually obligated to the service contract holder under the terms of the service contract."1
The insurance code points back to chapter 481X. HRS 431:1-209(14) treats some motor vehicle warranty and guaranty contracts as general casualty insurance when made by a warrantor "doing an insurance business," but adds that "service contracts, as defined and meeting the requirements of chapter 481X, shall not be subject to chapter 431."10 The Insurance Division's licensing forms page lists two service contract provider forms: "Form DP for SCP," for designated responsible parties, and "Form FRS," the "Service Contract Provider's Financial Responsibility Statement."13
What counts as a service contract, and what is left out
HRS 481X-2 defines a service contract as "a contract or agreement for a separately stated consideration and a specific duration" to "perform or indemnify the repair, replacement, or maintenance of property for operational or structural failure due either to a defect in materials or artisanship, or to normal wear and tear." The definition also covers some motor vehicle services, such as tire and wheel repair after road hazards, paintless dent removal, windshield repair and key replacement, and says a service contract "may provide for the repair, replacement, or maintenance of property damaged by power surges, or accidentally damaged during handling."1 Section 481X-1(a) says the chapter does not apply to three things:2
| Item | What the statute says |
|---|---|
| Warranties | "Express or implied warranties." A warranty is defined as one made "without consideration, solely by the manufacturer, importer, or seller," that is "not negotiated or separated from the sale of the product and is incidental to the sale"21 |
| Maintenance agreements | Defined as "a contract of limited duration that provides scheduled maintenance only"21 |
| Public utility plans | Warranties, service contracts and maintenance agreements "offered by public utilities on their transmission devices to the extent they are regulated by the public utilities commission or the department of commerce and consumer affairs"2 |
Does chapter 481X cover home warranties?
The statute does not answer this in words. None of the twelve sections of chapter 481X uses the terms "home warranty," "home service contract" or "residential service contract." The service contract definition uses the word "property" without defining it, and does not mention homes, home systems or appliances.1 The NAIC's Spring 2023 chart of state service contract laws lists HRS 481X-1 to 481X-12 under service contracts for Hawaii, and lists "No provision" for Hawaii under homeowner warranties.16 None of the Insurance Division pages listed in the references for this guide says whether a particular home warranty plan falls under chapter 481X, and this page does not answer that question. The chapter names the insurance commissioner as the official who registers providers.13
How a provider backs its promises
HRS 481X-4 requires a provider to meet "any one" of three options, and says a provider that does so "shall not be subject to any other financial security requirements under state law."4
| Option | What the statute requires |
|---|---|
| 1. Insurance | "Insure all service contracts under a contractual liability insurance policy issued by an insurer authorized to transact insurance in this State" or issued under part III of article 8 of chapter 4314 |
| 2. Reserve and deposit | A funded reserve account of "not less than forty per cent of the gross consideration received from the sale of the service contract, less claims paid," subject to examination by the commissioner, plus a deposit placed in trust with the commissioner worth "the larger of $25,000 or five per cent of the gross consideration received, less claims paid." The deposit may be a surety bond, eligible securities, cash, a letter of credit, or another form allowed by rule4 |
| 3. Net worth | The provider or its parent keeps "a net worth or stockholders' equity of at least $100,000,000" and, on request, gives the commissioner its latest Form 10-K or 20-F or audited financial statements. If the parent meets the test, the parent "shall guarantee the provider's obligations" under contracts sold in Hawaii4 |
The Insurance Division's Form FRS asks the provider to mark which of these options it meets and to supply documents; for the insurance option it asks for a copy of the active policy and asks the provider to "identify the section showing compliance with the sixty-day requirement in HRS section 481X-8(a)."14 That section says a contractual liability policy must provide that if covered service "is not provided by the service contract provider or administrator within sixty days of proof of loss," the contract holder "is entitled to apply directly to the contractual liability insurance company." It also says ending the policy "shall not reduce the insurer's responsibility for service contracts issued by providers prior to the date of termination."7
The contract itself has to say which kind of backing applies. An insured contract must give the insurer's name and address and include a statement substantially similar to: "Obligations of the provider under this service contract are insured under a service contract contractual liability insurance policy." A contract that is not insured must include a statement substantially similar to: "Obligations of the provider under this service contract are backed by the full faith and credit of the provider."5 Our guide to reimbursement insurance and funded reserves compares these models across states.
