Signed by Governor Phil Bryant

Vote Smart's Synopsis:

Vote to pass a bill that amends the definition of guaranteed asset protection waivers.

Highlights:

• Defines “guaranteed asset protection waiver” or “GAP waiver” as a contractual agreement where a creditor agrees for a separate charge to cancel or waive, or an administrator agrees to pay, all or part of amounts due on a borrower’s finance agreement in the event of a total physical damage loss or unrecovered theft of a motor vehicle (Sec. 2).

• Specifies that a GAP waiver in which a creditor cancels or waives an amount due will be part of, or a separate addendum to, the finance agreement (Sec. 2).

• Requires contractual liability or other insurance policies insuring GAP waivers to state the obligation of the insurer to reimburse the creditor or administrator any sums the creditor is legally obligated to waive, or administrator is legally obligated to pay under the GAP waivers issued by the creditor and purchased or held by the borrower (Sec. 4).

• Requires guaranteed asset protection waivers to disclose in writing and in clear, understandable language, the following (Sec. 5):

• 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; 

• The purchase price and terms of the GAP waiver, including, without limitation, the requirements for protection, conditions, or exclusions associated with the GAP waiver; 

• 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; 

• The procedure the borrower shall follow, if any, to obtain GAP waiver benefits under the terms and conditions of the waiver, including a telephone number and address where the borrower may apply for waiver benefits; 

• Whether or not the GAP waiver is cancellable after the free look period and the conditions under which it may be canceled or terminated, including the procedures for requesting any refund date; 

• That in order to receive any refund due in the event of a borrower’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 the terms of the waiver, shall provide a written request to cancel the creditor, administrator, or other party;

• 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; and

• 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.

Full Bill Text