Bill Text: NH SB119 | 2015 | Regular Session | Introduced
Bill Title: Relative to the regulation of consumer guaranty contracts by the insurance department and guaranteed asset protection waivers by the banking department.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2015-07-07 - Signed by the Governor on 07/06/2015; Chapter 0207; Effective 09/04/2015 [SB119 Detail]
Download: New_Hampshire-2015-SB119-Introduced.html
SB 119 – AS INTRODUCED
2015 SESSION
01/04
SENATE BILL 119
AN ACT relative to regulation of guaranteed asset protection waivers by the insurance department.
SPONSORS: Sen. Carson, Dist 14; Rep. Hunt, Ches 11
This law establishes procedures for regulation of guaranteed asset protection waivers offered in New Hampshire.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
15-0883
01/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT relative to regulation of guaranteed asset protection waivers by the insurance department.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subparagraph; Consumer Guarantee Contracts; Definitions. Amend RSA 415-C:1, III(c) by inserting after subparagraph (6) the following new subparagraph:
(7) Guaranteed asset protection waivers under RSA 415-K.
2 Consumer Guarantee Contracts; Definitions. Amend RSA 415-C:1, XIV to read as follows:
XIV.(a) “Service contract” means a contract or agreement for a separately stated consideration, and a specified period of time or usage, covering any consumer good, including, but not limited to, any automobile, household system, or appliance, which promises to provide for the service, repair, replacement, or maintenance of the property necessitated by operational or structural failure due to: a defect in materials or workmanship; normal wear and tear; power surges; or accidental damage from handling. This definition shall apply regardless of the name or label of such contract and regardless of the nature of the service contract obligor. A service contract may provide for the payment of incidental indemnity when service repair or replacement is not feasible or economical or under limited circumstances, including, but not limited to, towing, rental, road hazard, emergency road service, lodging, meals, and food loss.
(b) “Service contract” includes a contract or agreement for a separately stated consideration, and a specified period of time or usage that provides for any of the following:
(1) Repair or replacement of tires and/or wheels on an automobile damaged as a result of coming into contact with road hazards including, but not limited to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps;
(2) Removal of dents, dings, or creases on an automobile that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without replacing automobile body panels, sanding, bonding, or painting;
(3) Repair of chips or cracks in or the replacement of an automobile windshield as a result of damage caused by road hazards; or
(4) Replacement of an automobile key or key-fob if the key or key-fob becomes inoperable or is lost or stolen.
3 Consumer Guarantee Contracts; Prohibited Acts and Terms. Amend RSA 415-C:7, III (c) to read as follows:
(c) The consumer does not have the right to [bring an action to] enforce the terms of the contract or otherwise challenge the denial of a claim which the consumer believes is wrongful[, subject to the provisions or any]; provided that a consumer guaranty contract may specify that any dispute regarding the contract shall be resolved pursuant to an alternative dispute resolution procedure specified in the consumer guaranty contract; or
4 Consumer Guarantee Contracts; Reimbursement Insurance Policies. Amend RSA 415-C:8, I(b) to read as follows:
(b) The obligation of the reimbursement insurer to reimburse or, in the event of the obligor’s non-performance, to pay on behalf of the obligor any sums the obligor is legally obligated to pay or shall provide the service which the obligor is legally obligated to undertake according to the obligor’s contractual obligations under the consumer guaranty contracts issued or sold by the obligor. In the event the obligor does not provide for covered services within 60 days after the contract holder has submitted proof of loss to the obligor, the contract holder is entitled to apply directly to the reimbursement insurance company for satisfaction.
5 New Chapter; Guaranteed Asset Protection Waivers. Amend RSA by inserting after chapter 415-J the following new chapter:
CHAPTER 415-K
GUARANTEED ASSET PROTECTION WAIVERS
415-K:1 Scope.
I. The purpose of this chapter is to provide a framework within which guaranteed asset protection waivers are defined and may be offered within this state.
II. This chapter shall not apply to:
(a) An insurance policy offered by an insurer under the insurance laws of this state; or
(b) A debt cancellation or debt suspension contract being offered in compliance with state banking law, 12 C.F.R. part 37, 12 C.F.R. part 721 or other federal law.
III. Guaranteed asset protection waivers governed under this chapter are not insurance and are exempt from the insurance laws of this state. Persons marketing, selling, or offering to sell guaranteed asset protection waivers to borrowers that comply with this chapter are exempt from RSA 402-J.
