N.Y. PEP Law § 402-B — New York Code / Act PEP / Article 10 / Section 402-B
Total loss notice and waiver of the gap amount
Status: in_force

§ 402B. Total loss notice and waiver of the gap amount. 1. If the\nretail instalment contract provides that the buyer shall be responsible\nupon a total loss of the goods occasioned by theft, confiscation or\nphysical damage for the gap amount as defined in paragraph fifty-two of\nsubsection (a) of section one hundred seven of the insurance law, the\nholder, prior to the execution of the contract, shall by a notice on a\nseparate document conspicuously disclose that fact and the obligations\nfor which the buyer would remain liable in the event of a theft,\nconfiscation or total loss of the goods. If the holder is required under\nsubdivision two of this section to offer to waive its contractual right\nto hold the buyer liable for the gap amount in the event of a total loss\nof the goods occasioned by theft or physical damage, the notice shall\nalso: (a) state that for a separate charge disclosed in the notice the\nholder will waive its contractual right to hold the buyer liable for the\ngap amount in the event of a total loss of the goods occasioned by theft\nor physical damage; (b) contain a provision informing the buyer that he\nor she may, as an alternative to purchasing a waiver, be able to\npurchase insurance covering the gap amount from an insurance company\nwhich has been licensed by the superintendent of financial services to\nwrite non-motor vehicle debtor gap insurance in this state; and (c)\ncontain a provision permitting the buyer to indicate whether he or she\nwants the holder to waive its contractual right to hold the buyer liable\nfor the gap amount in the event of a total loss of the goods occasioned\nby theft or physical damage. The notice shall be signed by the buyer.\nThe holder shall provide a copy of the signed notice to the buyer and\nshall maintain a copy in the holder's files for at least the term of the\ncontract. Failure to provide the notice and to obtain the buyer's\nsignature as required by this subdivision shall invalidate any provision\nof the agreement which otherwise would obligate a buyer to pay to the\nholder, after a total loss of the goods occasioned by theft,\nconfiscation or physical damage, the gap amount. No retail instalment\ncontract shall be conditioned upon the buyer's obtaining of non-motor\nvehicle debtor gap insurance as set forth in subparagraph (D) of\nparagraph twenty-six of subsection (a) of section one thousand one\nhundred thirteen of the insurance law.\n  2. If the retail instalment contract provides that the buyer shall be\nresponsible upon a total loss of the goods occasioned by theft or\nphysical damage for the gap amount, the holder, prior to the execution\nof the contract, shall offer to waive its contractual right to hold the\nbuyer liable for the gap amount in the event of a total loss of the\ngoods occasioned by theft or physical damage, only if non-motor vehicle\ncreditor gap insurance coverage is available to the holder and such\ncoverage is obtained from a property/casualty insurance company, which\nhas been licensed by the superintendent of financial services of this\nstate to write non-motor vehicle creditor gap insurance in this state.\nThis offer may be made contingent upon the payment by the buyer of a\nseparate charge that shall not exceed the cost of non-motor vehicle\ncreditor gap insurance covering the retail instalment contract. Nothing\ncontained in this section shall be construed to authorize a waiver, in\nconnection with a transaction with respect to which non-motor vehicle\ncreditor gap insurance has not been obtained, of a contractual right to\nhold the buyer liable for the gap amount in the event of a total loss of\nthe goods occasioned by theft or physical damage.\n  3. A holder shall not be obligated under subdivision two of this\nsection to offer to waive its contractual right to hold the buyer liable\nfor the gap amount if, during the current calendar year or during the\nodd-numbered calendar year immediately preceding the calendar year in\nwhich the agreement is entered into, the holder has received non-motor\nvehicle creditor gap insurance declination notices or other evidence of\nunavailability from every insurance company whose name appears on the\ndepartment of financial services compilation of insurance companies\nwhich during that calendar year were authorized to write non-motor\nvehicle creditor gap insurance in this state. Evidence of these\ndeclinations shall be retained by such a holder for a period of six\nyears after the expiration of the calendar year in which they were\nissued.\n  4. In order to enable holders to comply with the requirements imposed\nby subdivision two of this section, the superintendent of financial\nservices shall compile and make available a periodically updated list of\nthose insurance companies which are authorized to write non-motor\nvehicle creditor gap insurance coverage in this state.\n  5. Nothing in this section shall be construed to apply to the holder\nunder a retail instalment contract under which the buyer is not liable\nupon a total loss of the goods occasioned by theft, confiscation or\nphysical damage for the gap amount.\n