NY State Assembly Bill 2011-A2818

Assembly Bill A2818

2011-2012 Legislative Session

Relates to guaranteed asset protection waivers in motor vehicle leasing and installment sales

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Archive: Last Bill Status - In Assembly Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 04, 2012	referred to judiciary
Jun 17, 2011	print number 2818a
Jun 17, 2011	amend (t) and recommit to judiciary
Jan 20, 2011	referred to judiciary

Bill Amendments

Original

A (Active)

2011-A2818 - Details

Current Committee:: Assembly Judiciary
Law Section:: Personal Property Law
Laws Affected:: Add Art 13 §§555 - 564, Pers Prop L
Versions Introduced in 2009-2010 Legislative Session:: A11263

2011-A2818 - Summary

Relates to guaranteed asset protection waivers in motor vehicle leasing and installment sales.

2011-A2818 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2818

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            January 20, 2011
                               ___________

Introduced  by M. of A. MORELLE -- read once and referred to the Commit-
  tee on Judiciary

AN ACT to amend the personal property law, in relation to motor  vehicle
  leasing and installment sales

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 6 of section 301 of the personal property  law,
as  amended  by  chapter  1  of  the laws of 1994, is amended to read as
follows:
  6. "Cash sale price" means the cash sale  price  stated  in  a  retail
instalment  contract  for  which the seller would sell to the buyer, and
the buyer would buy from the seller, the  motor  vehicle  which  is  the
subject matter of the retail instalment contract if the sale were a sale
for  cash  instead  of a retail instalment sale. The cash sale price may
include any taxes, registration, license and other fees and charges  for
insurance, FOR A GUARANTEED ASSET PROTECTION WAIVER, for accessories and
their installation and for delivering, servicing, repairing or improving
the motor vehicle and for other services incidental to the agreement. It
also  may  include  the  unpaid  balance of any amount financed under an
outstanding motor vehicle loan agreement or motor vehicle retail instal-
ment contract or the unpaid portion of the early termination  obligation
under an outstanding motor vehicle retail lease agreement.
  S  2. Section 302A of the personal property law, as amended by chapter
111 of the laws of 1995, is amended to read as follows:
  S [302A] 302-A.  Total loss notice and waiver of the gap amount. 1. If
the retail instalment contract provides that the buyer shall be  respon-
sible  upon a total loss of the vehicle occasioned by its theft, confis-
cation or physical damage for the gap amount  as  defined  in  paragraph
fifty-two  of  subsection (a) of section one hundred seven of the insur-
ance law, the holder, prior to the execution of the contract, shall by a
notice on a separate document conspicuously disclose that fact  and  the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05252-01-1

A. 2818                             2

obligations  for  which  the buyer would remain liable in the event of a
theft, confiscation or total loss of  the  vehicle.  If  the  holder  is
required  under  subdivision  two  of this section to offer to waive its
contractual  right  to  hold  the buyer liable for the gap amount in the
event of a total loss of the vehicle occasioned by its theft or physical
damage, the notice shall also: (a) state  that  for  a  separate  charge
disclosed  in  the notice the holder will waive its contractual right to
hold the buyer liable for the gap amount in the event of a total loss of
the vehicle occasioned by its theft or physical damage;  (b)  contain  a
provision  informing  the buyer that he or she may, as an alternative to
purchasing a waiver, be able to  purchase  insurance  covering  the  gap
amount  from  an insurance company which has been licensed by the super-
intendent of insurance to write motor vehicle debtor  gap  insurance  in
this state; and (c) contain a provision permitting the buyer to indicate
whether  he  or  she  wants the holder to waive its contractual right to
hold the buyer liable for the gap amount in the event of a total loss of
the vehicle occasioned by its theft or physical damage. The notice shall
be signed by the buyer. The holder shall provide a copy  of  the  signed
notice  to the buyer and shall maintain a copy in the holder's files for
at least the term of the contract. Failure to provide the notice and  to
obtain  the  buyer's  signature  as  required  by this subdivision shall
invalidate any provision of the agreement which otherwise would obligate
a buyer to pay to the holder, after a total loss of  the  motor  vehicle
occasioned  by  its  theft,  confiscation  or  physical  damage, the gap
amount. No retail installment contract shall  be  conditioned  upon  the
buyer's  obtaining of motor vehicle debtor gap insurance as set forth in
subparagraph (B) of paragraph twenty-six of subsection  (a)  of  section
one thousand one hundred thirteen of the insurance law.
  2.  If the retail instalment contract provides that the buyer shall be
responsible upon a total loss of the vehicle occasioned by its theft  or
physical  damage  for the gap amount, the holder, prior to the execution
of the agreement, shall offer to waive its contractual right to hold the
buyer liable for the gap amount in the event of  a  total  loss  of  the
vehicle  occasioned by its theft or physical damage, only if motor vehi-
cle creditor gap insurance coverage is available to the holder and  such
coverage  is  obtained from a property/casualty insurance company, which
has been licensed by the superintendent of insurance of  this  state  to
write motor vehicle creditor gap insurance in this state. This offer may
be  made  contingent  upon the payment by the buyer of a separate charge
that shall not exceed the cost of motor vehicle creditor  gap  insurance
covering  the retail instalment contract UNLESS SUCH WAIVER IS A GUARAN-
TEED ASSET PROTECTION WAIVER AS ESTABLISHED  IN  SECTION  THREE  HUNDRED
TWO-B  OF  THIS  ARTICLE.    Nothing  contained in this section shall be
construed to authorize a waiver, in connection with a  transaction  with
respect  to  which  motor  vehicle  creditor  gap insurance has not been
obtained, of a contractual right to hold the buyer liable  for  the  gap
amount  in  the  event  of a total loss of the vehicle occasioned by its
theft or physical damage.
  3. A holder shall not be  obligated  under  subdivision  two  of  this
section to offer to waive its contractual right to hold the buyer liable
for  the  gap  amount if, during the current calendar year or during the
odd-numbered calendar year immediately preceding the  calendar  year  in
which the agreement is entered into, the holder has received motor vehi-
cle  creditor  gap  insurance  declination  notices or other evidence of
unavailability from every insurance company whose name  appears  on  the
insurance  department  compilation  of  insurance companies which during

