Connecticut 2019 Regular Session

Connecticut Senate Bill SB00980 Compare Versions

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7	7		General Assembly Substitute Bill No. 980
8	8		January Session, 2019
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14	14		AN ACT CONCERNING GU ARANTEED ASSET PROTE CTION
15	15		WAIVERS.
16	16		Be it enacted by the Senate and House of Representatives in General
17	17		Assembly convened:
18	18
19	19		Section 1. (NEW) (Effective January 1, 2020) (a) For the purposes of 1
20	20		this section: 2
21	21		(1) "Administrator" means a person, other than an insurer or 3
22	22		creditor, who performs any administrative or operational function on 4
23	23		behalf of a creditor as part of the creditor's guaranteed asset protection 5
24	24		waiver program; 6
25	25		(2) "Borrower" means an individual in this state who is a debtor, 7
26	26		retail buyer or lessee under a finance agreement; 8
27	27		(3) "Commissioner" means the Commissioner of Consumer 9
28	28		Protection; 10
29	29		(4) "Creditor" means the lender in a credit or loan transaction 11
30	30		concerning a motor vehicle, the lessor in a motor vehicle lease 12
31	31		transaction, a motor vehicle dealer providing credit to an individual 13
32	32		purchasing a motor vehicle from such dealer, the seller in a 14
33	33		commercial retail installment transaction and an assignee of any other 15
34	34		person described in this subdivision to whom a credit obligation 16
35	35		created as part of a transaction described in this subdivision is payable; 17 Substitute Bill No. 980
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42	42		(5) "Finance agreement" means a loan, lease or retail installment 18
43	43		sales contract with a borrower for the lease or purchase of a motor 19
44	44		vehicle; 20
45	45		(6) "Guaranteed asset protection waiver" or "waiver" means a 21
46	46		contractual agreement forming part of a finance agreement, or 22
47	47		included as an addendum to a finance agreement, wherein a creditor 23
48	48		agrees, for a separate charge, to cancel or waive all or part of the 24
49	49		amount due and owing from a borrower pursuant to the finance 25
50	50		agreement in the event of a total physical damage loss or unrecovered 26
51	51		theft of the motor vehicle that is the subject of such finance agreement; 27
52	52		(7) "Insurer" has the same meaning as provided in section 38a-1 of 28
53	53		the general statutes; 29
54	54		(8) "Motor vehicle" means a self-propelled or towed vehicle 30
55	55		designed for commercial or personal use, including, but not limited to, 31
56	56		an all-terrain vehicle, automobile, boat, camper, motorcycle, personal 32
57	57		watercraft, recreational vehicle, snowmobile or truck, or a trailer for a 33
58	58		boat, camper, motorcycle or personal watercraft; 34
59	59		(9) "Motor vehicle dealer" means a motor vehicle dealer licensed in 35
60	60		accordance with section 14-52 of the general statutes; and 36
61	61		(10) "Person" means an individual, association, business trust, 37
62	62		company, corporation, organization, partnership or other legal entity. 38
63	63		(b) (1) Except as provided in subdivision (2) of this subsection: 39
64	64		(A) No person shall market, offer, provide or sell a guaranteed asset 40
65	65		protection waiver in this state except in accordance with the provisions 41
66	66		of this section, and no such person shall be required to be licensed 42
67	67		under the insurance laws and regulations of this state to market, offer, 43
68	68		provide or sell such a waiver in this state if such person complies with 44
69	69		the provisions of this section; and 45
70	70		(B) No guaranteed asset protection waiver that is marketed, offered, 46 Substitute Bill No. 980
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77	77		provided or sold in this state in accordance with the provisions of this 47
78	78		section shall be deemed to constitute insurance, or be subject to the 48
79	79		insurance laws and regulations of this state. 49
80	80		(2) The provisions of this section shall not apply to: 50
81	81		(A) An insurance policy delivered, issued for delivery, renewed, 51
82	82		amended or continued in this state; or 52
83	83		(B) A debt cancellation or debt suspension contract offered in 53
84	84		accordance with any applicable provision of federal law, including, but 54
85	85		not limited to, 12 CFR Part 37, as amended from time to time, or 12 55
86	86		CFR Part 721, as amended from time to time. 56
87	87		(c) (1) (A) Each guaranteed asset protection waiver marketed, 57
88	88		offered, provided or sold to a borrower or prospective borrower may, 58
89	89		at the option of the creditor, be payable in a single payment or 59
