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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
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 other 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, ref und of fees, and deduction 40
of fees if the agreement is canceled; creating s. 41
520.155, F.S.; providing an exemption for vehicle 42
value protection agreements in connection with a 43
commercial transaction; creating s. 520.156, F.S.; 44
providing noncriminal penalti es; defining the term 45
"violations of a similar nature"; creating s. 520.157, 46
F.S.; defining the term "excess wear and use waiver"; 47
authorizing a retail lessee to contract with a retail 48
lessor for an excess wear and use waiver; prohibiting 49
conditioning the terms of the consumer's motor vehicle 50
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
lease on his or her payment for any excess wear and 51
use waiver; authorizing discounting or giving the 52
excess wear and use waiver at no charge under certain 53
circumstances; requiring certain disclosures for a 54
lease agreement that includes an excess wear and use 55
waiver; providing construction; providing an effective 56
date. 57
58
Be It Enacted by the Legislature of the State of Florida: 59
60
Section 1. Subsection (7) of section 520.02, Florida 61
Statutes, is amended to read: 62
520.02 Definitions.—In this act, unless the context or 63
subject matter otherwise requires: 64
(7) "Guaranteed asset protection product" means a loan, 65
lease, or retail installment contract term, or modification or 66
addendum to a loan, lease, or retail installm ent contract, under 67
which a creditor agrees with or without a separate charge, to 68
cancel or waive a customer's liability for payment of some or 69
all of the amount by which the debt exceeds the value of the 70
collateral that has incurred total physical damage or is the 71
subject of an unrecovered theft . A guaranteed asset protection 72
product may also provide, with or without a separate charge, a 73
benefit that waives a portion of, or provides a customer with a 74
credit towards, the purchase of a replacement motor vehi cle. 75
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Such a product is not insurance for purposes of the Florida 76
Insurance Code. This subsection also applies to all guaranteed 77
asset protection products issued before October 1, 2008. 78
Section 2. Paragraph (g) of subsection (11) of section 79
520.07, Florida Statutes, is amended, and paragraphs (h) and (i) 80
are added to that subsection, to read: 81
520.07 Requirements and prohibitions as to retail 82
installment contracts. — 83
(11) In conjunction with entering into any new retail 84
installment contract or contract for a loan, a motor vehicle 85
retail installment seller as defined in s. 520.02, a sales 86
finance company as defined in s. 520.02, or a retail lessor as 87
defined in s. 521.003, and any assignee of such an entity, may 88
offer, for a fee or otherwise, optional gu aranteed asset 89
protection products in accordance with this chapter. The motor 90
vehicle retail installment seller, sales finance company, retail 91
lessor, or assignee may not require the purchase of a guaranteed 92
asset protection product as a condition for maki ng the loan. In 93
order to offer any guaranteed asset protection product, a motor 94
vehicle retail installment seller, sales finance company, or 95
retail lessor, and any assignee of such an entity, shall comply 96
with the following: 97
(g) If a contract for a guara nteed asset protection 98
product is terminated, the entity shall refund to the buyer all 99
any unearned portions of the purchase price of fees paid for the 100
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contract unless the contract provides otherwise. A refund is not 101
due to a consumer who receives a benefi t under such product. In 102
order to receive a refund, the buyer must notify the entity of 103
the event terminating the contract and request a refund within 104
90 days after the occurrence of the event terminating the 105
contract. An entity may offer a buyer a contrac t that does not 106
provide for a refund only if the entity also offers that buyer a 107
bona fide option to purchase a comparable contract that provides 108
for a refund. An entity may not deduct more than $75 in 109
administrative fees from a refund made under this subs ection. 110
(h) Guaranteed asset protection products may be cancelable 111
or noncancelable after a free -look period as defined in s. 112
520.152. 113
(i) If the termination of the guaranteed asset protection 114
product occurs because of a default under the retail instal lment 115
contract or contract for a loan, the repossession of the motor 116
vehicle associated with the retail installment contract or 117
contract for a loan, or any other termination of the retail 118
installment contract or contract for a loan, the entity may pay 119
any refund due directly to the holder or administrator and apply 120
the refund as a reduction of the amount owed under the retail 121
installment contract or contract for a loan, unless the buyer 122
can show that the retail installment contract has been paid in 123
full. 124
Section 3. Section 520.151, Florida Statutes, is created 125
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to read: 126
520.151 Florida Vehicle Value Protection Agreements Act. —127
Sections 520.151-520.156 may be cited as the "Florida Vehicle 128
Value Protection Agreements Act." 129
Section 4. Section 520.152, F lorida Statutes, is created 130
to read: 131
520.152 Definitions. —As used in ss. 520.151 -520.156, 132
unless the context or subject matter otherwise requires, the 133
term: 134
(1) "Administrator" means the person who is responsible 135
for the administrative or operational function of managing 136
vehicle value protection agreements, including, but not limited 137
to, the adjudication of claims or benefit requests by contract 138
holders. 139
(2) "Commercial transaction" means a transaction in which 140
the motor vehicle subject to the transaction is used primarily 141