A. 2818                             3

that calendar year were authorized to write motor vehicle  creditor  gap
insurance  in  this  state.  Evidence  of  these  declinations  shall be
retained by such a holder of such a holder for a  period  of  six  years
after the expiration of the calendar year in which they were issued.
  4. In order to enable holders or their anticipated assignees to comply
with  the  requirements  imposed by subdivision two of this section, the
superintendent of insurance shall compile and make available  a  period-
ically updated list of those insurance companies which are authorized to
write motor vehicle creditor gap insurance coverage in this state.
  5.  Nothing in this section shall be construed to apply to the holder,
under a retail instalment contract under which the buyer is  not  liable
upon  a  total loss of the vehicle occasioned by its theft, confiscation
or physical damage for the gap amount.
  S 3. The personal property law is amended  by  adding  a  new  section
302-B to read as follows:
  S  302-B.    GUARANTEED ASSET PROTECTION WAIVERS. 1. "GUARANTEED ASSET
PROTECTION WAIVER" OR "GAP WAIVER" MEANS A CONTRACTUAL AGREEMENT WHEREIN
A CREDITOR AGREES FOR A SEPARATE CHARGE TO CANCEL OR WAIVE ALL  OR  PART
OF  AMOUNTS  DUE TO BORROWER'S FINANCE AGREEMENT IN THE EVENT OF A TOTAL
PHYSICAL DAMAGE LOSS OR UNRECOVERED THEFT OF THE  MOTOR  VEHICLE,  WHICH
AGREEMENT  MUST  BE  PART  OF,  OR A   SEPARATE ADDENDUM TO, THE FINANCE
AGREEMENT.  FOR PURPOSES OF THIS SECTION, THE TERM MOTOR  VEHICLE  SHALL
INCLUDE  SELF  PROPELLED  OR  TOWED  VEHICLES  DESIGNED  FOR PERSONAL OR
COMMERCIAL USE, INCLUDING, BUT NOT LIMITED TO, MOTOR VEHICLES AS DEFINED
IN SECTION THREE HUNDRED  ONE  OF  THIS  ARTICLE,  TRUCKS,  MOTORCYCLES,
RECREATIONAL  VEHICLES,  ALL  TERRAIN  VEHICLES,  SNOWMOBILES,  CAMPERS,
BOATS, PERSONAL WATERCRAFT, AND MOTORCYCLE, BOAT, CAMPER,  AND  PERSONAL
WATERCRAFT TRAILERS.
  2. GAP WAIVERS SHALL BE OFFERED ACCORDING TO THE FOLLOWING:
  (A)  NEITHER THE EXTENSION OF CREDIT, THE TERM OF CREDIT, NOR THE TERM
OF THE RELATED MOTOR VEHICLE SALE MAY BE CONDITIONED UPON  THE  PURCHASE
OF A GAP WAIVER.
  (B)  THE  GAP  WAIVER REMAINS A PART OF THE FINANCE AGREEMENT UPON THE
ASSIGNMENT, SALE OR TRANSFER OF SUCH FINANCE AGREEMENT BY THE CREDITOR.
  (C) NOTWITHSTANDING ANY OTHER  PROVISION  OF  LAW,  ANY  COST  TO  THE
BORROWER  FOR  A GAP WAIVER ENTERED INTO IN COMPLIANCE WITH THE TRUTH IN
LENDING ACT (15 U.S.C. 1601 ET. SEQ.) AND ITS IMPLEMENTING  REGULATIONS,
AS THEY MAY BE AMENDED FROM  TIME TO TIME, MUST BE SEPARATELY STATED AND
IS NOT TO BE CONSIDERED A FINANCE CHARGE OR INTEREST.
  (D)  A  BUYER  MAY  CANCEL THE GAP WAIVER WITHIN A FREE LOOK PERIOD AS
SPECIFIED IN THE WAIVER, AND WILL BE ENTITLED TO A FULL  REFUND  OF  THE
PURCHASE  PRICE,  SO  LONG  AS NO BENEFITS HAVE BEEN PROVIDED; OR IN THE
EVENT BENEFITS HAVE BEEN PROVIDED, THE BORROWER MAY RECEIVE  A  FULL  OR
PARTIAL  REFUND PURSUANT TO THE TERMS OF THE WAIVER. A GAP WAIVER MAY BE
CANCELLABLE OR NON-CANCELLABLE AFTER THE FREE  LOOK  PERIOD.  IF  A  GAP
WAIVER IS CANCELLED AFTER THE FREE LOOK PERIOD AND NO BENEFITS HAVE BEEN
PAID,  A  BORROWER  MAY BE ENTITLED TO A REFUND PURSUANT TO THE TERMS OF
THE WAIVER. IN THE EVENT THE GAP  WAIVER  IS  CANCELLED  OR  UPON  EARLY
TERMINATION  OF THE FINANCE AGREEMENT, THE GAP WAIVER SHALL DISCLOSE THE
METHODOLOGY FOR CALCULATING ANY REFUND OF THE UNEARNED PURCHASE PRICE OF
THE GAP WAIVER DUE. IN ORDER TO  RECEIVE  A  REFUND,  THE  BORROWER,  IN
ACCORDANCE  WITH  ANY APPLICABLE TERMS OF THE GAP WAIVER, MUST PROVIDE A
WRITTEN REQUEST TO THE CREDITOR, ADMINISTRATOR OR  OTHER  PARTY,  WITHIN
NINETY  DAYS  OF  THE EVENT TERMINATING THE GAP WAIVER OR FINANCE AGREE-
MENT.

