Is an auto service contract backed by a surety bond sold by dealerships considered insurance?

Full question:

Is an auto service contract backed by a surety bond that is sold through dealerships considered insurance in Louisiana?

• Category: Insurance
• Date: 04/07/2025
• State: Louisiana

Answer:

Please see the following LA statutes to determine applicability:

General definitions

In this Code, unless the context otherwise requires, the following
definitions shall be applicable:

(1) "Alien Insurer" is one formed under the laws of any country other
than the United States.

(2) "Approved unauthorized insurer" means an insurer without a
certificate of authority, or otherwise qualified under the provisions of
this Code, and which is on the list of approved unauthorized insurers
under the provisions of R.S. 22:1262.1, and from which a licensed surplus
lines broker may procure insurance under provisions of R.S. 22:1257.

(3) "Authorized insurer" means an insurer with a certificate of
authority or license issued under provisions of this Code or otherwise
qualified under R.S. 22:2071 et seq.

(4) "Commissioner of Insurance" as that office is created and defined
by this Code shall have full power and authority to act as insurance
commissioner for the state of Louisiana and is hereby declared to be the
proper officer to act for this state and to represent this state as a
member of the National Association of Insurance Commissioners.

(5) "Control", as used in this Code relative to ownership, shall mean
ownership representing or the authority to represent over fifty percent
of the total one hundred percent ownership.

(6) "Directive" means a written communication or order issued by or on
behalf of the commissioner of insurance to a person whose activities are
regulated by this Title, which instructs the person to act in conformance
with this Title, or any rule or regulation adopted in accordance with the
Administrative Procedure Act.

(7) "Domestic Insurer" is one formed under the laws of this state.

(8) "Foreign Insurer" is one formed under the laws of any other state
or territory of the United States or the District of Columbia.

(9)(a) "Insurance" is a contract whereby one undertakes to indemnify
another or pay a specified amount upon determinable contingencies. It
shall include any trust, plan or agreement, popularly known as employee
benefit trusts, not specifically exempted from state regulation under
Public Law 93-406, except collectively bargained union welfare plans,
single employer plans or plans of the state or political subdivisions.

(b) The establishment and operation of one or more professional or
public liability trust funds by a statewide hospital association in this
state for the purpose of providing a means by which any type of
professional malpractice or public liability claims or judgments arising
from such claims against hospitals which are members of the association
and claims against members of societies of the association shall be paid
or settled shall not be deemed to be insurance and such trust or trusts
shall not be deemed to be licensed, admitted or authorized insurers but
shall be subject to Parts XX, XXVI, XXVIII, and XXIX of Chapter 1 of
Title 22 of the Louisiana Revised Statutes of 1950. An annual audited
statement for each such trust shall be filed with the commissioner of
insurance. The commissioner of insurance shall also have the authority to
examine the books, records and affairs of the trust funds.

(c) The establishment and operation of professional and public
liability trust funds by a nonprofit beneficiary organization as set
forth in Part XIII of Chapter 2 of Title 22 of the Louisiana Revised
Statutes of 1950 shall not be deemed to be insurance and the trusts shall
not be deemed to be a licensed, admitted, or authorized insurer but shall
be subject to Parts XX, XXVI, XXVIII, and XXIX of Chapter 1 of Title 22
of the Louisiana Revised Statutes of 1950. An annual audited statement
shall be filed with the commissioner of insurance. The commissioner of
insurance shall also have the authority to examine the books, records,
and affairs of the trust fund.

(d) The establishment and operation of one or more professional,
trade, and occupational or public liability trust funds by professional
associations in this state for the purpose of providing a means by which
professional malpractice and public liability claims or judgments arising
from such claims against members of the associations shall be paid or
settled shall not be deemed to be insurance, and the trust shall not be
deemed to be a licensed, admitted, or authorized insurer but shall be
subject to Parts XX, XXVI, XXVIII, and XXIX of Chapter 1 of Title 22 of
the Louisiana Revised Statutes of 1950. An annual audited statement shall
be filed with the commissioner of insurance. The commissioner of
insurance shall also have the authority to examine the books, records,
and affairs of the trust fund.

