OMVIC clarifies dealer obligations when selling third-party extended warranties

On October 6, 2025, OMVIC issued a dealer bulletin restating the rule under s. 47(1) of O. Reg. 333/08. A registered motor vehicle dealer cannot sell or facilitate the sale of an extended warranty unless the warranty is insured by an Ontario-licensed insurer, or the seller of the warranty has filed an irrevocable Letter of Credit with the Motor Vehicle Dealers Compensation Fund.

The bulletin frames itself as a follow-up to an earlier OMVIC bulletin on third-party warranty providers, and the rule it restates is the same insurance-verification logic OMVIC later applied to a specific provider in the Assureway GAP-insurance warning of March 2026.

The bulletin is short, but the rule sits at the centre of the dealer-side compliance chain for any F&I product that promises future repair coverage. Selling or facilitating an extended warranty from a provider that meets neither the insurance test nor the Letter of Credit test will, per OMVIC, “result in compliance action.”

What counts as an extended warranty

The definition in O. Reg. 333/08 is broad. An extended warranty is a contract under which someone (the seller of the warranty) agrees to cover the cost of repairing or replacing components of a motor vehicle, including the labour, in addition to whatever is provided by law or by the manufacturer’s warranty. Anything a dealer offers to a buyer or lessee at the closing table that adds future repair coverage past the OEM warranty falls inside that definition.

The dealer’s role is split two ways. If the dealer is the seller of the warranty, it sells the warranty directly. If the dealer is not the seller and instead forwards the buyer’s application to a third-party provider, the dealer is treated as facilitating the sale. Section 47(2) makes that explicit: forwarding the application counts as facilitating, even if the dealer never signs the warranty contract itself.

The two paths to a valid extended warranty

Either condition in s. 47(1) has to be satisfied before a dealer can sell or facilitate an extended warranty.

Path one: insurance from an Ontario-licensed insurer. The performance of the warranty is insured by an insurer licensed under the Insurance Act. This is the path the regulator prefers because the policy itself fronts the risk. The bulletin asks dealers to do two things to verify it: confirm with the insurer that the third-party warranty provider and all of its products are insured, and obtain a schedule from the insurer listing every insured product with a description of each.

Path two: a Letter of Credit filed with the Compensation Fund. The seller of the warranty has provided security to the Fund in the form of an irrevocable Letter of Credit. The amount depends on who the seller is:

• $100,000 if the seller of the warranty is the same dealer that sold or leased the vehicle to the buyer.
• $500,000 in any other case (the typical third-party warranty provider).

The bulletin gives a single verification step on this path: contact OMVIC at 1-800-943-6002 to validate that the LOC is on file with the Motor Vehicle Dealers Compensation Fund.

If the provider has both insurance and a Letter of Credit, the dealer still has to verify whichever the dealer is relying on. The two paths are alternatives, not a stack, and the dealer cannot assume the provider has either without checking.

What happens when the warranty seller goes out of business

The reason the rule exists in this shape is set out in s. 47(3). If the dealer is not the seller of the warranty (a facilitated sale) and the warranty seller is no longer in business when a claim arises, the dealer is liable for the amount of the claim that is not covered by the $500,000 security under s. 47(1)(b)(ii). The Letter of Credit caps the dealer’s exposure; it does not eliminate it. A dealer that facilitates a warranty without confirming the security is on file walks into uncapped liability when the provider folds.

The Compensation Fund itself separately compensates consumers for certain extended-warranty losses under s. 79(3), paragraph 7 of O. Reg. 333/08, which back-references the dealer’s s. 47(3) and s. 47(7)(c) obligations. The Fund’s role is the consumer-facing backstop. The dealer’s verification duty under the bulletin is the upstream gate that keeps a non-compliant warranty out of the dealership in the first place.

Contract content the dealer is responsible for

Even when the dealer is satisfied that one of the two paths is in place, the warranty contract itself has to hit the disclosure standards in s. 47(4) of O. Reg. 333/08 for a direct sale or s. 47(6) for a facilitated sale. The contract must include, in a clear, comprehensible, and prominent manner, eighteen specific items for direct sales, including:

• The names and addresses of the buyer and the warranty holder, if different.
• The dealer’s business address, registered name, and registration number.
• The salesperson’s registered name and registration number.
• All restrictions, limitations, and conditions on the warranty.
• A statement of whether the warranty is insured and, if so, the insurer’s name and address.
• The make, model, model year, and VIN.
• The components covered, the start and end of the warranty, the claim limits, the deductible, and whether the warranty is transferable and at what fee.
• The sale price of the warranty with an itemized list of every fee.

For facilitated sales, s. 47(6) carries the s. 47(4) items across (except items 3 and 4, which name the selling dealer) and replaces them with the warranty seller’s name and address, the registered name and number of the facilitating dealer, and the salesperson’s name and number where one is involved.

When the dealer facilitates the sale, s. 47(7) gives the dealer 30 days to forward the contract, the buyer’s payments, and any vehicle-condition statement in the dealer’s possession to the warranty seller. The 30-day window was extended from a 7-day window by O. Reg. 278/24, filed June 27, 2024 and effective July 1, 2024. A dealer that holds onto buyer money past the 30-day mark is in breach of the remittance rule and exposed to a separate professionalism finding under s. 9 of the Code of Ethics.

How this connects to the Assureway warning

The October 2025 bulletin came before the Assureway warning but the two pieces fit together. The Assureway product was GAP insurance, not strictly an extended warranty, and the regulatory failure there was on the insurance-licensing side. A dealer that performed the verification this bulletin asks for would have asked the provider for proof of insurance under the Insurance Act, would have received no clean answer, and would have stopped facilitating the product.

The bulletin gives dealers a procedural defence. A dealer that documents the insurance schedule from the third-party provider’s insurer, or that documents the LOC confirmation from OMVIC, has the paper trail to demonstrate it satisfied s. 47(1). Without that paper trail, the dealer is exposed to both a compliance finding and the s. 47(3) subsidiary liability if the provider exits the market.

What to learn

• Verify before you sell or facilitate. Section 47(1) of O. Reg. 333/08 is a precondition, not a backstop. Either confirm the warranty is insured under the Insurance Act (and ask the insurer for the schedule of insured products), or call OMVIC at 1-800-943-6002 to confirm the Letter of Credit is on file.
• Know the LOC numbers. The Letter of Credit must be $100,000 when the dealer is both the warranty seller and the vehicle seller, and $500,000 in every other case. The number anchors the dealer’s exposure under s. 47(3) if the third-party provider goes out of business.
• Document the verification. The bulletin does not invent paperwork, but it gives a dealer the structure for an audit trail. Save the insurance schedule, save the OMVIC confirmation, and tie each warranty sale to that file. The same file is what a Discipline Tribunal would ask for if a claim cannot be settled and the dealer is sued under s. 47(3).