A. 2818                             4

  (E) THE GAP WAIVER MUST DISCLOSE IN CLEAR AND UNDERSTANDABLE  LANGUAGE
THE  TERMS OF THE GAP WAIVER INCLUDING, BUT NOT LIMITED TO, THE REQUIRE-
MENTS FOR PROTECTION, CONDITIONS, OR EXCLUSIONS ASSOCIATED WITH THE  GAP
WAIVER.  THE  GAP  WAIVER MUST ALSO DISCLOSE THE PROCEDURES THE BORROWER
MUST FOLLOW, IF ANY, TO OBTAIN GAP WAIVER BENEFITS.
  (F)  NOTWITHSTANDING  PARAGRAPH  THREE  OF SUBSECTION B OF SECTION ONE
THOUSAND ONE HUNDRED ONE OF THE  INSURANCE  LAW,  GAP  WAIVERS  GOVERNED
UNDER  THIS  SECTION ARE NOT INSURANCE AND ARE EXEMPT FROM THE INSURANCE
LAWS OF THIS STATE. PERSONS MARKETING, SELLING OR OFFERING TO  SELL  GAP
WAIVERS  TO BORROWERS THAT COMPLY WITH THIS SECTION ARE EXEMPT FROM THIS
STATE'S INSURANCE LICENSING REQUIREMENTS.
  S 4. Subdivision 2 of section 335 of the  personal  property  law,  as
amended  by  chapter  111  of  the  laws  of 1995, is amended to read as
follows:
  2. If the retail lease agreement provides that  the  lessee  shall  be
responsible  upon a total loss of the vehicle occasioned by its theft or
physical damage for the gap amount, the lessor, prior to  the  execution
of the agreement, shall offer to waive its contractual right to hold the
lessee  liable  for  the  gap amount in the event of a total loss of the
vehicle occasioned by its theft or physical damage, only if motor  vehi-
cle  lessor  gap  insurance  coverage  is available to the lessor or the
anticipated  assignee   and   such   coverage   is   obtained   from   a
property/casualty  insurance  company,  which  has  been licensed by the
superintendent of insurance of this state to write motor vehicle  lessor
gap  insurance in this state. This offer may be made contingent upon the
payment by the lessee of a separate charge that  shall  not  exceed  the
cost  of lessor gap insurance covering the retail lease transaction plus
an administrative fee not to exceed ten dollars UNLESS SUCH WAIVER IS  A
GUARANTEED  ASSET  PROTECTION  WAIVER  AS  ESTABLISHED  IN SECTION THREE
HUNDRED THIRTY-FIVE-A OF THIS ARTICLE. Nothing contained in this section
shall be construed to authorize a waiver, in connection  with  a  trans-
action with respect to which lessor gap insurance has not been obtained,
of  a  contractual right to hold the lessee liable for the gap amount in
the event of a total loss of the vehicle  occasioned  by  its  theft  or
physical damage.
  S  5.  The  personal  property  law is amended by adding a new section
335-A to read as follows:
  S 335-A. GUARANTEED ASSET PROTECTION  WAIVERS.  1.  "GUARANTEED  ASSET
PROTECTION WAIVER" OR "GAP WAIVER" MEANS A CONTRACTUAL AGREEMENT WHEREIN
A  CREDITOR  AGREES FOR A SEPARATE CHARGE TO CANCEL OR WAIVE ALL OR PART
OF AMOUNTS DUE TO BORROWER'S FINANCE AGREEMENT IN THE EVENT OF  A  TOTAL
PHYSICAL  DAMAGE  LOSS  OR UNRECOVERED THEFT OF THE MOTOR VEHICLE, WHICH
AGREEMENT MUST BE PART OF, OR A SEPARATE ADDENDUM TO, THE FINANCE AGREE-
MENT. FOR PURPOSES OF THIS SECTION, THE TERM MOTOR VEHICLE SHALL INCLUDE
SELF PROPELLED OR TOWED VEHICLES DESIGNED FOR PERSONAL OR COMMERCIAL  OR
BUSINESS  USE,  INCLUDING, BUT NOT LIMITED TO, MOTOR VEHICLES AS DEFINED
IN SECTION THREE HUNDRED  ONE  OF  THIS  CHAPTER,  TRUCKS,  MOTORCYCLES,
RECREATIONAL  VEHICLES,  ALL  TERRAIN  VEHICLES,  SNOWMOBILES,  CAMPERS,
BOATS, PERSONAL WATERCRAFT, AND MOTORCYCLE, BOAT, CAMPER,  AND  PERSONAL
WATERCRAFT TRAILERS.
  2. GAP WAIVERS SHALL BE OFFERED ACCORDING TO THE FOLLOWING:
  (A)  NEITHER THE EXTENSION OF CREDIT, THE TERM OF CREDIT, NOR THE TERM
OF THE RELATED MOTOR VEHICLE LEASE MAY BE CONDITIONED UPON THE  PURCHASE
OF A GAP WAIVER.

