An Act To Amend the Usage and Consumer Protections of Guaranteed Asset Protection Waivers
Maine Legislature, Session 128, LD 1506
Committee: Insurance and Financial Services
Sponsors: WHITTEMORE, FOLEY, LAWRENCE, SANBORN

Legislative Document
No. 1506
S.P. 531
In Senate, April 25, 2017
An Act To Amend the Usage and Consumer Protections of 
Guaranteed Asset Protection Waivers
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed.
HEATHER J.R. PRIEST
Secretary of the Senate
Presented by Senator WHITTEMORE of Somerset.
Cosponsored by Representative FOLEY of Wells and
Representatives: LAWRENCE of South Berwick, SANBORN of Portland.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  10 MRSA c. 229 is enacted to read: 
CHAPTER 229 
GUARANTEED ASSET PROTECTION WAIVERS 
§1500-H.  Guaranteed asset protection waivers 
1.  Definitions.  As used in this chapter, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Administrator" means a person, other than an insurer or creditor, that performs 
administrative or operational functions pursuant to a waiver program. 
B.  "Borrower" means a debtor or retail buyer under a finance agreement. 
C.  "Creditor" means: 
(1)  The lender in a loan or credit transaction; 
(2)  A person engaged as a retail seller of motor vehicles that provides credit to 
consumers, as defined in Title 9-A, section 1-301, subsection 10, of the motor 
vehicles, as long as that person complies with the provisions of this section; 
(3)  The seller in a commercial retail installment transaction; or 
(4)  The assignee of any of the persons in subparagraphs (1) to (4) to which the 
credit obligation is payable. 
D.  "Finance agreement" means a loan or retail installment sales contract for the 
purchase of a motor vehicle. 
E.  "Free-look period" means the period of time, not less than 30 days, from the 
effective date of the waiver until the date the borrower may cancel the waiver 
contract without penalty, fees or costs to the borrower. 
F.  "Guaranteed asset protection waiver" or "waiver" means a contractual agreement 
in which a creditor agrees for a separate charge to cancel or waive all or part of the 
amount due on a borrower's finance agreement for a motor vehicle in the event of a 
total physical damage loss or unrecovered theft of the motor vehicle.  The waiver 
must be part of or a separate addendum to the finance agreement. 
G.  "Insurer" has the same meaning as in Title 24-A, section 4. 
H.  "Motor vehicle" means a self-propelled vehicle not operated exclusively on 
railroad tracks; a motorcycle as defined in Title 29-A, section 101, subsection 38; a 
motor home as defined in Title 29-A, section 101, subsection 40; an all-terrain 
vehicle as defined in Title 12, section 13001, subsection 3; a snowmobile as defined 
in Title 12, section 13001, subsection 25; a motorboat as defined in Title 12, section 
13001, subsection 16; a personal watercraft as defined in Title 12, section 13001, 
subsection 23; or a trailer as defined in Title 29-A, section 101, subsection 86. 
"Motor vehicle" includes vehicles whether self-propelled or towed. 
I.  "Person" includes an individual, company, association, organization, partnership, 
business trust, corporation and every form of legal entity. 
J.  "Superintendent" means the Superintendent of Consumer Credit Protection. 
2.  Requirements for offering waivers.  The following provisions apply to offering 
waivers. 
A.  A waiver may be offered, sold or provided to a borrower in this State in 
compliance with this chapter. 
B.  A waiver may, at the option of the creditor, be sold for a single payment or may 
be offered with a monthly or periodic payment option. 
C.  Notwithstanding any other provision of law, any cost to the borrower for a waiver 
entered into in compliance with the federal Truth in Lending Act, 15 United States 
Code, Section 1601 et seq. and its implementing regulations, as they may be amended 
from time to time, must be separately stated and may not be considered a finance 
charge or interest. 
D.  A retail seller must insure its waiver obligations under a contractual liability 
policy or other insurance policy issued by an insurer.  A creditor, other than a retail 
seller, may insure its waiver obligations under a contractual liability policy or other 
insurance policy issued by an insurer.  Any such insurance policy may be directly 
obtained by a creditor or retail seller or may be procured by an administrator to cover 
a creditor's or retail seller's obligations. 
E.  A waiver remains a part of the finance agreement upon the assignment, sale or 
transfer of the finance agreement by the creditor. 
F.  The extension of credit, the term of credit and the term of the related motor 
vehicle sale may not be conditioned upon the purchase of a waiver. 
G.  A creditor that offers a waiver must report the sale of and forward funds received 
on such a waiver 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, must be held 
by the creditor or administrator in a fiduciary capacity. 
I.  The borrower's primary motor vehicle insurance carrier or, if applicable, the 3rd-
party liability carrier shall determine the existence of a total physical damage loss.  If 
no primary motor vehicle insurance or 3rd-party liability insurance is present on the 
date of loss, then the existence of a total physical damage loss must be determined 
pursuant to the terms of the waiver. 
3.  Contractual liability policy or other insurance policies.  The following 
provisions govern a contractual liability policy or other insurance policies insuring 
waivers. 
A.  A contractual liability policy or other insurance policy insuring waivers must state 
the obligation of the insurer to reimburse or pay to the creditor any sums the creditor 
is legally obligated to waive under the waivers issued by the creditor and purchased 
by the borrower or held by the borrower. 
