Connecticut 2022 Regular Session

Connecticut House Bill HB05385 Compare Versions

Only one version of the bill is available at this time.

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5	5	LCO No. 1744 1 of 7
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7	7	General Assembly Raised Bill No. 5385
8	8	February Session, 2022
9	9	LCO No. 1744
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12	12	Referred to Committee on INSURANCE AND REAL ESTATE
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15	15	Introduced by:
16	16	(INS)
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21	21	AN ACT CONCERNING GUARANTEED ASSET PROTECTION
22	22	WAIVERS.
23	23	Be it enacted by the Senate and House of Representatives in General
24	24	Assembly convened:
25	25
26	26	Section 1. (NEW) (Effective January 1, 2023) (a) For the purposes of this 1
27	27	section: 2
28	28	(1) "Administrator" means a person, other than an insurer or creditor, 3
29	29	who performs any administrative or operational function on behalf of a 4
30	30	creditor as part of the creditor's guaranteed asset protection waiver 5
31	31	program; 6
32	32	(2) "Borrower" means an individual in this state who is a debtor, retail 7
33	33	buyer or lessee under a finance agreement; 8
34	34	(3) "Commissioner" means the Commissioner of Consumer 9
35	35	Protection; 10
36	36	(4) "Creditor" means the lender in a credit or loan transaction 11
37	37	concerning a motor vehicle, the lessor in a motor vehicle lease 12
38	38	transaction, a motor vehicle dealer providing credit to an individual 13 Raised Bill No. 5385
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42	42	LCO No. 1744 2 of 7
43	43
44	44	purchasing a motor vehicle from such dealer, the seller in a commercial 14
45	45	retail installment transaction and an assignee of any other person 15
46	46	described in this subdivision to whom a credit obligation created as part 16
47	47	of a transaction described in this subdivision is payable; 17
48	48	(5) "Finance agreement" means a loan, lease or retail installment sales 18
49	49	contract with a borrower for the lease or purchase of a motor vehicle; 19
50	50	(6) "Free look period" means the time period, beginning on the 20
51	51	effective date of a guaranteed asset protection waiver and ending not 21
52	52	sooner than thirty days after such effective date, during which time 22
53	53	period a borrower shall be entitled to cancel a guaranteed asset 23
54	54	protection waiver; 24
55	55	(7) "Guaranteed asset protection waiver" or "waiver" means a 25
56	56	contractual agreement forming part of a finance agreement, or included 26
57	57	as an addendum to a finance agreement, wherein a creditor agrees, for 27
58	58	a separate charge, to cancel or waive all or part of the amount due and 28
59	59	owing from a borrower pursuant to the finance agreement in the event 29
60	60	of a total physical damage loss or unrecovered theft of the motor vehicle 30
61	61	that is the subject of such finance agreement; 31
62	62	(8) "Insurer" has the same meaning as provided in section 38a-1 of the 32
63	63	general statutes; 33
64	64	(9) "Motor vehicle" means a self-propelled or towed vehicle designed 34
65	65	for commercial or personal use, including, but not limited to, an all-35
66	66	terrain vehicle, automobile, boat, camper, motorcycle, personal 36
67	67	watercraft, recreational vehicle, snowmobile or truck, or a trailer for a 37
68	68	boat, camper, motorcycle, personal watercraft or truck; 38
69	69	(10) "Motor vehicle dealer" means a motor vehicle dealer licensed in 39
70	70	accordance with section 14-52 of the general statutes; and 40
71	71	(11) "Person" means an individual, association, business trust, 41
72	72	company, corporation, organization, partnership or other legal entity. 42
73	73	(b) (1) Except as provided in subdivision (2) of this subsection: 43 Raised Bill No. 5385
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79	79	(A) No person shall market, offer, provide or sell a guaranteed asset 44
80	80	protection waiver in this state except in accordance with the provisions 45
81	81	of this section, and no such person shall be required to be licensed under 46
82	82	the insurance laws and regulations of this state to market, offer, provide 47
83	83	or sell such a waiver in this state if such person complies with the 48
84	84	provisions of this section; and 49
85	85	(B) No guaranteed asset protection waiver that is marketed, offered, 50
86	86	provided or sold in this state in accordance with the provisions of this 51
87	87	section shall be deemed to constitute insurance, or be subject to the 52
88	88	insurance laws and regulations of this state. 53
89	89	(2) The provisions of this section shall not apply to: 54
90	90	(A) An insurance policy delivered, issued for delivery, renewed, 55
91	91	amended or continued in this state; or 56
92	92	(B) A debt cancellation or debt suspension contract offered in 57
