N.Y. Personal Property Law § 302-a: Total loss notice and waiver of the gap amount

§ 302A. Total loss notice and waiver of the gap amount. 1. If the

retail instalment contract provides that the buyer shall be responsible

upon a total loss of the vehicle occasioned by its theft, confiscation

or physical damage for the gap amount as defined in paragraph fifty-two

of subsection (a) of section one hundred seven of the insurance law, the

holder, prior to the execution of the contract, shall by a notice on a

separate document conspicuously disclose that fact and the obligations

for which the buyer would remain liable in the event of a theft,

confiscation or total loss of the vehicle. If the holder is required

under subdivision two of this section to offer to waive its contractual

right to hold the buyer liable for the gap amount in the event of a

total loss of the vehicle occasioned by its theft or physical damage,

the notice shall also: (a) state that for a separate charge disclosed in

the notice the holder will waive its contractual right to hold the buyer

liable for the gap amount in the event of a total loss of the vehicle

occasioned by its theft or physical damage; (b) contain a provision

informing the buyer that he or she may, as an alternative to purchasing

a waiver, be able to purchase insurance covering the gap amount from an

insurance company which has been licensed by the superintendent of

financial services to write motor vehicle debtor gap insurance in this

state; and (c) contain a provision permitting the buyer to indicate

whether he or she wants the holder to waive its contractual right to

hold the buyer liable for the gap amount in the event of a total loss of

the vehicle occasioned by its theft or physical damage. The notice shall

be signed by the buyer. The holder shall provide a copy of the signed

notice to the buyer and shall maintain a copy in the holder's files for

at least the term of the contract. Failure to provide the notice and to

obtain the buyer's signature as required by this subdivision shall

invalidate any provision of the agreement which otherwise would obligate

a buyer to pay to the holder, after a total loss of the motor vehicle

occasioned by its theft, confiscation or physical damage, the gap

amount. No retail installment contract shall be conditioned upon the

buyer's obtaining of motor vehicle debtor gap insurance as set forth in

subparagraph (B) of paragraph twenty-six of subsection (a) of section

one thousand one hundred thirteen of the insurance law.

2. If the retail instalment contract provides that the buyer shall be

responsible upon a total loss of the vehicle occasioned by its theft or

physical damage for the gap amount, the holder, prior to the execution

of the agreement, shall offer to waive its contractual right to hold the

buyer liable for the gap amount in the event of a total loss of the

vehicle occasioned by its theft or physical damage, only if motor

vehicle creditor gap insurance coverage is available to the holder and

such coverage is obtained from a property/casualty insurance company,

which has been licensed by the superintendent of financial services of

this state to write motor vehicle creditor gap insurance in this state.

This offer may be made contingent upon the payment by the buyer of a

separate charge that shall not exceed the cost of motor vehicle creditor

gap insurance covering the retail instalment contract. Nothing contained

in this section shall be construed to authorize a waiver, in connection

with a transaction with respect to which motor vehicle creditor gap

insurance has not been obtained, of a contractual right to hold the

buyer liable for the gap amount in the event of a total loss of the

vehicle occasioned by its theft or physical damage.

3. A holder shall not be obligated under subdivision two of this

section to offer to waive its contractual right to hold the buyer liable

for the gap amount if, during the current calendar year or during the

odd-numbered calendar year immediately preceding the calendar year in

which the agreement is entered into, the holder has received motor

vehicle creditor gap insurance declination notices or other evidence of

unavailability from every insurance company whose name appears on the

department of financial services compilation of insurance companies

which during that calendar year were authorized to write motor vehicle

creditor gap insurance in this state. Evidence of these declinations

shall be retained by such a holder of such a holder for a period of six

years after the expiration of the calendar year in which they were

issued.

4. In order to enable holders or their anticipated assignees to comply

with the requirements imposed by subdivision two of this section, the

superintendent of financial services shall compile and make available a

periodically updated list of those insurance companies which are

authorized to write motor vehicle creditor gap insurance coverage in

this state.

5. Nothing in this section shall be construed to apply to the holder,

under a retail instalment contract under which the buyer is not liable

upon a total loss of the vehicle occasioned by its theft, confiscation

or physical damage for the gap amount.