B.  Coverage under a contractual liability or other insurance policy insuring a waiver 
must also cover any subsequent assignee upon the assignment, sale or transfer of the 
finance agreement. 
C.  Coverage under a contractual liability or other insurance policy insuring a waiver 
must remain in effect unless cancelled or terminated in compliance with applicable 
insurance laws of this State. 
D.  The cancellation or termination of a contractual liability or other insurance policy 
may not reduce the insurer's responsibility for waivers issued by the creditor prior to 
the date of cancellation or termination and for which premium has been received by 
the insurer. 
4.  Disclosures.  A waiver must disclose, as applicable, in writing and in clear, 
understandable language that is easy to read, the following: 
A.  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; 
B.  The purchase price and the terms of the waiver, including without limitation the 
requirements for protection, condition or exclusion associated with the waiver; 
C.  That the borrower may cancel the waiver within a free-look period as specified in 
the waiver and will be entitled to a full refund of the purchase price as long as no 
waiver benefits have been provided; 
D.  The procedure the borrower must follow, if any, to obtain waiver benefits under 
the terms and conditions of the waiver and a telephone number and address where the 
borrower may apply for waiver benefits; 
E.  Whether or not the waiver is cancellable after the free-look period, the conditions 
under which it may be cancelled or terminated and the procedures for requesting any 
refund due; 
F.  That, in order to receive any refund due in the event of a borrower's cancellation 
of the waiver agreement or early termination of the finance agreement, the borrower, 
in accordance with the terms of the waiver, must provide a written request to cancel 
to the creditor, administrator or other party as specified in the waiver.  If a borrower 
is cancelling the waiver due to early termination of the finance agreement, the 
borrower must provide a written request to the creditor, administrator or other party 
within 90 days of the occurrence of the event terminating the finance agreement; 
G.  The methodology for calculating any refund due of the unearned portion of the 
purchase price of the waiver in the event of cancellation of the waiver or early 
termination of the finance agreement; and 
H.  That the extension of credit, the terms of credit and the terms of the related motor 
vehicle sale may not be conditioned upon purchase of the waiver. 
5.  Cancellation.  The following provisions govern the cancellation of a waiver. 
A.  A waiver may be cancellable or noncancellable after the free-look period.  A 
waiver must provide that if a borrower cancels the waiver within the free-look period, 
the borrower is entitled to a full refund of the purchase price as long as no benefits 
have been provided. 
B.  In the event of a borrower's cancellation of the waiver or early termination of the 
finance agreement, after the agreement has been in effect beyond the free-look 
period, the borrower is entitled to a refund of any unearned portion of the purchase 
price of the waiver unless the waiver provides otherwise.  In order to receive a 
refund, the borrower, in accordance with any applicable terms of the waiver, must 
provide a written request to the creditor, administrator or other party.  If the borrower 
is cancelling the waiver due to the early termination of the finance agreement, the 
borrower must provide a written request within 90 days of the event terminating the 
finance agreement. 
C.  If the cancellation of a 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 D. 
D.  Any refund under paragraph A, B or C may be applied by the creditor as a 
reduction of the amount owed under the finance agreement unless the borrower 
shows that the finance agreement has been paid in full. 
6.  Enforcement.  The superintendent may require the filing of notification by an 
administrator pursuant to Title 9-A, section 6-202 and section 6-203, subsection 1.  The 
superintendent may require the filing of waivers in use by an administrator.  Upon request 
by the superintendent, an administrator shall annually file a record of waivers 
administered by the administrator. 
The superintendent may take action that is necessary or appropriate to enforce the 
provisions of this chapter and to protect borrowers who hold waivers in this State.  After 
notice and opportunity for hearing, the superintendent may: 
A.  Order the creditor, administrator or any other person not in compliance with this 
chapter to cease and desist from further waiver-related operations that are in violation 
of this chapter; and 
B.  Impose a penalty of not more than $500 per violation and not more than $10,000 
in the aggregate for all violations of a similar nature.  For purposes of this paragraph, 
violations must be considered of a similar nature if the violations consist of the same 
or a similar course of conduct, action or practice, irrespective of the number of times 
the conduct, action or practice that is determined to be a violation of this chapter 
occurred. 
7.  Exemptions.  The following exemptions apply. 
A.  This chapter does not apply to: 
(1)  An insurance policy offered by an insurer under the insurance laws of this 
State; or 
(2)  A debt cancellation or debt suspension contract offered in compliance with 
Code of Federal Regulations, Part 37 (2017) or 12 Code of Federal 
Regulations, Part 721 (2017) or other federal law. 
B.  Subsection 2, paragraph C and subsections 4 and 6 are not applicable to a waiver 
offered in connection with a retail installment sale associated with a commercial 
transaction. 
C.  Waivers governed under this chapter are not insurance and are exempt from the 
insurance laws of this State.  A person is not required to obtain a license as a 
producer or insurer or in any other capacity be regulated under Title 24-A in order to 
market, administer, sell or offer to sell a waiver. 
Sec. 2.  Application.  This Act applies to all guaranteed asset protection waivers 
that become effective on or after January 1, 2018. 
SUMMARY 
This bill specifies the rights and obligations of parties to a guaranteed asset protection 
waiver.  A guaranteed asset protection waiver is a contractual agreement in which a 
creditor agrees for a separate charge to cancel or waive all or part of the amount due on a 
borrower's finance agreement for a motor vehicle in the event of a total physical damage 
loss or unrecovered theft of the motor vehicle.