A. 2818                             5

  (B)  THE  GAP WAIVER REMAINS A PART OF THE RETAIL LEASE AGREEMENT UPON
THE ASSIGNMENT, SALE OR TRANSFER OF SUCH RETAIL LEASE AGREEMENT  BY  THE
CREDITOR.
  (C)  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF  LAW,  ANY COST TO THE
BORROWER FOR A GAP WAIVER ENTERED INTO IN COMPLIANCE WITH THE  TRUTH  IN
LENDING  ACT (15 U.S.C. 1601 ET. SEQ.) AND ITS IMPLEMENTING REGULATIONS,
AS THEY MAY BE AMENDED FROM TIME TO TIME, MUST BE SEPARATELY STATED  AND
IS NOT TO BE CONSIDERED A FINANCE CHARGE OR INTEREST.
  (D)  A  BUYER  MAY  CANCEL THE GAP WAIVER WITHIN A FREE LOOK PERIOD AS
SPECIFIED IN THE WAIVER, AND WILL BE ENTITLED TO A FULL  REFUND  OF  THE
PURCHASE  PRICE,  SO  LONG  AS NO BENEFITS HAVE BEEN PROVIDED; OR IN THE
EVENT BENEFITS HAVE BEEN PROVIDED, THE BORROWER MAY RECEIVE  A  FULL  OR
PARTIAL  REFUND PURSUANT TO THE TERMS OF THE WAIVER. A GAP WAIVER MAY BE
CANCELLABLE OR NON-CANCELLABLE AFTER THE FREE  LOOK  PERIOD.  IF  A  GAP
WAIVER IS CANCELLED AFTER THE FREE LOOK PERIOD AND NO BENEFITS HAVE BEEN
PAID,  A  BORROWER  MAY BE ENTITLED TO A REFUND PURSUANT TO THE TERMS OF
THE WAIVER. IN THE EVENT THE GAP  WAIVER  IS  CANCELLED  OR  UPON  EARLY
TERMINATION  OF THE FINANCE AGREEMENT, THE GAP WAIVER SHALL DISCLOSE THE
METHODOLOGY FOR CALCULATING ANY REFUND OF THE UNEARNED PURCHASE PRICE OF
THE GAP WAIVER DUE. IN ORDER TO  RECEIVE  A  REFUND,  THE  BORROWER,  IN
ACCORDANCE  WITH  ANY APPLICABLE TERMS OF THE GAP WAIVER, MUST PROVIDE A
WRITTEN REQUEST TO THE CREDITOR, ADMINISTRATOR OR  OTHER  PARTY,  WITHIN
NINETY  DAYS  OF  THE EVENT TERMINATING THE GAP WAIVER OR FINANCE AGREE-
MENT.
  (E) THE GAP WAIVER MUST DISCLOSE IN CLEAR AND UNDERSTANDABLE  LANGUAGE
THE  TERMS OF THE GAP WAIVER INCLUDING, BUT NOT LIMITED TO, THE REQUIRE-
MENTS FOR PROTECTION, CONDITIONS, OR EXCLUSIONS ASSOCIATED WITH THE  GAP
WAIVER.  THE  GAP  WAIVER MUST ALSO DISCLOSE THE PROCEDURES THE BORROWER
MUST FOLLOW, IF ANY, TO OBTAIN GAP WAIVER BENEFITS.
  (F) NOTWITHSTANDING PARAGRAPH THREE OF SUBSECTION  B  OF  SECTION  ONE
THOUSAND  ONE  HUNDRED  ONE OF THE INSURANCE LAW, GAP WAIVERS UNDER THIS
SECTION ARE NOT INSURANCE AND ARE EXEMPT FROM THE INSURANCE LAWS OF THIS
STATE. PERSONS MARKETING, SELLING OR OFFERING TO  SELL  GAP  WAIVERS  TO
BORROWERS  THAT  COMPLY  WITH  THIS SECTION ARE EXEMPT FROM THIS STATE'S
INSURANCE LICENSING REQUIREMENTS.
  S 6. This act shall take effect immediately.

2011-A2818A (ACTIVE) - Details

Current Committee:: Assembly Judiciary
Law Section:: Personal Property Law
Laws Affected:: Add Art 13 §§555 - 564, Pers Prop L
Versions Introduced in 2009-2010 Legislative Session:: A11263

2011-A2818A (ACTIVE) - Summary

Relates to guaranteed asset protection waivers in motor vehicle leasing and installment sales.

2011-A2818A (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 2818--A

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            January 20, 2011
                               ___________

Introduced  by M. of A. MORELLE -- read once and referred to the Commit-
  tee on  Judiciary  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN  ACT  to  amend  the  personal  property  law and the banking law, in
  relation to guaranteed asset protection waivers

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. The personal property law is amended by adding a new arti-
cle 13 to read as follows:
                               ARTICLE 13
                   GUARANTEED ASSET PROTECTION WAIVERS
SECTION 555. SCOPE.
        556. DEFINITIONS.
        557. REQUIREMENTS FOR OFFERING GUARANTEED ASSET PROTECTION WAIV-
               ERS.
        558. CONTRACTUAL LIABILITY OR OTHER INSURANCE POLICIES.
        559. DISCLOSURES.
        560. CANCELLATION.
        561. COMMERCIAL TRANSACTIONS EXEMPTED.
        562. ENFORCEMENT.
        563. INTENT.
        564. SEVERABILITY.
  S 555. SCOPE. 1. THE PURPOSE OF THIS ARTICLE IS TO PROVIDE A FRAMEWORK
WITHIN WHICH GUARANTEED ASSET PROTECTION WAIVERS ARE DEFINED AND MAY  BE
OFFERED WITHIN THIS STATE.
  2. THIS ARTICLE DOES NOT APPLY TO:
  (A)  AN  INSURANCE  POLICY  OFFERED BY AN AUTHORIZED INSURER UNDER THE
INSURANCE LAWS OF THIS STATE; OR
  (B) A DEBT CANCELLATION OR DEBT SUSPENSION CONTRACT BEING  OFFERED  IN
COMPLIANCE WITH 12 CFR PART 37 OR 12 CFR PART 721 OR OTHER FEDERAL LAW.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05252-02-1

