BILL NUMBER: AB 509	CHAPTERED  08/27/99

	CHAPTER   238
	FILED WITH SECRETARY OF STATE   AUGUST 27, 1999
	APPROVED BY GOVERNOR   AUGUST 26, 1999
	PASSED THE ASSEMBLY   AUGUST 16, 1999
	PASSED THE SENATE   JULY 15, 1999
	AMENDED IN SENATE   JULY 8, 1999
	AMENDED IN SENATE   JUNE 28, 1999
	AMENDED IN SENATE   JUNE 7, 1999
	AMENDED IN ASSEMBLY   APRIL 29, 1999
	AMENDED IN ASSEMBLY   MARCH 22, 1999

INTRODUCED BY   Assembly Member Calderon

                        FEBRUARY 18, 1999

   An act to add Section 116.5 to the Insurance Code, relating to
automotive lubricant product warranties.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 509, Calderon.  Insurance:  automotive lubricant product
warranties.
   Existing law defines automobile insurance to include any warranty
or guaranty that promises service, maintenance, parts replacement,
repair, money, or any other indemnity in the event of loss or damage
to a motor vehicle or any part thereof from any cause.
   This bill would exclude from that definition an agreement
promising repair or replacement of a motor vehicle or part thereof
subsequent to a mechanical or electrical breakdown, where the repair
or replacement is at either no cost or a reduced cost for the
agreement holder, if the obligor is a manufacturer of motor vehicle
lubricants, treatments, fluids, or additives, subject to certain
specified conditions.


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


  SECTION 1.  Section 116.5 is added to the Insurance Code, to read:

   116.5.  Notwithstanding Section 116, an agreement promising repair
or replacement of a motor vehicle or part thereof subsequent to a
mechanical or electrical breakdown, where the repair or replacement
is at either no cost or a reduced cost for the agreement holder,
shall not constitute automobile insurance if the obligor is a
manufacturer of motor vehicle lubricants, treatments, fluids, or
additives, provided that all of the following apply:
   (a) The agreement covers only parts directly in contact with the
lubricant, treatment, fluid, or additive that is manufactured by the
obligor, or parts mechanically connected to those parts.
   (b) No separately stated consideration is paid for the agreement
by the agreement holder.
   (c) The agreement is in writing and includes all of the following:

   (1) A disclosure in 10-point type or larger that reads as follows:
  "This agreement is a product warranty and is not insurance.  It is
not subject to state insurance laws but is subject to state laws
concerning warranties.  You must use the product as instructed in
order to receive the benefit of the warranty."
   (2) A disclosure of the year in which the obligor began doing
business in this state.
   (3) A toll-free telephone number for the agreementholder to call
should there be a question or problem about the lubricant, treatment,
fluids, or additives or the warranty.