The following words and terms, as used in this chapter and Texas Occupations Code, Chapter 1304, have the following meanings:
  (1) "Buyer" means a "service contract holder" as it relates to a "depreciation benefit optional member program."
  (2) "Dealer" means a motor vehicle dealer licensed under Texas Occupations Code, Chapter 2301.
  (3) "Depreciation benefit optional member program" means a service contract financed under Chapter 348 or 353, Finance Code, that pays to the buyer, as a credit toward the purchase of a replacement vehicle at a participating dealer, an amount less than or equal to the difference between the purchase price and actual cash value for a total constructive loss.
  (4) "Identity recovery" means a process, through a limited power of attorney and the assistance of an identity recovery expert, that returns the identity of an identity theft victim to pre-identity theft event status.
  (5) "Qualified financial institution" means a financial institution organized and licensed under the laws of the United States, a state of the United States, or the District of Columbia.
  (6) "Service contract" means an agreement that is entered into for a separately stated consideration and for a specified term under which a provider agrees to:
    (A) repair, replace, or maintain a product, or provide indemnification for the repair, replacement, or maintenance of a product, for operational or structural failure or damage caused by a defect in materials or workmanship or by normal wear;
    (B) provide identity recovery, if the service contract is financed under Chapter 348 or 353, Finance Code;
    (C) provide compensation to the lessee or buyer of a vehicle on the total constructive loss under a depreciation benefit optional member program; or
    (D) provide a service, reimbursement, or payment under a residential service contact as defined in Texas Occupation Code §1304.003(4)(A) - (C) and (b)(1) - (4).
  (7) "Service contract holder" means a person who purchases or otherwise holds a service contract.
  (8) "Third-party administration of a service contract" includes any of the following activities performed on behalf of a service contract provider:
    (A) performing or arranging the collection, maintenance, or disbursement of money to compensate any party for claims or repairs pursuant to a service contract;
    (B) participating in the processing or adjustment of claims arising under a service contract;
    (C) maintaining records required by Texas Occupations Code, Chapter 1304; or
    (D) complying with provider requirements, other than financial security requirements, of Texas Occupations Code, Chapter 1304.
  (9) The term "third party administration of a service contract" does not include the performance of repairs, or clerical functions ancillary to the performance of repairs, by a repair facility that performs no other activities with respect to a service contract.
  (10) "Total constructive loss" means a loss of such significance that the cost of restoring damaged property would exceed its value after restoration.

Source Note: The provisions of this §77.10 adopted to be effective November 16, 2009, 34 TexReg 7791; amended to be effective March 1, 2012, 37 TexReg 1319; amended to be effective July 1, 2018, 43 TexReg 3873; amended to be effective June 15, 2022, 47 TexReg 3455