A. 2818--A                          2

  3.  NOTWITHSTANDING  ANY  CONTRARY  PROVISION OF LAW, GUARANTEED ASSET
PROTECTION WAIVERS GOVERNED UNDER THIS ARTICLE DO NOT CONSTITUTE  INSUR-
ANCE AS DEFINED IN SECTION ONE THOUSAND ONE HUNDRED ONE OF THE INSURANCE
LAW.  PERSONS  MARKETING,  SELLING  OR OFFERING TO SELL GUARANTEED ASSET
PROTECTION  WAIVERS  TO  BORROWERS THAT COMPLY WITH THIS ARTICLE ARE NOT
AGENTS, BROKERS, OR INTERMEDIARIES AS DEFINED IN  SECTION  TWO  THOUSAND
ONE  HUNDRED  ONE  OF  THE  INSURANCE LAW AND ARE NOT DOING AN INSURANCE
BUSINESS AS PROVIDED UNDER SECTION ONE THOUSAND ONE HUNDRED ONE  OF  THE
INSURANCE LAW.
  S  556.  DEFINITIONS.  THE FOLLOWING TERMS ARE DEFINED FOR PURPOSES OF
THIS ARTICLE AND ARE NOT INTENDED TO PROVIDE ACTUAL  TERMS  REQUIRED  IN
GUARANTEED ASSET PROTECTION WAIVERS.
  1. "ADMINISTRATOR" MEANS A PERSON, OTHER THAN AN AUTHORIZED INSURER OR
CREDITOR  THAT PERFORMS ADMINISTRATIVE OR OPERATIONAL FUNCTIONS PURSUANT
TO GUARANTEED ASSET PROTECTION WAIVER PROGRAMS.
  2. "AUTHORIZED INSURER" MEANS AN INSURANCE  COMPANY  LICENSED,  REGIS-
TERED,  OR  OTHERWISE AUTHORIZED TO DO BUSINESS IN THIS STATE AS DEFINED
IN SECTION THREE HUNDRED ONE OF THIS CHAPTER.
  3. "BORROWER" MEANS A DEBTOR, RETAIL BUYER OR LESSEE, UNDER A  FINANCE
AGREEMENT.
  4. "CREDITOR" MEANS:
  (A) THE LENDER IN A LOAN OR CREDIT TRANSACTION;
  (B) THE LESSOR IN A LEASE TRANSACTION;
  (C)  ANY  "RETAIL  SELLER", AS DEFINED IN SECTION THREE HUNDRED ONE OF
THIS CHAPTER OR "RETAIL LESSOR" AS  DEFINED  IN  SECTION  THREE  HUNDRED
THIRTY-ONE  OF  THIS  CHAPTER, OF MOTOR VEHICLES THAT PROVIDES CREDIT TO
"RETAIL BUYERS", AS DEFINED IN SECTION THREE HUNDRED ONE OF THIS CHAPTER
OR "RETAIL LESSEE" AS DEFINED IN SECTION  THREE  HUNDRED  THIRTY-ONE  OF
THIS  CHAPTER, OF SUCH MOTOR VEHICLES PROVIDED THAT SUCH ENTITIES COMPLY
WITH THE PROVISIONS OF THIS SECTION;
  (D) THE SELLER IN COMMERCIAL RETAIL INSTALLMENT TRANSACTIONS; OR
  (E) THE ASSIGNEES OF ANY OF THE FOREGOING TO  WHOM  THE  CREDIT  OBLI-
GATION IS PAYABLE.
  5. "FINANCE AGREEMENT" MEANS A LOAN, LEASE OR RETAIL INSTALLMENT SALES
CONTRACT FOR THE PURCHASE OR LEASE OF A MOTOR VEHICLE.
  6. "FREE LOOK PERIOD" MEANS THE PERIOD OF TIME FROM THE EFFECTIVE DATE
OF  THE  GAP  WAIVER UNTIL THE DATE THE BORROWER MAY CANCEL THE CONTRACT
WITHOUT PENALTY, FEES OR COSTS TO THE BORROWER. THIS PERIOD OF TIME MUST
NOT BE SHORTER THAN THIRTY DAYS.
  7. "GUARANTEED ASSET  PROTECTION  WAIVER"  OR  "GAP  WAIVER"  MEANS  A
CONTRACTUAL  AGREEMENT WHEREIN A CREDITOR AGREES, FOR A SEPARATE CHARGE,
TO CANCEL OR WAIVE THE GAP AMOUNT AS DEFINED IN SUBDIVISION  FIFTEEN  OF
SECTION  THREE  HUNDRED  THIRTY-ONE  OF THIS CHAPTER DUE ON A BORROWER'S
FINANCE AGREEMENT IN THE EVENT OF A TOTAL PHYSICAL DAMAGE LOSS OR  UNRE-
COVERED  THEFT OF THE MOTOR VEHICLE, WHICH AGREEMENT MUST BE PART OF, OR
A SEPARATE ADDENDUM TO, THE FINANCE AGREEMENT. GAP AMOUNT SHALL HAVE THE
SAME MEANING AS SET  FORTH  IN  SUBDIVISION  FIFTEEN  OF  SECTION  THREE
HUNDRED  THIRTY-ONE  OF THIS CHAPTER, BUT SHALL NOT BE DEEMED TO INCLUDE
ANY AMOUNTS ACTUALLY REFUNDED FROM OTHER SOURCES.
  8. "MOTOR VEHICLE" MEANS SELF PROPELLED OR TOWED VEHICLES DESIGNED FOR
PERSONAL OR COMMERCIAL USE, INCLUDING BUT NOT  LIMITED  TO  AUTOMOBILES,
TRUCKS,  MOTORCYCLES, RECREATIONAL VEHICLES, ALL TERRAIN VEHICLES, SNOW-
MOBILES, CAMPERS, BOATS,  PERSONAL  WATERCRAFT,  AND  MOTORCYCLE,  BOAT,
CAMPER AND PERSONAL WATERCRAFT TRAILERS.

