N.Y. Personal Property Law § 402-b: Total loss notice and waiver of the gap amount

§ 402B. 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 goods occasioned by 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 goods. 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 goods occasioned by 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 goods occasioned by 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 non-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 goods occasioned

by 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 goods occasioned by theft,

confiscation or physical damage, the gap amount. No retail instalment

contract shall be conditioned upon the buyer's obtaining of non-motor

vehicle debtor gap insurance as set forth in subparagraph (D) 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 goods occasioned by theft or

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

of the contract, 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

goods occasioned by theft or physical damage, only if non-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 non-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 non-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 non-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 goods occasioned by 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 non-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 non-motor

vehicle creditor gap insurance in this state. Evidence of these

declinations shall be retained by 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 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 non-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 goods occasioned by theft, confiscation or

physical damage for the gap amount.