Montana: a provider backs its service contracts one of three ways, and the contract has to say which

Montana's service contract law sits in Title 30 (Trade and Commerce), Chapter 14, Part 13 of the Montana Code, not in the insurance title. It lets a provider choose among three kinds of financial backing and requires every contract to disclose a set of terms. This page describes what the text of that part provides.

The short answer

Not under the insurance code: the statute says the marketing, sale, issuance and administration of service contracts is exempt from all provisions of Title 33 (insurance), as provided in 33-1-102(10).²
Three backing options: an insurer-backed reimbursement policy, a funded reserve of at least 40 percent of gross consideration received less claims paid plus a deposit of at least 5 percent (never under $25,000), or a net worth of $100 million held by the provider or its parent.²
The contract says which: an insured contract must carry a statement that its obligations are insured and name the insurer. An uninsured one must say its obligations are "backed by the full faith and credit of the provider."⁴
Direct claim against the insurer: where a reimbursement policy is used and covered service is not provided within 60 days of proof of loss, the holder may apply directly to the insurer.³

What the part covers

A "service contract" under the part is a contract or agreement for a separately stated consideration for a specific duration to repair, replace or maintain property, or to indemnify for that, when an operational or structural failure is due to a defect in materials or manufacturing or to normal wear and tear. It may cover damage from power surges or accidental damage from handling.¹ The definition also lists vehicle-specific items: tire and wheel road-hazard repair, paintless dent removal, windshield chip repair, key or key-fob replacement, and certain lease-end excess wear and use charges. It does not include a motor club service as defined in section 61-12-301.¹

The part defines "department" as the Department of Justice, a "provider" as a person contractually obligated to the holder under the contract, and an "administrator" as the person responsible for administering contracts.¹ A provider may appoint an administrator or other designee for some or all administration.² The part's chapter heading is Unfair Trade Practices and Consumer Protection. It was amended in 2023.¹ ²

Three ways to prove a provider can pay

Section 30-14-1302 says service contracts may not be issued, sold or offered for sale in Montana unless the provider complies with one of three provisions.²

The three backing options in § 30-14-1302(2)
Option	What the statute requires
(a) Reimbursement insurance	All contracts are insured under a reimbursement insurance policy from an insurer licensed, registered or otherwise authorized in Montana. The insurer must maintain surplus to policyholders and paid-in capital of at least $15 million and annually file its financial statements, NAIC annual statement and any actuarial certification. Or it must maintain at least $10 million but under $15 million, show on request a ratio of net written premiums to that capital of no more than 3 to 1, and annually file audited financial statements, its NAIC annual statement and any actuarial certification.²
(b) Reserve and deposit	A funded reserve account, subject to examination and review by the department, of not less than 40% of gross consideration received, less claims paid, for all contracts issued and in force. Plus a financial security deposit of not less than 5% of that same figure, but not less than $25,000, held as a surety bond from an authorized surety, securities eligible for deposit by authorized insurers, cash, or a letter of credit from a qualified financial institution.²
(c) Net worth	A net worth of stockholders' equity of $100 million, held by the provider alone or with its parent company, shown on request by a Form 10-K or 20-F filed with the SEC within the last calendar year, or audited financial statements. If the figures come from a parent company, the parent must agree to guarantee the provider's obligations on contracts sold in Montana.²

Section 30-14-1302(4) adds that, except for these requirements, no other financial security requirements may be required.² For comparison, see our Wyoming guide.

The required disclosures

Contracts must be written in clear, understandable language that is easy to read.⁴ Section 30-14-1304 then lists what they must disclose.⁴

Required disclosures in a Montana service contract (§ 30-14-1304)
Subject	What the statute requires
Who backs it	If insured under a reimbursement policy: a statement in a form identical or similar to "Obligations of the provider under this service contract are insured under a service contract reimbursement insurance policy," plus the insurer's name and address. If not insured: a statement identical or similar to "Obligations of the provider under this service contract are backed by the full faith and credit of the provider."⁴
Parties and price	The provider's name and address, and the identity of any administrator if different from the provider, the seller, and the holder where provided by the holder. These identities may be added at the time of sale. The contract or the holder's receipt must state the total purchase price and the terms under which the contract is sold; the price is not required to be preprinted and may be negotiated at the time of sale.⁴
Coverage	Any deductible; the merchandise and services to be provided; any limitations, exceptions or exclusions. A contract covering automobiles must state whether nonoriginal manufacturer's parts are allowed.⁴
Transfer and cancellation	Any restrictions on transferability, and the terms, restrictions or conditions governing cancellation by either the provider or the holder.⁴
Holder duties	All obligations and duties of the holder, including the duty to protect against further damage and any requirement to follow the owner's manual.⁴

If the provider cancels, it must mail a written notice to the holder's last-known address at least 5 days before cancellation. No prior notice is required if the reason is nonpayment of the provider fee, a material misrepresentation by the holder, or substantial breach of the holder's duties relating to the covered product or its use. Any cancellation notice must state the effective date and the reason.⁴ Within Part 13 (sections 30-14-1301 to 30-14-1305), Montana requires the contract to state its cancellation terms but the part does not itself set a refund percentage.

Claims against the insurer

Section 30-14-1303 says a reimbursement insurance policy must state that the insurer will either reimburse or pay on the provider's behalf any covered sums the provider is legally obligated to pay or, if the provider does not perform, provide the service the provider is obligated to perform. If covered service is not provided within 60 days of proof of loss, the holder is entitled to apply directly to the reimbursement insurance company.³

Vehicle theft protection warranties

The part also covers vehicle theft protection product warranties, a separate product from a service contract, with its own disclosure section added in 2023. A warrantor may cancel such a warranty only on specified grounds, such as failure to pay, material misrepresentation, fraud, substantial breach, repossession for missed vehicle payments, or the vehicle being a total loss.⁵ Our guide on protection products vs. service contracts covers the general difference.

Where this fits in our standard

Point 1 of our standard asks whether contract terms and exclusions are disclosed in plain language before purchase. Point 4 asks whether a funded-claims mechanism is verified where the state requires one. In Montana the contract itself must say which of the two kinds of backing applies, which gives a reader something concrete to check. The Register describes how we apply those points. This page describes a statute, not any provider.

How to verify this yourself

Read Part 13 of Chapter 14, Title 30 on the Montana Legislature site (references 1 to 5). The page shows the code year, 2025.
Find the backing statement in your contract. Section 30-14-1304 requires either the insurance statement with the insurer's name and address, or the "full faith and credit" statement.⁴
Section 30-14-1304(2) and (3) set the backing statement: a contract insured under a reimbursement insurance policy carries the insurance statement and the insurer's name and address, and a contract not insured under one carries the "full faith and credit" statement.⁴ Section 30-14-1302(2) lists the three backing options.²
For a different state's approach, compare our guide on confirming funded-claims backing.

What this page is not

This is general information about the text of a statute, not legal advice. It does not say whether any provider meets Montana law, and it does not cover other Montana laws, such as the state's general consumer protection provisions, that may also apply. Confirm the current text before relying on it.

What to do next

Check any Montana contract against the disclosure table above, then read our warranty contract checklist or return to the state regulation hub.