SB 2929 — Guaranteed asset protection waivers; allow sales of and regulate.

SB2929 (As SentPassed tothe Governor)Senate) - 2018 Regular Session MISSISSIPPI LEGISLATURE Regular Session To:

Senator(s) Parks Senate Bill 2929 (As SentPassed tothe Governor)Senate) AN ACT TO CREATE NEW CHAPTER 52, TITLE 83, MISSISSIPPI CODE OF 1972, TO PROVIDE A FRAMEWORK WITHIN WHICH GUARANTEED ASSET PROTECTION WAIVERS ARE DEFINED AND MAY BE OFFERED WITHIN THE STATE OF MISSISSIPPI;

     83-52-3.  The following are terms defined for purposes of this chapter and are not intended to provide actual terms required in guaranteed asset protection waivers:            (a)  "Administrator" means a person, other than an insurer or creditor, who issues, makes or provides a GAP waiver, or who performs administrative or operational functions pursuant to guaranteed asset protection waiver programs.

          (c)  "Commissioner""Creditor" meansmeans: the Commissioner of Insurance for the State of Mississippi.

          (d)  "Creditor" means:

                            (iv)  The seller in commercial retail installment transactions;

          (e) (d)  "Finance agreement" means a loan, lease or retail installment sales contract for the purchase or lease of a motor vehicle or any other credit extension secured by a motor vehicle.

          (f) (e)  "FreeFree 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 shall not be shorter than thirty (30) days.

          (g) (f)  "Guaranteed asset protection waiver" or "GAP waiver" means a contractual agreement wherein a creditor agrees for a separate charge to cancel or waive,waive or an administrator agrees for a separate charge 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 the motor vehicle. vehicle, A GAP waiver in which theagreement creditor cancels or waives amount due shall be part of, or a separate addendum to, the finance agreement.

          (h) (g)  "Insurer" means an insurance company licensed, registered, or otherwise authorized to do business under the insurance laws of this state.

          (i) (h)  "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, snowmobiles, campers, boats, personal watercraft, and motorcycle, boat, camper and personal watercraft trailers.

          (j) (i)  "Person" includes an individual, company, association, organization, partnership, business trust, corporation, and every form of legal entity.

     (2)  GAP waivers may, at the option of the creditorcreditor, or administrator, be sold for a single payment or may be offered with a monthly or periodic payment option.

     (3)  Notwithstanding any other provision of law to the contrary, any cost to the borrower for a guaranteed asset protection waiver entered into in compliance with theThe Truth in Lending Act (15 USC 1601 et seq.) and its implementing regulations, as they may be amended from time to time, shall be separately stated and is not to be considered a finance charge or interest.

     (4)  A retail seller or administrator shall insure its GAP waiver obligations under a contractual liability or other insurance policy issued by an 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 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,However retail sellers that are lessors on motor vehicles are not required to insure obligations related to GAP waivers on such leased vehicles.

     (7)  Any creditor or administrator that offers a GAP waiver shall 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.documents.       (8)  Funds received or held by a creditor or administrator and belonging to an insurer, creditor or administrator, pursuant to the terms of a written agreement shall be held by such creditor or administrator in a fiduciary capacity.

     (8)  Funds received or held by a creditor or administrator and belonging to an insurer, creditor or administrator, pursuant to the terms of a written agreement, shall be held by such creditor or administrator in a fiduciary capacity.

     83-52-7.  (1) (1) Contractual Contractual liability or other insurance policies insuring GAP waivers shall state the obligation of the insurer to reimburse or pay to the creditor or administrator any sums the creditor is legally obligated to waive,waive or administrator is legally obligated to pay, under the GAP waivers issued by the creditor or administrator and purchased or held by the borrower.borrower.       (2)  Coverage under a contractual liability or other insurance policy insuring a GAP waiver shall also cover any subsequent assignee upon the assignment, sale or transfer of the finance agreement.

     (2)  Coverage under a contractual liability or other insurance policy insuring a GAP waiver shall also cover any subsequent assignee upon the assignment, sale or transfer of the finance agreement.

