Section 8-37-3

(Effective January 1, 2018) GAP waivers authorized; charges; insurance; creditor requirements.

(a) GAP waivers may be offered, sold, or provided to borrowers in this state under this chapter.

(b) GAP waivers, at the option of the creditor that offers the GAP waiver, may be sold for a single payment or may be offered with a monthly or periodic payment option.

(c) Notwithstanding any other provision of law and subject to Section 8-37-7, any cost to the borrower for a GAP waiver entered into in compliance with The Truth in Lending Act, 15 U.S.C. §1601 et seq., and its implementing regulations, as they may be amended from time to time, shall be separately stated and is not to be considered a finance charge or interest. If the charge for a GAP waiver is financed, the charge shall be separately itemized on the finance agreement.

(d) 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 similar policy issued by an insurer. Any 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 under the GAP waiver. However retail sellers who do not assign their finance agreements or retail sellers that are lessors of motor vehicles are not required to insure obligations related to GAP waivers on the sold or leased vehicles.

(e) A GAP waiver remains a part of the finance agreement upon the assignment, sale, or transfer of the finance agreement by the creditor. The creditor, administrator, or other designated party shall maintain for three years after the maturity date of the finance agreement a copy of or electronic details of each GAP waiver sold regardless of the method of payment and the creditor, administrator, or other designated party shall provide copies of or electronic details of the contracts to the Superintendent of Banks upon reasonable advance written notice.

(f) Neither the extension of credit, any term of credit, nor the term of the related motor vehicle sale or lease may be conditioned upon the purchase of a GAP waiver.

(g) Any creditor that offers a GAP waiver shall report the sale of, and forward funds received on all 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.

(h) 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 the creditor or administrator in a fiduciary capacity.

(Act 2017-392, §1.)