A. 2818--A                          3

  9.  "PERSON"  INCLUDES  AN INDIVIDUAL, COMPANY, ASSOCIATION, ORGANIZA-
TION, PARTNERSHIP, BUSINESS TRUST, CORPORATION, AND EVERY FORM OF  LEGAL
ENTITY.
  S  557. REQUIREMENTS FOR OFFERING GUARANTEED ASSET PROTECTION WAIVERS.
NOTWITHSTANDING ANY CONTRARY PROVISION OF LAW:
  1. GAP WAIVERS MAY BE OFFERED, SOLD OR PROVIDED TO BORROWERS  IN  THIS
STATE IN COMPLIANCE WITH THIS CHAPTER.
  2.  GAP  WAIVERS  MAY,  AT  THE  OPTION OF THE CREDITOR, BE SOLD FOR A
SINGLE PAYMENT OR MAY BE OFFERED WITH  A  MONTHLY  OR  PERIODIC  PAYMENT
OPTION.
  3. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, ANY COST TO THE BORROW-
ER  FOR  A GUARANTEED ASSET PROTECTION WAIVER ENTERED INTO IN COMPLIANCE
WITH THE TRUTH IN LENDING ACT (15 USC 1601 ET. SEQ.) AND ITS  IMPLEMENT-
ING REGULATIONS, AS THEY MAY BE AMENDED FROM TIME TO TIME, MUST BE SEPA-
RATELY STATED AND IS NOT TO BE CONSIDERED A FINANCE CHARGE OR INTEREST.
  4.  A  RETAIL  SELLER  MUST  INSURE ITS GAP WAIVER OBLIGATIONS UNDER A
CONTRACTUAL LIABILITY OR OTHER INSURANCE POLICY ISSUED BY AN  AUTHORIZED
INSURER.  A  CREDITOR,  OTHER  THAN  A RETAIL SELLER, MAY INSURE ITS GAP
WAIVER OBLIGATIONS UNDER A CONTRACTUAL LIABILITY POLICY  OR  OTHER  SUCH
POLICY ISSUED BY AN AUTHORIZED INSURER. ANY SUCH INSURANCE POLICY MAY BE
DIRECTLY OBTAINED BY A CREDITOR, RETAIL SELLER, OR MAY BE PROCURED BY AN
ADMINISTRATOR  TO  COVER  A  CREDITOR'S  OR RETAIL SELLER'S OBLIGATIONS.
HOWEVER RETAIL SELLERS THAT  ARE  LESSORS  ON  MOTOR  VEHICLES  ARE  NOT
REQUIRED  TO  INSURE  OBLIGATIONS  RELATED TO GAP WAIVERS ON SUCH LEASED
VEHICLES.
  5. THE GAP WAIVER REMAINS A PART OF THE  FINANCE  AGREEMENT  UPON  THE
ASSIGNMENT, SALE OR TRANSFER OF SUCH FINANCE AGREEMENT BY THE CREDITOR.
  6.  NEITHER  THE EXTENSION OF CREDIT, THE TERM OF CREDIT, NOR THE TERM
OF THE RELATED MOTOR VEHICLE SALE OR LEASE MAY BE CONDITIONED  UPON  THE
PURCHASE OF A GAP WAIVER.
  7.  ANY CREDITOR THAT OFFERS A GAP WAIVER MUST REPORT THE SALE OF, AND
FORWARD FUNDS RECEIVED ON ALL SUCH WAIVERS TO THE DESIGNATED  PARTY,  IF
ANY,  AS PRESCRIBED IN ANY APPLICABLE ADMINISTRATIVE SERVICES AGREEMENT,
CONTRACTUAL LIABILITY POLICY, OTHER INSURANCE POLICY OR OTHER  SPECIFIED
PROGRAM DOCUMENTS.
  8. FUNDS RECEIVED OR HELD BY A CREDITOR OR ADMINISTRATOR AND BELONGING
TO  AN  AUTHORIZED  INSURER,  CREDITOR OR ADMINISTRATOR, PURSUANT TO THE
TERMS OF A WRITTEN AGREEMENT MUST BE HELD BY SUCH CREDITOR  OR  ADMINIS-
TRATOR IN A FIDUCIARY CAPACITY.
  9.  A RETAIL SELLER MUST, AT THE TIME OF OFFERING ANY GAP WAIVER, ALSO
DISCLOSE ALTERNATIVE PRODUCTS INCLUDING PRODUCTS OFFERED  UNDER  SECTION
THREE  THOUSAND  FOUR  HUNDRED  TWENTY-SEVEN  OF  THE INSURANCE LAW. THE
RETAIL SELLER IS NOT REQUIRED TO BE LICENSED UNDER THE  INSURANCE  LAWS,
RULES, OR REGULATIONS IN ORDER TO DISCLOSE SUCH ALTERNATIVE PRODUCTS.
  S 558. CONTRACTUAL LIABILITY OR OTHER INSURANCE POLICIES.
  1.  CONTRACTUAL  LIABILITY  OR  OTHER  INSURANCE POLICIES INSURING GAP
WAIVERS MUST STATE THE OBLIGATION OF THE AUTHORIZED INSURER TO REIMBURSE
OR PAY TO THE CREDITOR ANY SUMS THE CREDITOR  IS  LEGALLY  OBLIGATED  TO
WAIVE UNDER THE GAP WAIVERS ISSUED BY THE CREDITOR AND PURCHASED OR HELD
BY THE BORROWER.
  2.  COVERAGE  UNDER  A CONTRACTUAL LIABILITY OR OTHER INSURANCE POLICY
INSURING A GAP WAIVER MUST ALSO COVER ANY SUBSEQUENT ASSIGNEE  UPON  THE
ASSIGNMENT, SALE OR TRANSFER OF THE FINANCE AGREEMENT.
  3.  COVERAGE  UNDER  A CONTRACTUAL LIABILITY OR OTHER INSURANCE POLICY
INSURING A GAP WAIVER MUST REMAIN IN EFFECT UNLESS CANCELLED  OR  TERMI-
NATED IN COMPLIANCE WITH APPLICABLE INSURANCE LAWS OF THIS STATE.

