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This entry was published on 2014-09-22
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SECTION 302-A
Total loss notice and waiver of the gap amount
Personal Property (PEP) CHAPTER 41, ARTICLE 9
§ 302A. Total loss notice and waiver of the gap amount. 1. If the
retail instalment contract provides that the buyer shall be responsible
upon a total loss of the vehicle occasioned by its theft, confiscation
or physical damage for the gap amount as defined in paragraph fifty-two
of subsection (a) of section one hundred seven of the insurance law, the
holder, prior to the execution of the contract, shall by a notice on a
separate document conspicuously disclose that fact and the 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 superintendent of
financial services 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
vehicle 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 financial services 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. 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
vehicle creditor gap insurance declination notices or other evidence of
unavailability from every insurance company whose name appears on the
department of financial services compilation of insurance companies
which during 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 financial services shall compile and make available a
periodically 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.