08 SB470/AP
Senate
Bill 470
By:
Senator Hudgens of the 47th
AS
PASSED
AN
ACT
To amend Title 33 of the Official Code of Georgia Annotated, relating to insurance, so as to provide for guaranteed asset protection waivers; to provide for legislative intent; to provide for scope; to provide for purposes; to provide for definitions; to provide for requirements for offering; to provide for contractual liability or other insurance policies; to provide for disclosures; to provide for cancellation; to provide for exempted commercial transactions; to provide for related matters; to provide for an effective date and applicability; to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Title
33 of the Official Code of Georgia Annotated, relating to insurance, is amended
by adding a new chapter to read as follows:
"CHAPTER
62
33-62-1.
The
General Assembly finds that guaranteed asset protection waivers are not
insurance. All guaranteed asset protection waivers issued after the date of
enactment of this chapter shall not be construed as insurance.
33-62-2.
(a)
The purpose of this chapter is to provide a framework within which guaranteed
asset protection waivers are defined and may be offered within this
state.
(b)
This chapter shall 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 being offered in compliance
with 12 C.F.R. Part 37 or 12 C.F.R. Part 721 or other federal
law.
(c)
Guaranteed asset protection waivers governed under this chapter are not
insurance and are exempt from the insurance laws of this state. Persons
marketing, selling, or offering to sell guaranteed asset protection waivers to
borrowers that comply with this chapter are exempt from this state´s
insurance licensing requirements.
33-62-3.
The
following terms are defined for purposes of this chapter and are not intended to
provide actual terms required in guaranteed asset protection
waivers:
(1)
'Administrator' means a person, other than an insurer or creditor, that performs
administrative or operational functions pursuant to guaranteed asset protection
waiver programs.
(2)
'Borrower' means a debtor, retail buyer, or lessee under a finance
agreement.
(3)
'Creditor' means:
(A)
The lender in a loan or credit transaction;
(B)
The lessor in a lease transaction;
(C)
Any retail installment seller that provides credit to any retail buyer of motor
vehicles, provided that such entity complies with the provisions of this
chapter;
(D)
The seller in commercial retail installment transactions; or
(E)
The assignees of any of the creditors listed in subparagraphs (A) through (D) of
this paragraph to whom the credit obligation is payable.
(4)
'Finance agreement' means a loan, lease, or retail installment sales contract
for the purchase or lease of a motor vehicle.
(5)
'Free look period' means the period of time from the effective date of the
guaranteed asset protection waiver until the date the borrower may cancel the
guaranteed asset protection waiver without penalty, fees, or costs to the
borrower. This period of time must not be shorter than 30 days.
(6)
'Guaranteed asset protection waiver' means a contractual agreement wherein a
creditor agrees for a separate charge to cancel or waive all or part of amounts
due on a borrower´s finance agreement in the event of a total physical
damage loss or unrecovered theft of the motor vehicle, which agreement must be
part of, or a separate addendum to, the finance agreement.
(7)
'Insurer' means an insurance company licensed, registered, or otherwise
authorized to do business under the insurance laws of this state.
(8)
'Motor vehicle' means self-propelled or towed vehicles designed for personal or
commercial use, including but not limited to automobiles, trucks, motorcycles,
recreational vehicles, all-terrain vehicles, campers, boats, personal
watercraft, and motorcycle, boat, camper, and personal watercraft
trailers.
(9)
'Person' includes an individual, company, association, organization,
partnership, business trust, corporation, and every form of legal
entity.
(10)
'Retail buyer' shall have the same meaning as provided in Code Section
10-1-31.
(11)
'Retail installment seller' shall have the same meaning as provided in Code
Section 10-1-31.
33-62-4.
(a)
Guaranteed asset protection waivers may be offered, sold, or provided to
borrowers in this state in compliance with this chapter.