A. 2818--A                          4

  4. THE CANCELLATION OR TERMINATION OF A CONTRACTUAL LIABILITY OR OTHER
INSURANCE POLICY MUST NOT REDUCE THE AUTHORIZED INSURER'S RESPONSIBILITY
FOR GAP WAIVERS ISSUED BY THE CREDITOR PRIOR TO THE DATE OF CANCELLATION
OR TERMINATION AND FOR WHICH PREMIUM HAS BEEN RECEIVED BY THE AUTHORIZED
INSURER.
  S 559. DISCLOSURES. GUARANTEED ASSET PROTECTION WAIVERS MUST DISCLOSE,
AS  APPLICABLE, IN WRITING AND IN CLEAR, UNDERSTANDABLE LANGUAGE THAT IS
EASY TO READ, THE FOLLOWING:
  1. THE NAME AND ADDRESS OF THE INITIAL CREDITOR AND  THE  BORROWER  AT
THE  TIME  OF  SALE,  AND THE IDENTITY OF ANY ADMINISTRATOR IF DIFFERENT
FROM THE CREDITOR.
  2. THE PURCHASE PRICE AND THE TERMS OF THE GAP WAIVER, INCLUDING WITH-
OUT LIMITATION, THE REQUIREMENTS FOR PROTECTION, CONDITIONS,  OR  EXCLU-
SIONS ASSOCIATED WITH THE GAP WAIVER.
  3.  THAT  THE  BORROWER  MAY  CANCEL THE GAP WAIVER WITHIN A FREE LOOK
PERIOD AS SPECIFIED IN THE WAIVER, AND WILL BE ENTITLED TO A FULL REFUND
OF THE PURCHASE PRICE, SO LONG AS NO BENEFITS HAVE BEEN PROVIDED; OR  IN
THE  EVENT  BENEFITS HAVE BEEN PROVIDED, THE BORROWER MAY RECEIVE A FULL
OR PARTIAL REFUND PURSUANT TO THE TERMS OF THE WAIVER.
  4. THE PROCEDURE THE BORROWER MUST FOLLOW, IF ANY, TO OBTAIN GAP WAIV-
ER BENEFITS UNDER THE TERMS AND CONDITIONS OF THE  WAIVER,  INCLUDING  A
TELEPHONE  NUMBER  AND  ADDRESS  WHERE THE BORROWER MAY APPLY FOR WAIVER
BENEFITS.
  5. WHETHER OR NOT THE GAP WAIVER IS CANCELLABLE AFTER  THE  FREE  LOOK
PERIOD  AND THE CONDITIONS UNDER WHICH IT MAY BE CANCELLED OR TERMINATED
INCLUDING THE PROCEDURES FOR REQUESTING ANY REFUND DUE.
  6. THAT IN ORDER TO RECEIVE ANY REFUND DUE IN THE EVENT OF  A  BORROW-
ER'S  CANCELLATION  OF  THE GAP WAIVER AGREEMENT OR EARLY TERMINATION OF
THE FINANCE AGREEMENT AFTER THE FREE LOOK PERIOD OF THE GAP WAIVER,  THE
BORROWER, IN ACCORDANCE WITH TERMS OF THE WAIVER, MUST PROVIDE A WRITTEN
REQUEST  TO  CANCEL  TO THE CREDITOR, ADMINISTRATOR OR SUCH OTHER PARTY,
WITHIN NINETY DAYS OF  THE  OCCURRENCE  OF  THE  EVENT  TERMINATING  THE
FINANCE AGREEMENT.
  7. THE METHODOLOGY FOR CALCULATING ANY REFUND OF THE UNEARNED PURCHASE
PRICE  OF  THE  GAP  WAIVER DUE, IN THE EVENT OF CANCELLATION OF THE GAP
WAIVER OR EARLY TERMINATION OF THE FINANCE AGREEMENT.
  8. THAT NEITHER THE EXTENSION OF CREDIT, THE TERMS OF THE CREDIT,  NOR
THE TERMS OF THE RELATED MOTOR VEHICLE SALE OR LEASE, MAY BE CONDITIONED
UPON THE PURCHASE OF THE GAP WAIVER.
  S  560. CANCELLATION. 1. GUARANTEED ASSET PROTECTION WAIVER AGREEMENTS
MAY BE CANCELLABLE OR NON-CANCELLABLE AFTER THE FREE  LOOK  PERIOD.  GAP
WAIVERS MUST PROVIDE THAT IF A BORROWER CANCELS A WAIVER WITHIN THE FREE
LOOK  PERIOD,  THE  BORROWER  WILL  BE  ENTITLED TO A FULL REFUND OF THE
PURCHASE PRICE, SO LONG AS NO BENEFITS HAVE BEEN  PROVIDED;  OR  IN  THE
EVENT  BENEFITS  HAVE  BEEN PROVIDED, THE BORROWER MAY RECEIVE A FULL OR
PARTIAL REFUND PURSUANT TO THE TERMS OF THE WAIVER.
  2. IN THE EVENT OF A BORROWER'S CANCELLATION  OF  THE  GAP  WAIVER  OR
EARLY TERMINATION OF THE FINANCE AGREEMENT, AFTER THE AGREEMENT HAS BEEN
IN EFFECT BEYOND THE FREE LOOK PERIOD, THE BORROWER MAY BE ENTITLED TO A
REFUND  OF  ANY  UNEARNED  PORTION  OF  THE PURCHASE PRICE OF THE WAIVER
UNLESS THE WAIVER PROVIDES OTHERWISE. IN ORDER TO RECEIVE A REFUND,  THE
BORROWER,  IN  ACCORDANCE  WITH ANY APPLICABLE TERMS OF THE WAIVER, MUST
PROVIDE A WRITTEN REQUEST TO THE CREDITOR, ADMINISTRATOR OR OTHER PARTY,
WITHIN NINETY DAYS OF THE EVENT TERMINATING THE FINANCE AGREEMENT.
  3. IF THE CANCELLATION OF A GAP WAIVER OCCURS AS A RESULT OF A DEFAULT
UNDER THE FINANCE AGREEMENT OR THE REPOSSESSION  OF  THE  MOTOR  VEHICLE

