1. The Laws of New York
  2. Consolidated Laws
  3. Personal Property
  4. Article 10: Retail Instalment Sales Act


Section 402-B Total loss notice and waiver of the gap amount

Personal Property (PEP)

1. If the retail instalment contract provides that the buyer shall be responsible upon a total loss of the goods occasioned by 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 goods. 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 goods occasioned by 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 goods occasioned by 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 non-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 goods occasioned by 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 goods occasioned by theft, confiscation or physical damage, the gap amount. No retail instalment contract shall be conditioned upon the buyer's obtaining of non-motor vehicle debtor gap insurance as set forth in subparagraph (D) 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 goods occasioned by theft or physical damage for the gap amount, the holder, prior to the execution of the contract, 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 goods occasioned by theft or physical damage, only if non-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 non-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 non-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 non-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 goods occasioned by 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 non-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 non-motor vehicle creditor gap insurance in this state. Evidence of these declinations shall be retained by 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 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 non-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 goods occasioned by theft, confiscation or physical damage for the gap amount.