415-K:2 Definitions. In this chapter:
(a) “Administrator” means a person, other than an insurer or creditor that performs administrative or operational functions pursuant to guaranteed asset protection waiver programs.
(b) “Borrower” means a debtor, retail buyer, or lessee, under a finance agreement.
(c) “Creditor” means:
(1) The lender in a loan or credit transaction;
(2) The lessor in a lease transaction;
(3) Any retail seller as defined in RSA 361-A:1, XII, of motor vehicles that provides credit to retail buyer” as defined in RSA 361-A:1, IX of such motor vehicles provided that such entities comply with the provisions of this chapter;
(4) The seller in commercial retail installment transactions; or
(5) The assignees of any of the foregoing to whom the credit obligation is payable.
(d) “Finance agreement” means a loan, lease, or retail installment sales contract for the purchase or lease of a motor vehicle.
(e) “Free look period” means the period of time from the effective date of the guaranteed asset protection (GAP) waiver until the date the borrower may cancel the contract without penalty, fees, or costs to the borrower. This period of time shall not be shorter than 30 days.
(f) “Guaranteed asset protection waiver” or “GAP waiver” means a contractual agreement wherein a creditor agrees for a separate charge to cancel or waive all or part of amounts due on a borrower’s finance agreement in the event of a total physical damage loss or unrecovered theft of the motor vehicle, which agreement shall be part of, or a separate addendum to, the finance agreement.
(g) “Insurer” means an insurance company licensed, registered, or otherwise authorized to do business under the insurance laws of this state.
(h) “Motor vehicle” means self-propelled or towed vehicles designed for personal or commercial use, including but not limited to automobiles, trucks, motorcycles, recreational vehicles, all terrain vehicles, snowmobiles, campers, boats, personal watercraft, and motorcycle, boat, camper, and personal watercraft trailers.
(i) “Person” includes an individual, company, association, organization, partnership, business trust, corporation, limited liability company, and every other form of legal entity.
II. The terms defined in this section are not intended to provide actual terms required in guaranteed asset protection waivers.
415-K:3 Requirements for Offering Guaranteed Asset Protection Waivers.
I. GAP waivers maybe offered, sold, or provided to borrowers in this state in compliance with this chapter.
II. GAP waivers may, at the option of the creditor, be sold for a single payment or may be offered with a monthly or periodic payment option.
III. Any cost to the borrower for a guaranteed asset protection waiver entered into in compliance with the Truth in Lending Act, 15 U.S.C. section 1601 et seq., and the regulations adopted thereunder, as amended from time to time, shall be separately stated and is not to be considered a finance charge or interest.
IV. A retail seller shall insure its GAP waiver obligations under a contractual liability or other insurance policy issued by an insurer. A creditor, other than a retail seller, may insure its GAP waiver obligations under a contractual liability policy or other such policy issued by an insurer. Any such insurance policy may be directly obtained by a creditor, retail seller, or may be procured by an administrator to cover a creditor’s or retail seller’s obligations. However retail sellers that are lessors on motor vehicles shall not be required to insure obligations related to GAP waivers on such leased vehicles.
V. The GAP waiver remains a part of the finance agreement upon the assignment, sale, or transfer of such finance agreement by the creditor.
VI. Neither the extension of credit, the term of credit, nor the term of the related motor vehicle sale or lease may be conditioned upon the purchase of a GAP waiver.
VII. Any creditor that offers a GAP waiver shall report the sale of, and forward funds received on all such waivers to the designated party, if any, as prescribed in any applicable administrative services agreement, contractual liability policy, other insurance policy or other specified program documents.
VIII. Funds received or held by a creditor or administrator and belonging to an insurer, creditor or administrator pursuant to the terms of a written agreement shall be held by such creditor or administrator in a fiduciary capacity.
415-K:4 Contractual Liability or Other Insurance Policies.
I. Contractual liability or other insurance policies insuring GAP waivers shall state the obligation of the insurer to reimburse or pay to the creditor any sums the creditor is legally obligated to waive under the GAP waivers issued by the creditor and purchased or held by the borrower.
II. Coverage under a contractual liability or other insurance policy insuring a GAP waiver shall also cover any subsequent assignee upon the assignment, sale, or transfer of the finance agreement.