A. 2818--A                          5

ASSOCIATED  WITH  THE FINANCE AGREEMENT, OR ANY OTHER TERMINATION OF THE
FINANCE AGREEMENT, ANY REFUND DUE MAY BE PAID DIRECTLY TO  THE  CREDITOR
OR ADMINISTRATOR AND APPLIED AS SET FORTH IN SUBDIVISION FOUR.
  4.  ANY  CANCELLATION  REFUND  UNDER SUBDIVISIONS ONE, TWO OR THREE OF
THIS SUBDIVISION, MAY BE APPLIED BY THE CREDITOR AS A REDUCTION  OF  THE
AMOUNT  OWED  UNDER  THE FINANCE AGREEMENT, UNLESS THE BORROWER CAN SHOW
THAT THE FINANCE AGREEMENT HAS BEEN PAID IN FULL.
  S 561. COMMERCIAL TRANSACTIONS EXEMPTED. SUBDIVISION THREE OF  SECTION
FIVE  HUNDRED  FIFTY-SEVEN AND SECTIONS FIVE HUNDRED FIFTY-NINE AND FIVE
HUNDRED SIXTY-TWO OF THIS ARTICLE ARE NOT  APPLICABLE  TO  A  GUARANTEED
ASSET  PROTECTION  WAIVER  OFFERED  IN CONNECTION WITH A LEASE OR RETAIL
INSTALLMENT SALE ASSOCIATED WITH A COMMERCIAL TRANSACTION.
  S 562. ENFORCEMENT. THE SUPERINTENDENT OF FINANCIAL SERVICES MAY  TAKE
ACTION  WHICH  IS  NECESSARY OR APPROPRIATE TO ENFORCE THE PROVISIONS OF
THIS SECTION AND TO PROTECT GUARANTEED ASSET PROTECTION  WAIVER  HOLDERS
IN  THIS  STATE.  AFTER  PROPER NOTICE AND OPPORTUNITY FOR HEARING, SUCH
SUPERINTENDENT MAY:
  1. ORDER THE CREDITOR,  ADMINISTRATOR  OR  ANY  OTHER  PERSON  NOT  IN
COMPLIANCE WITH THIS SECTION TO CEASE AND DESIST FROM FURTHER GUARANTEED
ASSET  PROTECTION  WAIVER-RELATED  OPERATIONS  WHICH ARE IN VIOLATION OF
THIS SECTION.
  2. IMPOSE A PENALTY OF NOT MORE THAN FIVE  HUNDRED  DOLLARS  ($500.00)
PER  VIOLATION  AND  NO  MORE THAN TEN THOUSAND DOLLARS ($10,000) IN THE
AGGREGATE FOR ALL VIOLATIONS OF SIMILAR NATURE.  FOR  PURPOSES  OF  THIS
SECTION,  VIOLATIONS  MUST  BE  OF  A  SIMILAR  NATURE  IF THE VIOLATION
CONSISTS OF THE SAME OR SIMILAR COURSE OF CONDUCT, ACTION  OR  PRACTICE,
IRRESPECTIVE  OF  THE  NUMBER  OF TIMES THE SECTION, CONDUCT OR PRACTICE
WHICH IS DETERMINED TO BE A VIOLATION OF THE SECTION OCCURRED.
  S 563. INTENT. THE LEGISLATURE FINDS THAT GUARANTEED ASSET  PROTECTION
WAIVERS  ARE  NOT  INSURANCE.  ALL  GUARANTEED  ASSET PROTECTION WAIVERS
ISSUED PRIOR TO AND AFTER THE DATE OF ENACTMENT OF  THIS  SECTION  SHALL
NOT BE CONSTRUED AS INSURANCE.
  S 564. SEVERABILITY. IF ANY PROVISION OF THIS SECTION, OR THE APPLICA-
TION  OF  THE PROVISION TO ANY PERSON OR CIRCUMSTANCES, IS HELD INVALID,
THE REMAINDER OF THE SECTION, AND THE APPLICATION OF  THE  PROVISION  TO
ANY  PERSON  OR  CIRCUMSTANCES  OTHER  THAN THOSE AS TO WHICH IT IS HELD
INVALID, IS NOT TO BE AFFECTED.
  S 2. Section 357 of the banking law is amended by adding a new  subdi-
vision 8 to read as follows:
  8.  A  LICENSEE  MAY OFFER TO A BORROWER A GUARANTEED ASSET PROTECTION
WAIVER AS DEFINED IN ARTICLE THIRTEEN OF THE PERSONAL PROPERTY LAW.
  S 3. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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