What the contract itself must contain
HRS 481X-6 requires the provider to give the buyer a receipt or other written evidence of purchase and a copy of the contract "within a reasonable period of time from the date of purchase." For in-person sales, a written copy of the basic terms must be available at the point of sale; that rule does not apply to sales by telephone, mail or electronic means. Contracts "shall be written in clear, understandable language" and in a typeface and format that is easy to read.5
| Item | What the contract must state |
|---|---|
| Parties | The name and address of the provider, and of the administrator if different; the seller; and the holder, to the extent the holder has given that information. These may be added at the time of sale5 |
| Price | "The terms of the sale, including the purchase price." The price need not be preprinted and "may be negotiated with the contract holder at the time of sale"5 |
| Getting service | "The procedure the contract holder must follow to obtain service"5 |
| Deductible, coverage, limits | Any deductible, and "the specific merchandise and services to be provided, and any limitations, exceptions, or exclusions"5 |
| Vehicle parts | For a motor vehicle, whether nonoriginal manufacturer's parts may be used5 |
| Transfer and cancellation | Any limits on transfer, and the terms for return or cancellation "by either the provider or contract holder" before the contract ends5 |
| Holder duties | The holder's obligations, "such as the duty to protect against any further damage, or to follow owner's manual instructions"5 |
| Consequential damages and preexisting conditions | "Any provision for, or exclusion of consequential damages or preexisting conditions that applies"5 |
Returning or cancelling a contract
HRS 481X-7(a) says every contract "shall state" that the holder may return it within 30 days of the date it was mailed, within 20 days of delivery if it was delivered at the time of sale, or within a longer period the contract sets. If the contract is returned in time and no claim has been made, it "shall be void" and the provider must refund or credit "the full purchase price." A 10 per cent penalty per month is added to a refund not paid or credited within 45 days of the return. This right belongs only to the original purchaser and cannot be transferred.6
When a provider cancels, it must mail the holder written notice "at least five days prior to cancellation," stating the effective date. No prior notice is needed if the cancellation is for nonpayment of the provider fee, a material misrepresentation by the holder, or a substantial breach of the holder's duties relating to the covered product or its use.6 Section 481X-7 does not set a refund amount for a contract returned or cancelled after the 30- or 20-day return period. Section 481X-6(c)(9) requires the contract itself to state its terms for return or cancellation.56 For other states' rules, see cancelling a service contract: state statutes compared.
Records and prohibited acts
Under HRS 481X-5, a provider or its administrator must keep copies of each type of contract sold, holder names and addresses as furnished, a list of where its contracts are sold, and claims files showing at least "the date and description of each claim." Records are kept "for at least one year after coverage under the contract has expired." A provider leaving Hawaii must keep them until it gives the commissioner "satisfactory proof that the provider has discharged all contractual obligations to contract holders in this State."12
HRS 481X-10 bars a provider from using "insurance," "casualty," "surety," "mutual" or similar words in its name, with an exception for names used before July 1, 2000; "guaranty" or a similar word is allowed. A provider or its representative may not make a false or misleading statement in its contracts or literature, or "deliberately omit any material statement that would be considered misleading if omitted." And "no person shall condition a loan or the sale of any property on the purchase of a service contract."8
Enforcement and complaints
HRS 481X-12 lets the commissioner investigate and examine "providers, administrators, insurers, or other persons," and issue orders to cease and desist, to stop sales that violate the chapter, or to impose a civil penalty. The commissioner may also go to court for an injunction, and that action "may also seek restitution on behalf of persons aggrieved." Violations of the chapter "shall be considered unfair or deceptive acts or practices in the conduct of trade or commerce under section 480-2."9 Section 480-2 declares those acts unlawful, and subsection (d) says no person "other than a consumer, the attorney general or the director of the office of consumer protection" may bring an action based on them.11
The Insurance Division's complaint page says it encourages consumers "to speak with an Insurance Division investigator before filing a complaint," and lists 1-844-808-DCCA (3222), Monday to Friday, 7:45 a.m. to 4:30 p.m. Hawaii Standard Time, except state holidays.15 For other routes, see where to file a warranty complaint.
Questions people ask
Is a service contract insurance in Hawaii?
A service contract that meets chapter 481X is regulated under that chapter rather than the general insurance code. Section 481X-1(b) exempts service contracts from "the insurance laws of this State other than laws included in this chapter," and section 431:1-209(14) says service contracts "as defined and meeting the requirements of chapter 481X, shall not be subject to chapter 431." The insurance commissioner still registers providers under 481X-3.2103
What if an insured provider does not provide covered service?
If the contract is backed by a contractual liability insurance policy and covered service is not provided within sixty days of proof of loss, section 481X-8(a) says the holder "is entitled to apply directly to the contractual liability insurance company" for covered services.7 The contract must give that insurer's name and address.5 See also what happens if your warranty company goes out of business.
Can a loan or a sale be conditioned on buying a service contract?
No. Section 481X-10(c) says "no person shall condition a loan or the sale of any property on the purchase of a service contract."8
Last reviewed: 28 October 2026. Statute text as published by the Hawaii State Legislature. This page is general information about a statute, not legal advice.