III. Coverage under a contractual liability or other insurance policy insuring a GAP waiver shall remain in effect unless cancelled or terminated in compliance with applicable insurance laws of this state.
IV. The cancellation or termination of a contractual liability or other insurance policy shall not reduce the insurer’s responsibility for GAP waivers issued by the creditor prior to the date of cancellation or termination and for which premium has been received by the insurer.
415-K:5 Disclosures. Guaranteed asset protection waivers shall disclose, as applicable, in writing and in clear, understandable language that is easy to read, the following:
I. The name and address of the initial creditor and the borrower at the time of sale, and the identity of any administrator if different from the creditor.
II. The purchase price and the terms of the GAP waiver, including the requirements for protection, conditions, or exclusions associated with the GAP waiver.
III. That the borrower may cancel the GAP waiver within a free look period as specified in the waiver, and shall be entitled to a full refund of the purchase price, if no benefits have been provided.
IV. The procedure the borrower shall follow, if any, to obtain GAP waiver benefits under the terms and conditions of the waiver, including a telephone number and address where the borrower may apply for waiver benefits.
V. Whether or not the GAP waiver is cancellable after the free look period and the conditions under which it may be cancelled or terminated, including the procedures for requesting any refund due.
VI. That in order to receive any refund due in the event of a borrower’s cancellation of the GAP waiver agreement or early termination of the finance agreement after the free look period of the GAP waiver, the borrower, in accordance with terms of the waiver, shall provide a written request to cancel to the creditor, administrator or such other party, within 90 days of the occurrence of the event terminating the finance agreement.
VII. The methodology for calculating any refund of the unearned purchase price of the GAP waiver due, in the event of cancellation of the GAP waiver or early termination of the finance agreement.
VIII. That neither the extension of credit, the terms of the credit, nor the terms of the related motor vehicle sale or lease, shall be conditioned upon the purchase of the GAP waiver.
415-K:6 Cancellation.
I. Guaranteed asset protection waiver agreements may be cancellable or noncancellable after the free look period. GAP waivers shall provide that if a borrower cancels a waiver within the free look period, the borrower shall be entitled to a full refund of the purchase price, if no benefits have been provided.
II. In the event of a borrower’s cancellation of the GAP waiver or early termination of the finance agreement, after the agreement has been in effect beyond the free look period, the borrower may be entitled to a refund of any unearned portion of the purchase price of the GAP waiver unless the GAP waiver provides otherwise. In order to receive a refund, the borrower, in accordance with any applicable terms of the GAP waiver, shall provide a written request to the creditor, administrator or other party, within 90 days of the event terminating the finance agreement.
III. If the cancellation of a GAP waiver occurs as a result of a default under the finance agreement or the repossession of the motor vehicle associated with the finance agreement, or any other termination of the finance agreement, any refund due may be paid directly to the creditor or administrator and applied as set forth in paragraph IV.
IV. Any cancellation refund under paragraph I, II, or III, may be applied by the creditor as a reduction of the amount owed under the finance agreement, unless the borrower can show that the finance agreement has been paid in full.
415-K:7 Commercial Transactions Exempted. RSA 415-K;3, III, RSA 415-K:5 and RSA 415-K:8 shall not be applicable to a guaranteed asset protection waiver offered in connection with a lease or retail installment sale associated with a commercial transaction.
415-K:8 Enforcement. If any person violates any provision of this chapter, after proper notice and opportunity for hearing, the commissioner of insurance may:
I. Order the person to cease and desist selling GAP waivers.
II. Impose a penalty of not more than $1,000 for each violation or $10,000 for each violation the commissioner finds to be willful.
III. Order the person to make restitution.
415-K:9 Severability. If any provision of this chapter or the application thereof to any person or circumstances is held to be invalid, the remainder of the chapter and the application of such provision to other persons or circumstances shall not be affected thereby.
6 Retail Installment Contracts. Amend RSA 361-A:7, II(i) to read as follows:
(i) The time balance, which is the sum of (g) and (h), payable in installments by the buyer, the number of installments, the amount of each installment and the due date or period thereof.
The above subparagraphs in paragraph II need not be stated in the sequence or order set forth. Additional paragraphs may be included to explain the calculations involved in determining the stated time balance to be paid by the buyer;
(j) The amount included for a guaranteed asset protection waiver offered in compliance with RSA 415-K.
7 Effective Date. This act shall take effect 60 days after its passage.
