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