BILL NUMBER: AB 2904	CHAPTERED  06/30/04

	CHAPTER  85
	FILED WITH SECRETARY OF STATE  JUNE 30, 2004
	APPROVED BY GOVERNOR  JUNE 30, 2004
	PASSED THE SENATE  JUNE 24, 2004
	PASSED THE ASSEMBLY  MAY 20, 2004
	AMENDED IN ASSEMBLY  MAY 12, 2004

INTRODUCED BY   Assembly Member Benoit

                        FEBRUARY 20, 2004

   An act to amend Section 116.5 of the Insurance Code, relating to
auto insurance, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2904, Benoit.  Auto insurance:  express warranties.
   Existing law provides that an express warranty warranting a motor
vehicle lubricant, treatment, fluid, or additive that covers
incidental or consequential damage resulting from a failure of the
lubricant, treatment, fluid, or additive, shall constitute automobile
insurance, unless specified requirements are met, including a
requirement that the obligor under the warranty be the primary
manufacturer of the product.  Existing law defines "manufacturer" to
include a person who has formulated or produced, and continuously
offered in this state for more than 10 years, one of these
substances.
   This bill would, with respect to this definition, change to 9
years the period in which a person must have continuously offered the
substance in this state.
   The bill would declare that it is to take effect immediately as an
urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 116.5 of the Insurance Code is amended to read:

   116.5.  An express warranty warranting a motor vehicle lubricant,
treatment, fluid, or additive that covers incidental or consequential
damage resulting from a failure of the lubricant, treatment, fluid,
or additive, shall constitute automobile insurance, unless all of the
following requirements are met:
   (a) The obligor is the primary manufacturer of the product.  For
the purpose of this section, "manufacturer" means a person who can
prove clearly and convincingly that the per unit cost of owned or
leased capital goods, including the factory, plus the per unit cost
of nonsubcontracted labor, exceeds twice the per unit cost of raw
materials.  "Manufacturer" also means a person who has formulated or
produced, and continuously offered in this state for more than nine
years, a motor vehicle lubricant, treatment, fluid, or additive.
   (b) The commissioner has issued a written determination that the
obligor is a manufacturer as defined in subdivision (a).  An obligor
shall provide the commissioner with all information, documents, and
affidavits reasonably necessary for this determination to be made.
Approval by the commissioner shall be obtained prior to January 1,
2004, or prior to the issuance of a warranty subject to this section,
whichever is later.  If the commissioner determines that the obligor
is not a manufacturer, the obligor may obtain a hearing in
accordance with Chapter 4.5 (commencing with Section 11400) of Part 1
of Division 3 of Title 2 of the Government Code.
   (c) The agreement covers only damage incurred while the product
was in the vehicle.
   (d) The agreement is provided automatically with the product at no
extra charge.
  SEC. 2.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to prevent unintended consequences with respect to
businesses affected by current law, it is necessary that this act
take effect immediately.