## Facts

- Griffin Systems, Inc. sold “vehicle protection plans” promising to repair or replace specified motor-vehicle parts that failed due to defects in materials or workmanship.
- The plans excluded losses from collision, weather, vandalism, negligence, and improper maintenance.
- Griffin was an independent third party: it did not manufacture automobiles or parts and did not sell vehicles or parts; it only sold the plans.
- The Ohio Department of Insurance (ODI) asserted the plans were not warranties but contracts “substantially amounting to insurance” because Griffin accepted consumers’ risk of certain breakdowns for a fee.
- ODI issued a notice of intent to enter an adjudicatory order and, after proceedings, ordered Griffin to stop selling the plans in Ohio unless authorized under Ohio insurance law.

## Issues

1. Whether Griffin’s vehicle protection plans are warranties or contracts of insurance under Ohio law.
2. Whether ODI has authority under R.C. 3905.42 to regulate Griffin’s sale of those plans and require authorization.

## Decision

- The Supreme Court of Ohio affirmed the court of appeals.
- Griffin’s vehicle protection plans were not traditional warranties because they were not issued by the seller or manufacturer of the covered goods.
- The plans were contracts “substantially amounting to insurance” within R.C. 3905.42.
- ODI had jurisdiction to regulate Griffin’s activities and could prohibit sales absent compliance with Ohio insurance authorization requirements.

## Legal Principles

- Under R.C. 3905.42, a company may not engage in the business of insurance or enter into contracts substantially amounting to insurance without express authorization and compliance with applicable insurance laws.
- Courts classify agreements by their operation rather than their label; a contract that shifts and distributes risk for a fee may be treated as insurance.
- A traditional warranty is typically incident to the sale of goods and issued by the seller or manufacturer as part of assuring product quality; a separate third party’s promise to cover product failure for consideration resembles property/casualty insurance.
- When an independent provider collects payments akin to premiums and promises to pay for repair or replacement upon a contingent loss, the arrangement fits the general definition of insurance.

## Conclusion

Because Griffin, a non-seller and non-manufacturer, sold protection plans that shifted breakdown risk to itself in exchange for a fee, the plans were insurance in substance and therefore fell within ODI’s regulatory authority under R.C. 3905.42.


Griffin Sys., Inc. v. Ohio Dep’t of Ins., 61 Ohio St. 3d 552, 575 N.E.2d 803 (Ohio 1991)