for business or commercial purposes. 142
(3) "Contract holder" means a person who is the purchaser 143
or holder of a vehicle value protection agreement. 144
(4) "Finance agreement" means a loan, retail installment 145
sales contract, or lease for the purchase, refinancing, or lease 146
of a motor vehicle. 147
(5) "Free-look period" means the period of time, 148
commencing on the effective date of the contract, during which 149
the buyer may cancel the contract for a full refund of the 150
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purchase price. This period may not be shorter than 30 days. 151
(6) "Motor vehicle" has the same meaning as provided in s. 152
520.02. 153
(7) "Provider" means a person that is obligated to provide 154
a benefit under a vehicle value protection agreeme nt. A provider 155
may function as an administrator or retain the services of a 156
third-party administrator. 157
(8) "Vehicle value protection agreement" includes a 158
contractual agreement that provides a benefit toward either the 159
reduction of some or all of the con tract holder's current 160
finance agreement deficiency balance or the purchase or lease of 161
a replacement motor vehicle or motor vehicle services upon the 162
occurrence of an adverse event to the motor vehicle, including, 163
but not limited to, loss, theft, damage, obsolescence, 164
diminished value, or depreciation. The term does not include 165
guaranteed asset protection products as defined in s. 520.02. 166
Such a product is not insurance for purposes of the Florida 167
Insurance Code. 168
Section 5. Section 520.153, Florida Sta tutes, is created 169
to read: 170
520.153 Requirements and prohibitions as to vehicle value 171
protection agreements. — 172
(1) Vehicle value protection agreements may be offered, 173
sold, or given to consumers in this state in compliance with 174
this act. 175
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(2) Notwithstanding any other law, any amount charged or 176
financed for a vehicle value protection agreement is not 177
considered a finance charge or interest and must be separately 178
stated in the finance agreement and in the vehicle value 179
protection agreement. 180
(3) The extension of credit, the terms of credit, or the 181
terms of the related motor vehicle sale or lease may not be 182
conditioned upon the consumer's payment for or financing of any 183
charge for a vehicle value protection agreement. However, a 184
vehicle value protection ag reement may be discounted or given at 185
no charge in connection with the purchase of other noncredit 186
related goods or services. 187
(4) A provider may use an administrator or other designee 188
to administer a vehicle value protection agreement. 189
(5) A vehicle value protection agreement may not be sold 190
or given to any person unless he or she has been or will be 191
provided access to a copy of such vehicle value protection 192
agreement at a reasonable time after such vehicle value 193
protection agreement is sold or given. 194
(6) A vehicle value protection agreement may not be sold 195
or given if coverage is duplicative of another vehicle value 196
protection agreement sold or given to a person or duplicative of 197
a guaranteed asset protection product. 198
(7) Each provider shall do one of the following: 199
(a) Insure all of its vehicle value protection agreements 200
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under a policy that pays or reimburses the contract holder in 201
the event the provider fails to perform its obligations under 202
the vehicle value protection agreement. The insurer mu st be 203
licensed or otherwise authorized or eligible to do business in 204
this state. 205
(b) Maintain a funded reserve account for its obligations 206
under its contracts issued and outstanding in this state. The 207
reserves may not be less than 40 percent of gross con sideration 208
received, less claims paid, on the sale of the vehicle value 209
protection agreement for all in -force contracts in this state. 210
The reserve must be placed in trust with the office and have a 211
financial security deposit valued at not less than 5 perce nt of 212
the gross consideration received, less claims paid, on the sale 213
of the vehicle value protection agreements for all vehicle value 214
protection agreements issued and in force in this state, but at 215
least $25,000. The reserve account must consist of one of the 216
following: 217
1. A surety bond issued by an authorized surety. 218
2. Securities of the type eligible for deposit by insurers 219
as provided in s. 625.52. 220
3. Cash. 221
4. A letter of credit issued by a qualified financial 222
institution. 223
(c) Maintain, or together with its parent corporation 224
maintain, a net worth or stockholders' equity of $100 million 225
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and, upon request, provide the office with a copy of the 226
provider's or the provider's parent company's Form 10 -K or Form 227
20-F filed with the Securities and Exchange Commission within 228
the last calendar year, or if the company does not file with the 229
Securities and Exchange Commission, a copy of the company's 230
audited financial statements, which must show a net worth of the 231
provider or its parent company of at least $100 million. If the 232
provider's parent company's Form 10 -K, Form 20-F, or financial 233
statements are filed to meet the provider's financial security 234
requirement, the parent company must agree to guarantee the 235
obligations of the provider relating to vehicle value protection 236
agreements sold by the provider in this state. 237
(8) A financial security requirement other than those 238
imposed in subsection (7) may not be imposed on vehicle value 239
protection agreement providers. 240
Section 6. Section 520.154, Florida Statutes, is created 241
to read: 242
520.154 Disclosures. — 243
(1) A vehicle value protection agreement must disclose in 244
writing, in clear, understandable language, all of the 245
following: 246