93	93	accordance with all applicable provisions of federal law, including, but 58
94	94	not limited to, 12 CFR Part 37, as amended from time to time, or 12 CFR 59
95	95	Part 721, as amended from time to time. 60
96	96	(c) (1) (A) Each guaranteed asset protection waiver marketed, offered, 61
97	97	provided or sold to a borrower or prospective borrower in this state 62
98	98	may, at the option of the creditor, be payable in a single payment or 63
99	99	multiple installment payments, and shall include a free look period 64
100	100	during which time period the borrower may cancel such waiver. Each 65
101	101	free look period shall begin on the effective date of the guaranteed asset 66
102	102	protection waiver and end not sooner than thirty days after such 67
103	103	effective date. If a borrower cancels a guaranteed asset protection 68
104	104	waiver during the free look period in accordance with the terms of the 69
105	105	waiver, the borrower shall be entitled to receive a refund for the 70
106	106	unearned portion of the purchase price for such waiver. 71
107	107	(B) Except as otherwise provided in the guaranteed asset protection 72
108	108	waiver, the borrower may cancel such waiver following expiration of 73
109	109	the free look period, and receive a refund for the unearned portion of 74 Raised Bill No. 5385
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113	113	LCO No. 1744 4 of 7
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115	115	the purchase price for such waiver if such borrower sends a written 75
116	116	notice, not later than ninety days after the effective date of such 76
117	117	cancellation or termination of the related finance agreement, to the 77
118	118	person designated in such waiver to receive such notice. If a guaranteed 78
119	119	asset protection waiver is cancelled due to a default under, or early 79
120	120	termination of, the related finance agreement or repossession of the 80
121	121	related motor vehicle, any refund due and owing to the borrower under 81
122	122	the waiver shall be paid to the creditor or administrator. A creditor may 82
123	123	deduct, from any refund due and owing to a borrower under a 83
124	124	guaranteed asset protection waiver pursuant to this subdivision, any 84
125	125	amount due and owing under the related finance agreement unless the 85
126	126	borrower can show that such agreement is paid in full. 86
127	127	(C) Notwithstanding any provision of the general statutes, any cost 87
128	128	to a borrower for a guaranteed asset protection waiver that is marketed, 88
129	129	offered, provided or sold to the borrower in accordance with the federal 89
130	130	Truth-in-Lending Act, 15 USC Section 1601 et seq., and the regulations 90
131	131	promulgated thereunder, as both may be amended from time to time, 91
132	132	shall be separately stated and not considered a finance charge or 92
133	133	interest, unless such waiver is marketed, offered, provided or sold in 93
134	134	connection with a lease or retail installment sale as part of a commercial 94
135	135	transaction. 95
136	136	(2) Each guaranteed asset protection waiver provided or sold to a 96
137	137	borrower in this state, other than a waiver provided or sold in 97
138	138	connection with a lease or retail installment sale as part of a commercial 98
139	139	transaction, shall disclose to the borrower, in easily readable and 99
140	140	understandable language: 100
141	141	(A) The name and address of each person who is a creditor, 101
142	142	administrator or borrower under such waiver on the date that such 102
143	143	waiver is first provided or sold to such borrower; 103
144	144	(B) The purchase price and terms of such waiver, including, but not 104
145	145	limited to, all conditions, exclusions and requirements for protection 105
146	146	under such waiver; 106 Raised Bill No. 5385
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150	150	LCO No. 1744 5 of 7
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152	152	(C) The manner in which a borrower applies for benefits under such 107
153	153	waiver, including all contact information concerning such application; 108
154	154	(D) That such borrower may cancel such waiver during the free look 109
155	155	period, whether such borrower may cancel such waiver following 110
156	156	expiration of such free look period, and the procedures a borrower 111
157	157	follows to receive any refund available to such borrower under such 112
158	158	waiver; 113
159	159	(E) The method used to calculate any refund available to such 114
160	160	borrower under such waiver; 115
161	161	(F) That such borrower shall not be required to purchase such waiver 116
162	162	as a precondition to receiving credit, or leasing or purchasing a motor 117
163	163	vehicle, from a creditor; and 118
164	164	(G) That no person shall make any credit term conditional upon the 119
165	165	purchase of such waiver. 120
166	166	(3) Each guaranteed asset protection waiver provided or sold to a 121
167	167	borrower in this state shall remain part of the related finance agreement 122
168	168	upon each assignment, sale or transfer of such agreement by a creditor. 123
169	169	(d) No borrower shall be required to purchase a guaranteed asset 124
170	170	protection waiver as a precondition to receiving credit, or leasing or 125
171	171	purchasing a motor vehicle, from a creditor, and no person shall make 126
172	172	any credit term conditional upon purchase of a waiver. 127
173	173	(e) Each creditor that provides or sells a guaranteed asset protection 128
174	174	waiver in this state shall report such provision or sale, and forward all 129
175	175	funds received pursuant to such waiver, to the person, if any, 130
176	176	designated in an administrative services agreement, insurance policy or 131
177	177	other guaranteed asset protection program document to receive such 132
178	178	report. Each creditor or administrator that, pursuant to a written 133
179	179	agreement, holds or receives funds belonging to an insurer or another 134
180	180	creditor or administrator shall be deemed to hold such funds as a 135
181	181	fiduciary for such insurer, creditor or administrator. 136 Raised Bill No. 5385
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185	185	LCO No. 1744 6 of 7
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187	187	(f) (1) (A) Each motor vehicle dealer that incurs an obligation 137
188	188	pursuant to a guaranteed asset protection waiver shall, either directly or 138
189	189	indirectly through an administrator acting on behalf of such dealer, 139
190	190	insure such obligation under an insurance policy issued by an insurer, 140
191	191	except that no such dealer shall be required to insure such obligation if 141
192	192	such waiver concerns a motor vehicle that such dealer has leased to a 142
193	193	borrower. 143
194	194	(B) Each creditor, other than a motor vehicle dealer, that incurs an 144
195	195	obligation pursuant to a guaranteed asset protection waiver may, either 145
196	196	directly or indirectly through an administrator acting on behalf of such 146
197	197	creditor, insure such obligation under an insurance policy issued by an 147
198	198	insurer. 148
199	199	(2) Each insurance policy insuring a guaranteed asset protection 149
200	200	waiver shall: 150
201	201	(A) Be subject to the insurance laws and regulations of this state; 151
202	202	(B) State the insurer's obligation to reimburse or pay, to the creditor 152
203	203	that provided or sold the insured waiver, any sums that such creditor is 153
204	204	legally required to waive pursuant to such waiver; 154
205	205	(C) Provide coverage to each assignee of the insured waiver upon 155
206	206	each assignment, sale or transfer of the related finance agreement; and 156
207	207	(D) Provide coverage that remains effective unless such coverage is 157
208	208	cancelled or terminated in accordance with all applicable insurance laws 158
209	209	and regulations of this state. Unless the insurer has not received 159
210	210	payment for such policy, such cancellation or termination shall not 160
211	211	reduce the liability of the insurer for a waiver provided or sold to a 161
212	212	borrower prior to the effective date of such cancellation or termination. 162
213	213	(g) The commissioner may, after providing notice and an opportunity 163
214	214	for a hearing in accordance with the provisions of chapter 54 of the 164
215	215	general statutes, enjoin any person who violates any provision of this 165
216	216	section from marketing, offering, providing or selling guaranteed asset 166 Raised Bill No. 5385
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220	220	LCO No. 1744 7 of 7
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222	222	protection waivers in this state, and impose a civil penalty on such 167
223	223	person in an amount not to exceed five hundred dollars for each 168
224	224	violation or ten thousand dollars in the aggregate for all violations that 169
225	225	are of a similar nature. For the purposes of this subsection, violations 170
226	226	are of a similar nature if such violations consist of the same or similar 171
227	227	actions, conduct or practices. 172
228	228	(h) The commissioner may adopt regulations, in accordance with the 173
229	229	provisions of chapter 54 of the general statutes, to implement the 174
230	230	provisions of this section. 175
231	231	This act shall take effect as follows and shall amend the following
232	232	sections:
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234	234	Section 1 January 1, 2023 New section
235	235
236	236	Statement of Purpose:
237	237	To implement requirements regarding Guaranteed Asset Protection
238	238	Waivers.
239	239	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
240	240	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
241	241	underlined.]
242	242