90	90		multiple installment payments, and shall include a free look period 60
91	91		during which the borrower may cancel such waiver. Each free look 61
92	92		period shall begin on the effective date of the guaranteed asset 62
93	93		protection waiver and end not sooner than thirty days after such 63
94	94		effective date. If a borrower cancels a guaranteed asset protection 64
95	95		waiver during the free look period in accordance with the terms of the 65
96	96		waiver, the borrower shall be entitled to receive a refund for the 66
97	97		unearned portion of the purchase price for such waiver. 67
98	98		(B) Except as otherwise provided in the guaranteed asset protection 68
99	99		waiver, the borrower may cancel such waiver following expiration of 69
100	100		the free look period, and receive a refund for the unearned portion of 70
101	101		the purchase price for such waiver if such borrower sends a written 71
102	102		notice, not later than ninety days after the effective date of such 72
103	103		cancellation or termination of the related finance agreement, to the 73
104	104		person designated in such waiver to receive such notice. If a 74
105	105		guaranteed asset protection waiver is cancelled due to a default under, 75
106	106		or early termination of, the related finance agreement or repossession 76
107	107		of the related motor vehicle, any refund due and owing to the 77 Substitute Bill No. 980
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114	114		borrower under the waiver shall be paid to the creditor or 78
115	115		administrator. A creditor may deduct, from any refund due and owing 79
116	116		to a borrower under a guaranteed asset protection waiver pursuant to 80
117	117		this subdivision, any amount due and owing under the related finance 81
118	118		agreement unless the borrower can show that such agreement is paid 82
119	119		in full. 83
120	120		(C) Notwithstanding any provision of law to the contrary, any cost 84
121	121		to a borrower for a guaranteed asset protection waiver that is 85
122	122		marketed, offered, provided or sold to the borrower in accordance 86
123	123		with the federal Truth in Lending Act, 15 USC 1601 et seq., and the 87
124	124		regulations promulgated thereunder, as both may be amended from 88
125	125		time to time, shall be separately stated and not considered a finance 89
126	126		charge or interest, unless such waiver is marketed, offered, provided 90
127	127		or sold in connection with a lease or retail installment sale as part of a 91
128	128		commercial transaction. 92
129	129		(2) Each guaranteed asset protection waiver provided or sold to a 93
130	130		borrower, other than a waiver provided or sold in connection with a 94
131	131		lease or retail installment sale as part of a commercial transaction, shall 95
132	132		disclose to the borrower, in easily readable and understandable 96
133	133		language: 97
134	134		(A) The name and address of each person who is a creditor, 98
135	135		administrator or borrower under such waiver on the date that such 99
136	136		waiver is first provided or sold to such borrower; 100
137	137		(B) The purchase price and terms of such waiver, including, but not 101
138	138		limited to, all conditions, exclusions and requirements for protection 102
139	139		under such waiver; 103
140	140		(C) The manner in which such borrower must apply for benefits 104
141	141		under such waiver, including all contact information concerning such 105
142	142		application; 106
143	143		(D) That such borrower may cancel such waiver during the free look 107
144	144		period, whether such borrower may cancel such waiver following 108 Substitute Bill No. 980
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151	151		expiration of such free look period, and the procedures such borrower 109
152	152		must follow to receive any refund available to such borrower under 110
153	153		such waiver; 111
154	154		(E) The method used to calculate any refund available to such 112
155	155		borrower under such waiver; and 113
156	156		(F) That such borrower shall not be required to purchase such 114
157	157		waiver as a precondition to receiving credit, or leasing or purchasing a 115
158	158		motor vehicle, from a creditor, and that no person shall make any 116
159	159		credit term conditional upon the purchase of such waiver. 117
160	160		(3) Each guaranteed asset protection waiver provided or sold to a 118
161	161		borrower shall remain part of the related finance agreement upon each 119
162	162		assignment, sale or transfer of such agreement by a creditor. 120
163	163		(d) No borrower shall be required to purchase a guaranteed asset 121
164	164		protection waiver as a precondition to receiving credit, or leasing or 122
165	165		purchasing a motor vehicle, from a creditor, and no person shall make 123