(a) The name and address of the provider, contract holde r, 247
and administrator, if any. 248
(b) The terms of the vehicle value protection agreement, 249
including, but not limited to, the purchase price to be paid by 250
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the contract holder, if any, the requirements for eligibility 251
and conditions of coverage, and any exclusions. 252
(c) Whether the vehicle value protection agreement may be 253
canceled by the contract holder during a free -look period as 254
defined in s. 520.152, and that, in the event of cancellation, 255
the contract holder is entitled to a full refund of the purc hase 256
price, if any, so long as no benefits have been provided. 257
(d) The procedure the contract holder must follow, if any, 258
to obtain a benefit under the terms and conditions of the 259
vehicle value protection agreement, including, if applicable, a 260
telephone number, website, or mailing address where the contract 261
holder may apply for a benefit. 262
(e) Whether the vehicle value protection agreement is 263
cancelable after the free -look period and the conditions under 264
which it may be canceled, including the procedures for 265
requesting any refund of the unearned purchase price paid by the 266
contract holder. In the event that the agreement is cancelable, 267
it must include the methodology for calculating any refund due 268
of the unearned purchase price of the vehicle value protect ion 269
agreement. 270
(f) That the extension of credit, the terms of the credit, 271
or the terms of the related motor vehicle sale or lease may not 272
be conditioned upon the purchase of the vehicle value protection 273
agreement. 274
(2) A vehicle value protection agreeme nt must state the 275
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terms, restrictions, or conditions governing cancellation of the 276
vehicle value protection agreement before the termination or 277
expiration date of the vehicle value protection agreement by 278
either the provider or the contract holder. The pro vider of the 279
vehicle value protection agreement shall mail a written notice 280
to the contract holder at the last known address of the contract 281
holder contained in the records of the provider at least 5 days 282
before cancellation by the provider, which notice m ust state the 283
effective date of the cancellation and the reason for the 284
cancellation. However, such prior notice is not required if the 285
reason for cancellation is nonpayment of the provider fee, a 286
material misrepresentation by the contract holder to the 287
provider or administrator, or a substantial breach of duties by 288
the contract holder relating to the covered motor vehicle or its 289
use. If a vehicle value protection agreement is canceled by the 290
provider for a reason other than nonpayment of the provider fee, 291
the provider must refund to the contract holder 100 percent of 292
the unearned pro rata provider fee paid by the contract holder, 293
if any. If coverage under the vehicle value protection agreement 294
continues after a claim, any refund may reflect a deduction for 295
claims paid and, at the discretion of the provider, an 296
administrative fee of not more than $75. 297
Section 7. Section 520.155, Florida Statutes, is created 298
to read: 299
520.155 Commercial transactions exempt. —Sections 520.154 300
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and 520.156 do not apply to veh icle value protection agreements 301
offered in connection with a commercial transaction. 302
Section 8. Section 520.156, Florida Statutes, is created 303
to read: 304
520.156 Penalties.—A provider, an administrator, or any 305
other person who willfully and intentional ly violates ss. 306
520.151-520.155 commits a noncriminal violation as defined in s. 307
775.08(3), punishable by a fine not to exceed $500 per violation 308
and not more than $10,000 in the aggregate for all violations of 309
a similar nature. For purposes of this sectio n, the term 310
"violations of a similar nature" means violations that consist 311
of the same or similar course of conduct, action, or practice, 312
irrespective of the number of times the action, conduct, or 313
practice determined to be a violation of ss. 520.151 -520.155 314
occurred. 315
Section 9. Section 520.157, Florida Statutes, is created 316
to read: 317
520.157 Excess wear and use waiver. — 318
(1) For purposes of this section, the term "excess wear 319
and use waiver" means a contractual agreement wherein a lessor 320
agrees, regardless of whether subject to a separate fee, to 321
cancel or waive all or part of amounts that may become due under 322
a lease agreement as a result of excess wear and use of a motor 323
vehicle, which agreement must be part of, or a separate addendum 324
to, the lease agreement. Such waivers may also cancel or waive 325
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amounts due for excess mileage. 326
(2) A retail lessee may contract with a retail lessor for 327
an excess wear and use waiver in connection with a lease 328
agreement. 329
(3) The terms of the related motor vehicle lea se may not 330
be conditioned upon the consumer's payment for any excess wear 331
and use waiver. However, excess wear and use waivers may be 332
discounted or given at no charge in connection with the purchase 333
of other noncredit-related goods. 334
(4) A lease agreement that includes an excess wear and use 335
waiver must disclose all of the following: 336
(a) The total charge for the excess wear and use waiver. 337
(b) Any exclusions or limitations on the amount of excess 338
wear and use which may be waived under the excess wear a nd use 339
waiver. 340
(c) The terms, restrictions, or conditions governing 341
cancellation of the excess wear and use waiver before the 342
termination or expiration of the excess wear and use waiver, 343
which may include an administrative fee of not more than $75. 344
(5) An excess wear and use waiver is not insurance for 345
purposes of the Florida Insurance Code. 346
Section 10. This act shall take effect October 1, 2024. 347