Relates to guaranteed asset protection waivers

Summary of provisions

Section one creates a new article in the personal property law.

New section 555 provides for the scope of the article.

Section 556 provides the definitions to be used in the article.

Section 557 provides the requirements part and parcel of the offering of a gap waiver including compliance with the Truth in Lending Act, the purchase of insurance of the offeror's obligations, the prohibition of conditioning the extension of credit on the purchase of the gap waiver, and the requirement to disclosure of the consumer's options and prices upon the offer of a gap waiver.

Section 558 provides requirements for the contractual liability of the offeror.

Section 559 requires disclosures to be provided to the consumer upon the offer for sale of a gap waiver, including information on the product, the initial creditor and any administrator, as well as how consumer would obtain benefits. The disclosures also inform consumers regarding their right to cancel the benefits after a Free Look Period, and the right to and methodology for calculation of any refund.

Section 560 provides for the cancellation of the gap waiver with refund.

Section 561 provides for exemption of commercial contracts.

Section 562 provides for enforcement of the requirements.

Section 563 provides the intent of the legislation.

Section two of the bill provides that certain entities licensed by the Banking Law may offer gap waiver under the requirements of this article.

Section three of the bill provides the effective date.

Justification

Currently, New Yorkers are restricted to a limited selection of asset protection providers. As a result, New York consumers have few choices in the types of protection they can access. This is due, in part, to the arbitrary cap placed on the amount for which such products may be sold, creating a disincentive for new underwriters

and carriers to enter the market and compete for business. Removing the cap will facilitate competition among asset protection providers enabling them to be more flexible with the products they offer. More flexibility will result in a greater selection of higher quality products better suited to meet a consumer's particular needs. Furthermore, as competition increases the price affixed to asset protection products will decrease, potentially lowering the fee below the current statutory cap for a better product than what is now available.

The addition of this competition could have a downward effect on insurance premiums as another avenue is established by this bill by which consumers can be covered for loss. The competition with insurance products will facilitate this reduction in premiums and further encourage the enhancement the quality of the insurance policies. Further, these products will include the highest amount of transparency and disclosure. Under this legislation, consumers are informed of their rights and benefits in regard to the guaranteed asset protection waiver. Consumers are provided with information on who is behind the waiver and anyone who administers it. Consumers are even notified that their current insurance may include this benefit and that the price is not regulated by the Department of Insurance.

The disclosures provided fully inform the consumer, allowing consumers to choose freely the protections they want from whomever they want, whereas, currently in this state, they have 110 choice.

Legislative history

New bill.

Effective date

This act shall take effect on the one hundred eightieth day after it shall become a law.