     (4)  The cancellation or termination of a contractual liability or other insurance policy shall not reduce the insurer's responsibility for GAP waivers issued by the creditor or administrator prior to the date of cancellation or termination and for which the premium has been received by the insurer.

     83-52-9.  Guaranteed asset protection waivers shall disclose, as applicable, in writing and in clear, understandable language that is easy to read, the following:following:            (a)  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.

          (a) (b)  The namepurchase price and addressthe terms of the initialGAP creditorwaiver, andincluding without limitation, the requirements for protection, conditions, or exclusions associated with the GAP waiver.            (c)  That the borrower atmay cancel the timeGAP ofwaiver sale,within anda Free Look Period as specified in the identitywaiver, and will be entitled to a full refund of anythe administratorpurchase price, so long as no benefits have been provided.            (d)  The procedure the borrower shall follow, if differentany, fromto obtain GAP waiver benefits under the creditor.terms and conditions of the waiver, including a telephone number and address where the borrower may apply for waiver benefits.

          (b) (e)  TheWhether purchaseor pricenot and the terms of the GAP waiver,waiver including,is withoutcancellable limitation,after the requirementsFree forLook protection,Period conditions,and or exclusions associated with the GAPconditions waiver. under          which (c) it That the borrower may cancelbe thecancelled GAPor waiverterminated withinincluding a free look period as specified in the waiver,procedures andfor willrequesting beany entitled to a full refund ofdue. the purchase price, so long as no benefits have been provided.

          (d) (f)  TheThat procedurein order to receive any refund due in the borrowerevent shallof follow,a ifborrower's any,cancellation toof obtainthe GAP waiver benefitsagreement underor early termination of the termsfinance andagreement conditionsafter the Free Look Period of the GAP waiver, includingthe borrower, in accordance with terms of the waiver, shall provide a telephonewritten numberrequest andto addresscancel whereto the borrowercreditor, mayadministrator applyor forsuch other party.  If the GAP waiver benefits.is cancelled due to the early termination of the finance agreement, the borrower must provide the request within ninety (90) days of the occurrence of the event terminating the finance agreement.

          (e) (g)  WhetherThe ormethodology notfor thecalculating GAPany waiverrefund isof cancellable after the freeunearned lookpurchase periodprice andof the conditionsGAP underwaiver whichdue, itin maythe beevent cancelledof orcancellation terminated,of including the proceduresGAP forWaiver requestingor anyearly refundtermination due.of the finance agreement.

          (f)  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 terms of the waiver, shall provide a written request to cancel to the creditor, administrator or such other party.  If the GAP waiver is cancelled due to the early termination of the finance agreement, the borrower must provide the request within ninety (90) days of the occurrence of the event terminating the finance agreement.

          (g)  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.

l83-52-11.      83-52-11.  (1)  Guaranteed asset protection waiver agreements may be cancellable or noncancellable after the freeFree lookLook period. Period.  GAP waivers shall provide that if a borrower cancels a waiver within the freeFree lookLook period,Period, the borrower will be entitled to a full refund of the purchase price, so long as no benefits have been provided;

     (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 freeFree lookLook period,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, shall provide a written request to the creditor, administrator or other party.

     83-52-13.  Sections 83-52-5(3), 83-52-9 and 83-52-15 of this chapter are not applicable to a guaranteed asset protection waiver offered in connection with a lease or retail installment sale associated with a commercial transaction.transaction.       SECTION 8.  The following shall be codified as Section 83-52-15, Mississippi Code of 1972:

     SECTION83-52-15.  8.  The followingOffice shallof beAttorney codifiedGeneral, asConsumer SectionProtection 83-52-15,Division, Mississippimay Codetake action which is necessary or appropriate to enforce the provisions of 1972:this chapter and to protect guaranteed asset protection waiver holders in this state.

     83-52-15.  The commissioner may take action which is necessary or appropriate to enforce the provisions of this chapter and to protect guaranteed asset protection waiver holders in this state.  After proper notice and opportunity for hearing, the commissionerOffice of Attorney General, Consumer Protection Division, may: