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A bill to be entitled 1
An act relating to asset protection products; amending 2
s. 520.02, F.S.; revising the definition of the term 3
"guaranteed asset protection product"; amending s. 4
520.07, F.S.; prohibiting certain entities from 5
deducting more than a specified amount in 6
administrative fees when providing a refund of a 7
guaranteed asset protection product; authorizing 8
guaranteed asset protection products to be cancelable 9
or noncancelable under certain circumstances; 10
authorizing certain entities to pay refunds directly 11
to the holder or administrator of a loan under certain 12
circumstances; creating s. 520.151, F.S.; providing a 13
short title; creating s. 520.152, F.S.; providing 14
definitions; creating s. 520.153, F.S.; authorizing 15
the offer, sale, or gift of vehicle value protection 16
agreements in compliance with a certain act; 17
specifying a requirement regarding the amount charged 18
or financed for a vehicle value protection agreement; 19
prohibiting the conditioning of credit offers or terms 20
for the sale or lease of a motor vehicle upon a 21
consumer's payment for or financing of any charge for 22
a vehicle value protection agreement; authorizing 23
discounting or giving the vehicle value protection 24
agreement at no charge under certain circumstances; 25
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authorizing providers to use an administrator or othe r 26
designee for administration of vehicle value 27
protection agreements; prohibiting vehicle value 28
protection agreements from being sold under certain 29
circumstances; specifying financial security 30
requirements for providers; prohibiting additional 31
financial security requirements from being imposed on 32
providers; creating s. 520.154, F.S.; requiring 33
vehicle value protection agreements to include certain 34
written disclosures in clear and understandable 35
language; requiring vehicle value protection 36
agreements to state the terms, restrictions, or 37
conditions governing cancellation by the provider or 38
the contract holder; specifying requirements for 39
notice by the provider, refund of fees, and deduction 40
of fees if the agreement is canceled; creating s. 41
520.155, F.S.; provi ding an exemption for vehicle 42
value protection agreements in connection with a 43
commercial transaction; creating s. 520.156, F.S.; 44
providing noncriminal penalties; defining the term 45
"violations of a similar nature"; creating s. 520.157, 46
F.S.; defining the t erm "excess wear and use waiver"; 47
providing an effective date. 48
49
Be It Enacted by the Legislature of the State of Florida: 50
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Section 1. Subsection (7) of section 520.02, Florida 52
Statutes, is amended to read: 53
520.02 Definitions. —In this act, unless the context or 54
subject matter otherwise requires: 55
(7) "Guaranteed asset protection product" means a loan, 56
lease, or retail installment contract term, or modification or 57
addendum to a loan, lease, or retail installment contract, under 58
which a creditor agr ees with or without a separate charge, to 59
cancel or waive a customer's liability for payment of some or 60
all of the amount by which the debt exceeds the value of the 61
collateral that has incurred total physical damage or is the 62
subject of an unrecovered thef t. A guaranteed asset protection 63
product may also provide, with or without a separate charge, a 64
benefit that waives a portion of, or provides a customer with a 65
credit towards, the purchase of a replacement motor vehicle . 66
Such a product is not insurance for purposes of the Florida 67
Insurance Code. This subsection also applies to all guaranteed 68
asset protection products issued before October 1, 2008. 69
Section 2. Paragraph (g) of subsection (11) of section 70
520.07, Florida Statutes, is amended, and paragraphs (h) and (i) 71
are added to that subsection, to read: 72
520.07 Requirements and prohibitions as to retail 73
installment contracts. — 74
(11) In conjunction with entering into any new retail 75
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installment contract or contract for a loan, a motor vehicle 76
retail installment seller as defined in s. 520.02, a sales 77
finance company as defined in s. 520.02, or a retail lessor as 78
defined in s. 521.003, and any assignee of such an entity, may 79
offer, for a fee or otherwise, optional guaranteed asset 80
protection products in ac cordance with this chapter. The motor 81
vehicle retail installment seller, sales finance company, retail 82
lessor, or assignee may not require the purchase of a guaranteed 83
asset protection product as a condition for making the loan. In 84
order to offer any guara nteed asset protection product, a motor 85
vehicle retail installment seller, sales finance company, or 86
retail lessor, and any assignee of such an entity, shall comply 87
with the following: 88
(g) If a contract for a guaranteed asset protection 89
product is terminated, the entity shall refund to the buyer any 90
unearned fees paid for the contract unless the contract provides 91
otherwise. A refund is not due to a consumer who receives a 92
benefit under such product. In order to receive a refund, the 93
buyer must notify the entity of the event terminating the 94
contract and request a refund within 90 days after the 95
occurrence of the event terminating the contract. An entity may 96
offer a buyer a contract that does not provide for a refund only 97
if the entity also offers that buyer a bona fide option to 98
purchase a comparable contract that provides for a refund. An 99
entity may not deduct more than $75 in administrative fees from 100
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a refund made under this subsection . 101
(h) Guaranteed asset protection products may be cancelable 102
or noncancelable after a free -look period as defined in s. 103
520.152. 104
(i) If the termination of the guaranteed asset protection 105
product occurs because of a default under the retail installment 106
contract or contract for a loan, the repossession of the motor 107
vehicle associated with the retail installment contract or 108
contract for a loan, or any other termination of the retail 109
installment contract or contract for a loan, the entity may pay 110
any refund due directly to the holder or administrator and apply 111
the refund as a reduction of the amount owed under the retail 112
installment contract or contract for a loan, unless the buyer 113
can show that the retail installment contract has been paid in 114
full. 115
Section 3. Section 520.151, Florida Statutes, is created 116
to read: 117
520.151 Florida Vehicle Value Protection Agreements Act. —118
Sections 520.151-520.156 may be cited as the "Florida Vehicle 119
Value Protection Agreements Act." 120
Section 4. Section 520.152, Florida Statutes, is created 121
to read: 122
520.152 Definitions. —As used in ss. 520.151-520.156, 123
unless the context or subject matter otherwise requires, the 124
term: 125
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(1) "Administrator" means the person who is responsible 126
for the administrative or operational function of managing 127
vehicle value protection agreements, including, but not limited 128
to, the adjudication of claims or benefit requests by contract 129
holders. 130
(2) "Commercial transaction" means a transaction in which 131
the motor vehicle subject to the transaction is used primarily 132
for business or commercial purposes. 133
(3) "Contract holder" means a person who is the purchaser 134
or holder of a vehicle value protection agreement. 135
(4) "Finance agreement" means a loan, retail installment 136
sales contract, or lease for the purchase, refinancing, or lease 137
of a motor vehicle. 138
(5) "Free-look period" means the period of time, 139
commencing on the effective date of the contract, during which 140
the buyer may cancel the contract for a full refund of the 141
purchase price. This period may not be shorter than 30 days. 142
(6) "Motor vehicle" has the same mean ing as provided in s. 143
520.02. 144
(7) "Provider" means a person that is obligated to provide 145
a benefit under a vehicle value protection agreement. A provider 146
may function as an administrator or retain the services of a 147
third-party administrator. 148
(8) "Vehicle value protection agreement" includes a 149
contractual agreement that provides a benefit toward either the 150
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reduction of some or all of the contract holder's current 151
finance agreement deficiency balance or the purchase or lease of 152
a replacement motor vehicle or motor vehicle services upon the 153
occurrence of an adverse event to the motor vehicle, including, 154
but not limited to, loss, theft, damage, obsolescence, 155
diminished value, or depreciation. The term does not include 156
guaranteed asset protection products as defined in s. 520.02. 157
Such a product is not insurance for the purposes of the Florida 158
Insurance Code. 159
Section 5. Section 520.153, Florida Statutes, is created 160
to read: 161
520.153 Requirements and prohibitions as to vehicle value 162
protection agreements. — 163
(1) Vehicle value protection agreements may be offered, 164
sold, or given to consumers in this state in compliance with 165
this act. 166
(2) Notwithstanding any other law, any amount charged or 167
financed for a vehicle value protection agreement is not 168
considered a finance charge or interest and must be separately 169
stated in the finance agreement and in the vehicle value 170
protection agreement. 171
(3) The extension of credit, the terms of credit, or the 172
terms of the related motor vehicle sale or lease may not be 173
conditioned upon the consumer's payment for or financing of any 174
charge for a vehicle value protection agreement. However, a 175
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vehicle value protection agreement may be discounted or given at 176
no charge in connection with the purchase of other noncredit 177
related goods or services. 178
(4) A provider may use an administrator or other designee 179
to administer a vehicle value protection agreement. 180
(5) A vehicle value protection agreement may not be sold 181
or given to any person unless he or she has been or will be 182
provided access to a copy of such vehicle value protection 183
agreement at a reasonable time after such vehicle value 184
protection agreement is sold or given. 185
(6) A vehicle value protection agreement may not be sold 186
or given if coverage is duplicative of another vehicl e value 187
protection agreement sold or given to a person or duplicative of 188
a guaranteed asset protection product. 189
(7) Each provider shall do one of the following: 190
(a) Insure all of its vehicle value protection agreements 191
under a policy that pays or reimb urses the contract holder in 192
the event the provider fails to perform its obligations under 193
the vehicle value protection agreement. The insurer must be 194
licensed or otherwise authorized or eligible to do business in 195
this state; 196
(b) Maintain a funded reserv e account for its obligations 197
under its contracts issued and outstanding in this state. The 198
reserves may not be less than 40 percent of gross consideration 199
received, less claims paid, on the sale of the vehicle value 200
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protection agreement for all in -force contracts in this state. 201
The reserve must be placed in trust with the office and have a 202
financial security deposit valued at not less than 5 percent of 203
the gross consideration received, less claims paid, on the sale 204
of the vehicle value protection agreement s for all vehicle value 205
protection agreements issued and in force in this state, but at 206
least $25,000. The reserve account must consist of one of the 207
following: 208
1. A surety bond issued by an authorized surety; 209
2. Securities of the type eligible for dep osit by insurers 210
as provided in s. 625.52; 211
3. Cash; or 212
4. A letter of credit issued by a qualified financial 213
institution; or 214
(c) Maintain, or together with its parent corporation 215
maintain, a net worth or stockholders' equity of $100 million 216
and, upon request, provide the office with a copy of the 217
provider's or the provider's parent company's Form 10 -K or Form 218
20-F filed with the Securities and Exchange Commission within 219
the last calendar year, or if the company does not file with the 220
Securities and Exchange Commission, a copy of the company's 221
audited financial statements, which must show a net worth of the 222
provider or its parent company of at least $100 million. If the 223
provider's parent company's Form 10 -K, Form 20-F, or financial 224
statements are filed to meet the provider's financial security 225
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requirement, the parent company must agree to guarantee the 226
obligations of the provider relating to vehicle value protection 227
agreements sold by the provider in this state. 228
(8) A financial security requirement other than those 229
imposed in subsection (7) may not be imposed on vehicle value 230
protection agreement providers. 231
Section 6. Section 520.154, Florida Statutes, is created 232
to read: 233
520.154 Disclosures. — 234
(1) A vehicle value protection agreement must dis close in 235
writing, in clear, understandable language, all of the 236
following: 237
(a) The name and address of the provider, contract holder, 238
and administrator, if any. 239
(b) The terms of the vehicle value protection agreement, 240
including, but not limited to, the purchase price to be paid by 241
the contract holder, if any, the requirements for eligibility 242
and conditions of coverage, and any exclusions. 243
(c) Whether the vehicle value protection agreement may be 244
canceled by the contract holder during a free -look period as 245
defined in s. 520.152, and that, in the event of cancellation, 246
the contract holder is entitled to a full refund of the purchase 247
price, if any, so long as no benefits have been provided. 248
(d) The procedure the contract holder must follow, if any, 249
to obtain a benefit under the terms and conditions of the 250
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vehicle value protection agreement, including, if applicable, a 251
telephone number, website, or mailing address where the contract 252
holder may apply for a benefit. 253
(e) Whether the vehicle value protectio n agreement is 254
cancellable after the free -look period and the conditions under 255
which it may be canceled, including the procedures for 256
requesting any refund of the unearned purchase price paid by the 257
contract holder. In the event that the agreement is cance lable, 258
it must include the methodology for calculating any refund due 259
of the unearned purchase price of the vehicle value protection 260
agreement. 261
(f) That the extension of credit, the terms of the credit, 262
or the terms of the related motor vehicle sale or l ease may not 263
be conditioned upon the purchase of the vehicle value protection 264
agreement. 265
(2) A vehicle value protection agreement must state the 266
terms, restrictions, or conditions governing cancellation of the 267
vehicle value protection agreement before th e termination or 268
expiration date of the vehicle value protection agreement by 269
either the provider or the contract holder. The provider of the 270
vehicle value protection agreement shall mail a written notice 271
to the contract holder at the last known address of the contract 272
holder contained in the records of the provider at least 5 days 273
before cancellation by the provider, which notice must state the 274
effective date of the cancellation and the reason for the 275
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cancellation. However, such prior notice is not require d if the 276
reason for cancellation is nonpayment of the provider fee, a 277
material misrepresentation by the contract holder to the 278
provider or administrator, or a substantial breach of duties by 279
the contract holder relating to the covered motor vehicle or its 280
use. If a vehicle value protection agreement is canceled by the 281
provider for a reason other than nonpayment of the provider fee, 282
the provider must refund to the contract holder 100 percent of 283
the unearned pro rata provider fee paid by the contract holder, 284
if any. If coverage under the vehicle value protection agreement 285
continues after a claim, any refund may reflect a deduction for 286
claims paid and, at the discretion of the provider, an 287
administrative fee of not more than $75. 288
Section 7. Section 520.155, Florida Statutes, is created 289
to read: 290
520.155 Commercial transactions exempt. —Sections 520.154 291
and 520.156 do not apply to vehicle value protection agreements 292
offered in connection with a commercial transaction. 293
Section 8. Section 520.156, Florida S tatutes, is created 294
to read: 295
520.156 Penalties.—A provider, an administrator, or any 296
other person who willfully and intentionally violates ss. 297
520.151-520.155 commits a noncriminal violation, as defined in 298
s. 775.08(3), punishable by a fine not to exceed $500 per 299
violation and not more than $10,000 in the aggregate for all 300
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violations of a similar nature. For purposes of this section, 301
the term "violations of a similar nature" means violations that 302
consist of the same or similar course of conduct, action, o r 303
practice, irrespective of the number of times the action, 304
conduct, or practice, determined to be a violation of ss. 305
520.151-520.155 occurred. 306
Section 9. Section 520.157, Florida Statutes, is created 307
to read: 308
520.157 Excess wear and use waiver. —For purposes of this 309
section, the term "excess wear and use waiver" means a 310
contractual agreement wherein a lessor agrees, regardless of 311
whether subject to a separate fee, to cancel or waive all or 312
part of amounts that may become due under a lease agreement as a 313
result of excess wear and use of a motor vehicle, which 314
agreement must be part of, or a separate addendum to, the lease 315
agreement. Such waivers may also cancel or waive amounts due for 316
excess mileage. 317
Section 10. This act shall take effect October 1, 2024. 318