166	166		any credit term conditional upon purchase of a waiver. Each creditor 124
167	167		that provides or sells a guaranteed asset protection waiver in this state 125
168	168		shall report such provision or sale, and forward all funds received 126
169	169		pursuant to such waiver, to the person, if any, designated in an 127
170	170		administrative services agreement, insurance policy or other 128
171	171		guaranteed asset protection program document to receive such report. 129
172	172		Each creditor or administrator that, pursuant to a written agreement, 130
173	173		holds or receives funds belonging to an insurer or another creditor or 131
174	174		administrator shall be deemed to hold such funds as a fiduciary for 132
175	175		such insurer, creditor or administrator. 133
176	176		(e) (1) (A) Each motor vehicle dealer that incurs an obligation 134
177	177		pursuant to a guaranteed asset protection waiver shall, either directly 135
178	178		or indirectly through an administrator acting on behalf of such dealer, 136
179	179		insure such obligation under an insurance policy issued by an insurer, 137
180	180		except that no such dealer shall be required to insure such obligation if 138
181	181		such waiver concerns a motor vehicle that such dealer has leased to a 139 Substitute Bill No. 980
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188	188		borrower. 140
189	189		(B) Each creditor, other than a motor vehicle dealer, that incurs an 141
190	190		obligation pursuant to a guaranteed asset protection waiver may, 142
191	191		either directly or indirectly through an administrator acting on behalf 143
192	192		of such creditor, insure such obligation under an insurance policy 144
193	193		issued by an insurer. 145
194	194		(2) Each insurance policy insuring a guaranteed asset protection 146
195	195		waiver shall: 147
196	196		(A) Be subject to the insurance laws and regulations of this state; 148
197	197		(B) State the insurer's obligation to reimburse or pay to the creditor 149
198	198		that provided or sold the insured waiver any sums that such creditor is 150
199	199		legally required to waive pursuant to such waiver; 151
200	200		(C) Provide coverage to each assignee of the insured waiver upon 152
201	201		each assignment, sale or transfer of the related finance agreement; and 153
202	202		(D) Provide coverage that remains effective unless such coverage is 154
203	203		cancelled or terminated in accordance with all applicable insurance 155
204	204		laws and regulations of this state. Unless the insurer has not received 156
205	205		payment for such policy, such cancellation or termination shall not 157
206	206		reduce the liability of the insurer for a waiver provided or sold to a 158
207	207		borrower prior to the effective date of such cancellation or termination. 159
208	208		(f) The commissioner may, after providing notice and an 160
209	209		opportunity for a hearing in accordance with the provisions of chapter 161
210	210		54 of the general statutes, enjoin any person who violates any 162
211	211		provision of this section from marketing, offering, providing or selling 163
212	212		guaranteed asset protection waivers in this state, and impose a civil 164
213	213		penalty on such person in an amount not to exceed five hundred 165
214	214		dollars for each violation or ten thousand dollars in the aggregate for 166
215	215		all violations that are of a similar nature. For the purposes of this 167
216	216		subsection, violations are of a similar nature if such violations consist 168
217	217		of the same or similar actions, conduct or practices. 169 Substitute Bill No. 980
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224	224		(g) The commissioner may adopt regulations, in accordance with 170
225	225		the provisions of chapter 54 of the general statutes, to implement the 171
226	226		provisions of this section. 172
227	227		This act shall take effect as follows and shall amend the following
228	228		sections:
229	229
230	230		Section 1 January 1, 2020 New section
231	231
232	232		Statement of Legislative Commissioners:
233	233		In Subsec. (a), Subdiv. (6) was deleted to eliminate a redundant
234	234		definition and Subdivs. (7) to (11), inclusive, were renumbered for
235	235		consistency; Subsec. (b)(2)(B) was redrafted for consistency with
236	236		standard drafting conventions; and Subsec. (c)(1) was divided into
237	237		subparagraphs for clarity and "Notwithstanding any provision of law
238	238		to the contrary" was substituted for "Notwithstanding any contrary
239	239		provision of law" for consistency.
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241	241		INS Joint Favorable Subst.
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