(10) "Insurer" includes every person engaged in the business of making
contracts of insurance, other than a fraternal benefit society. A
reciprocal, an inter-insurance exchange, insurance exchange syndicate, or
a Lloyds organization is an "insurer". Any person who provides an
employee benefit trust as specified in Subparagraph (9)(a) of this
Section is an insurer. A health maintenance organization is an insurer
but only for the purposes enumerated in R.S. 22:2002(7).

(11) "Life Insurer" as used in this Code, shall mean all insurers
issuing life insurance contracts, including industrial and service
insurers.

(12) "Person" means any individual, company, insurer, association,
organization, reciprocal or inter-insurance exchange, partnership,
business, trust, or corporation.

(13) "Premium" as used in this Code means all sums charged, received,
or deposited as consideration for the purchase or continuance of
insurance for a definitely stated term, and shall include any
assessment, membership, policy, survey, inspection, service or similar
fee or charge made by an insurer as a part of the consideration for the
purchase or continuance of insurance. The term premium, as used in R.S.
22:636(D) and 637(B), shall not include any assessment, membership,
policy, survey, inspection, service or similar fee or charge made by an
insurer as part of the consideration for the purchase or continuance of
insurance.

(14) "Resident" shall mean any individual, company, insurer,
partnership, association, organization, corporation, reciprocal or
inter-insurance exchange, business, or trust that principally resides or
maintains a principal place of business in this state.

(15) "Secretary of State" as used in this Code means the secretary of
state of the state of Louisiana where that designation appears, to the
extent that the functions to be performed by the secretary of state as
designated therein involve the recordation of documents or his
appointment as attorney to accept service of process in legal
proceedings.

(16) "Small company" means a domestic life insurer which does business
exclusively in the state of Louisiana, with admitted assets not exceeding
ten million dollars and having gross annual premiums not exceeding two
million dollars.

(17) "Surplus lines insurance" means any property and casualty
insurance in this state on properties, risks, or exposures, located or to
be performed in this state, permitted to be placed through a licensed
surplus lines broker with an approved unauthorized insurer.

(18) "Unauthorized insurer" means an insurer which does not possess a
certificate of authority to do business in the state.

22:6. Kinds of insurance

Insurance shall be classified as follows:

(1) Life. Insurance on human lives and insurances appertaining thereto
or connected therewith. For the purposes of this Code, the transacting of
life insurance includes additional benefits, including the acceleration
of life benefits in advance of the time they would otherwise be payable,
in the event of death by accident; additional benefits in event of the
total and permanent disability of the insured; and optional modes of
settlement of proceeds.

(2)(a) Health and accident. Insurance of human beings against bodily
injury, disablement, or death by accident or accidental means, or the
expense thereof, or against disablement, or expense resulting from
sickness or old age, or against major expenses incurred by an employee
benefit plan due to the illness or injury of a covered employee, or
against major expenses incurred by a health care provider at financial
risk for provision of health care to persons under an agreement, and
every insurance appertaining thereto, including insurance wherein the
benefits are covered at a higher level when health care is received from
a defined network of health care providers, provided, however, that such
insurance meets all applicable requirements of Part XII of Chapter 2 of
this Title for provision of coverage through designated providers of
medical services.

(b)(i) Limited benefit. Health and accident insurance policy designed,
advertised, and marketed to supplement major medical insurance that
includes accident-only, the Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), dental, disability income, fixed
indemnity, long-term care, Medicare supplement, specified disease,
vision, and any other health and accident insurance, other than basic
hospital expense, basic medical-surgical expense, or other major medical
insurance.

(ii) Repealed by Acts 1999, No. 294, § 2.

(3) Vehicle. Insurance against loss or damage to any land vehicle or
aircraft or any draft or riding animal or to property while contained
therein or thereon or being loaded or unloaded therein or therefrom, and
against any loss or liability resulting from or incident to ownership,
maintenance, or use of any such vehicle or aircraft or animal.

Insurance against accidental death or accidental injury to individuals
including the named insured while in, entering, alighting from,
adjusting, repairing, cranking, or caused by being struck by a vehicle,
aircraft, or draft or riding animal, if such insurance is issued as part
of insurance on the vehicle, aircraft, or draft or riding animal, shall
be deemed to be vehicle insurance.

(4) Liability. Insurance against the liability of the insured for the
death, injury or disability of an employee or other person, and insurance
against the liability of the insured for damage to or destruction of
another person's property.

(5) Worker's compensation. Insurance of the obligations accepted by,
imposed upon, or assumed by employers under law for worker's
compensation.

(6) Burglary and Forgery. Insurance against loss or damage by
burglary, theft, larceny, robbery, forgery, fraud or otherwise, including
the personal property floater.

(7) Glass. Insurance against loss or damage to glass including
lettering, ornamentation and fittings from any cause.

(8) Fidelity and Surety. Becoming surety or guarantor for any person,
copartnership, or corporation in any position or place of trust or as
custodian of money or property, public or private; or becoming a surety
or guarantor for the performance of any person, copartnership, or
corporation of any lawful obligation, undertaking, agreement, or contract
of any kind, except contracts or policies of insurance; or guaranteeing
against loss or damage resulting from failure of debtors to pay their
obligations to the insured; and underwriting blanket bonds, however, no
insurer, except the Federal Deposit Insurance Corporation, the Federal
Savings and Loan Insurance Corporation, the National Credit Union
Administration or any similar insurance corporation hereinafter created
by the Congress of the United States or the legislature of any state,
shall insure the deposits in banks, savings and loan associations, credit
unions, finance operations, or similar institutions. Such obligations
shall be known and treated as suretyship obligations and such business
shall be known as surety business.

(9) Title. Insurance of owners of property or others having an interest
therein, against loss by encumbrance, or defective titles, or adverse
claim to title, and services connected therewith.

(10) Fire and extended coverage.

(a) Insurance against loss or damage by fire, smoke and smudge,
lightning or other electrical disturbances;

(b) Insurance against loss or damage by earthquake, windstorms,
cyclone, tornado, tempests, hail, frost, snow, ice, sleet, flood, rain,
drought or other weather or climatic conditions including excess or
deficiency of moisture, rising of the waters of the ocean or its
tributaries;

(c) Insurance against loss or damage by bombardment, invasion,
insurrection, riot, strikes, civil war or commotion, military or usurped
power, or explosion (other than explosion of steam boilers and the
breaking of fly wheels);

(d) Insurance authorizing the insurer to repair, rebuild or replace
with new materials of like size, kind and quality, property damaged or
destroyed by fire or other perils insured against.

(e) Insurance against loss or damage to property from any other hazard
or cause and against loss consequential upon such loss or damage.

(11) Steam boiler and sprinkler leakage.

(a) Insurance against loss or damage to property and any liability of
the insured resulting from the ownership, maintenance or use of
elevators, except loss by fire or caused by the explosion of or accidents
to boilers, pipes, pressure containers, machinery, and apparatus of any
kind and any apparatus connected thereto, or used for creating,
transmitting or applying power, light, heat, steam or refrigeration, and
including the making of, inspection of and issuing certificates of
inspection upon elevators, boilers, machinery and apparatus of any kind
and all mechanical apparatus and appliances appertaining thereto;

(b) Insurance against loss or damage by water entering through leaks or
openings in buildings, or from the breakage or leakage of a sprinkler,
pumps, water pipes, plumbing and all tanks, apparatus, conduits and
containers designed to bring water into buildings or for its storage or
utilization therein, or caused by the falling of a tank, tank platform or
supports, or against loss or damage from any cause to such sprinkler,
pumps, water pipes, plumbing, tanks, apparatus, conduits, or containers.

(12) Crop and live stock.

(a) Insurance against loss or damage from insects, diseases or other
causes to trees, crops or other products of the soil;

(b) Insurance against loss by death or damage to any domesticated or
wild animal from disease, lightning, tornadoes, cyclones, accidents, and
every other casual or accidental cause, also against theft.

(13) Marine and transportation (inland marine).

(a) Insurance against loss or damage to vessels, craft, aircraft,
vehicles of every kind, (excluding vehicles operating under their own
power or while in storage not incidental to transportation) as well as all
goods, freights, cargoes, merchandise, effects, disbursements, profits,
moneys, bullion, precious stones, securities, choses in action, evidences
of debt, valuable papers, bottomry and respondentia interests and all
other kinds of property and interests therein, in respect to,
appertaining to or in connection with any or all risks or perils of
navigation, transit or transportation, including war risks, on or under
any seas or other waters, on land or in the air, or while being
assembled, packed, crated, baled, compressed or similarly prepared for
shipment or while awaiting the same or during any delays, storage,
trans-shipment or reshipment incident thereto, including marine builder's
risks and all personal property floater risks;

(b) Insurance against loss or damage to persons or property in
connection with or appertaining to marine, inland marine, transit or
transportation insurance, including liability for loss of or damage to
either arising out of or in connection with the construction, repair,
operation, maintenance, or use of the subject matter of such insurance,
(but not including life insurance or surety bonds nor insurance against
loss by reason of bodily injury to the person arising out of the
ownership, maintenance or use of automobiles);

(c) Insurance against loss or damage to precious stones, jewels,
jewelry, gold, silver, and other precious metals whether used in business
or trade or otherwise and whether the same be in course of transportation
or otherwise, which shall include jewelers' block insurance;

(d) Insurance against loss or damage to bridges, tunnels and other
instrumentalities of transportation and communication (excluding
buildings, their furniture and furnishings, fixed contents and supplies
held in storage) unless fire, tornado, sprinkler leakage, hail,
explosion, earthquake, riot and civil commotion are the only hazards to
be covered; and to piers, wharves, docks and slips, excluding the risks
of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot
and civil commotion; and to other aids to navigation and transportation,
including dry docks and marine railways, dams and appurtenant facilities
for the control of waterways, against all risks;

(e) "Marine protection and indemnity insurance", meaning insurance
against, or against legal liability of the insured for, loss, damage, or
expense incident to ownership, operation, chartering, maintenance, use,
repair, or construction of any vessel, craft, or instrumentality in use
in ocean or inland waterways, including liability of the insured for
personal injury, illness, or death or for the loss of or damage to the
property of another person, except this definition shall not include
vessels and watercraft under five tons gross weight.

(14) Miscellaneous. Any other kind of loss, damage, or liability
properly the subject of insurance and not within any other kind or kinds
of insurance as defined in this Section, if such insurance is not
contrary to law or public policy.

(15) Homeowners' insurance. A policy of insurance on a one- or
two-family owner-occupied premises, which combines fire and allied lines
with any one or more perils of casualty, liability, or other types of
insurance within one policy form at a single premium, where the insurer's
liability for damage to the premises under said policy is determined with
reference to the replacement value of the premises.

(16)(a) Credit life, health, and accident insurance. Insurance
generally sold in connection with a credit transaction and limited to
partially or wholly extinguishing the credit obligation, including but not
limited to agreements, contracts, or policies of insurance containing the
following: credit life, credit health, and disability. It also includes
accidental death and dismemberment insurance sold in connection with a
credit transaction that may or may not require benefits payable to wholly
or partially extinguish the credit obligation. The credit obligation is
the total sum payable, including all loan finance charges and credit
service charges, pursuant to the credit transaction.

(b) Credit property and casualty insurance. Insurance generally sold in
connection with a credit transaction and limited to partially or wholly
extinguishing the credit obligation, including but not limited to
agreements, contracts, or policies of insurance containing any of the
following: involuntary unemployment, vendors single interest, vendors
dual interest, and credit fire, or GAP. The credit obligation is the
total sum payable, including all loan finance charges and credit service
charges, pursuant to the credit transaction.

(17) Annuity. A contract sold by insurance companies that pays an
income benefit for the life of a person, for the lives of two or more
persons, or for a specified period of time, or a contract that may provide
for a series of payments to be made or received at regular intervals at
the direction of the contract holder.

We are unable to give a legal opinion, as this service provides information of a general legal nature. The answer will depend on the terms of the contract involved. If further clarification is needed, please contact the insurance department at the following link:

http://www.ldi.louisiana.gov/Property_Casualty/Ins_Commission/index.htm