(b)
Guaranteed asset protection waivers 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
guaranteed asset protection waiver entered into in compliance with the federal
Truth in Lending Act, 15 U.S.C. 1601 et seq., and its implementing regulations,
as they may be amended from time to time, must be separately stated and is not
to be considered a finance charge or interest.
(d)
A retail installment seller must insure its guaranteed asset protection waiver
obligations under a contractual liability or other insurance policy issued by an
insurer. A creditor other than a retail installment seller may insure its
guaranteed asset protection waiver obligations under a contractual liability
policy or other such policy issued by an insurer. Any such insurance policy may
be directly obtained by a creditor or retail installment seller or may be
procured by an administrator to cover a creditor´s or retail installment
seller´s obligations. However, retail installment sellers that are lessors
on motor vehicles are not required to insure obligations related to guaranteed
asset protection waivers on such leased vehicles.
(e)
The guaranteed asset protection waiver shall remain a part of the finance
agreement upon the assignment, sale, or transfer of such finance agreement by
the creditor.
(f)
Neither the extension of credit, the term of credit, nor the term of the related
motor vehicle sale or lease may be conditioned upon the purchase of a guaranteed
asset protection waiver.
(g)
Any creditor that offers a guaranteed asset protection waiver must report the
sale of, and forward funds received on, all such 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
must be held by such creditor or administrator in a fiduciary
capacity.
33-62-5.
(a)
Contractual liability or other insurance policies insuring guaranteed asset
protection 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
guaranteed asset protection waivers issued by the creditor and purchased or held
by the borrower.
(b)
Coverage under a contractual liability or other insurance policy insuring a
guaranteed asset protection 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
guaranteed asset protection waiver must remain in effect unless cancelled or
terminated in compliance with the applicable insurance laws of this
state.
(d)
The cancellation or termination of a contractual liability or other insurance
policy must not reduce the insurer´s responsibility for guaranteed asset
protection waivers issued by the creditor prior to the date of cancellation or
termination and for which premium has been received by the insurer.
33-62-6.
Guaranteed
asset protection waivers must disclose, as applicable, in writing and in clear,
understandable language that is easy to read, the following:
(1)
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;
(2)
The purchase price and the terms of the guaranteed asset protection waiver,
including without limitation the requirements for protection, conditions, or
exclusions associated with the guaranteed asset protection waiver;
(3)
That the borrower may cancel the guaranteed asset protection waiver within a
free look period, as specified in the waiver, and will be entitled to a full
refund of the purchase price, provided no benefits have been made; or in the
event benefits have been made, the borrower may receive a full or partial refund
if the waiver so provides;
(4)
The procedure the borrower must follow, if any, to obtain guaranteed asset
protection waiver benefits under the terms and conditions of the waiver,
including a telephone number and address where the borrower may apply for waiver
benefits;
(5)
Whether or not the guaranteed asset protection waiver is cancelable after the
free look period and the conditions under which it may be canceled or
terminated, including the procedures for requesting any refund due;
(6)
That in order to receive any refund due in the event of a borrower´s
cancellation of the guaranteed asset protection waiver agreement or early
termination of the finance agreement after the free look period of the
guaranteed asset protection waiver, the borrower, in accordance with terms of
the waiver, must provide a written request to cancel to the creditor,
administrator, or such other party within 90 days after the borrower´s
decision to cancel the waiver or the occurrence of the event terminating the
finance agreement;
(7)
The methodology for calculating any refund of the unearned purchase price of the
guaranteed asset protection waiver due in the event of cancellation of the
guaranteed asset protection waiver or early termination of the finance
agreement; and
(8)
That neither the extension of credit, the terms of the credit, nor the terms of
the related motor vehicle sale or lease may be conditioned upon the purchase of
the guaranteed asset protection waiver.
33-62-7.
(a)
Guaranteed asset protection waiver agreements may be cancelable or noncancelable
after the free look period. Guaranteed asset protection waivers must provide
that if a borrower cancels a waiver within the free look period, the borrower
will be entitled to a full refund of the purchase price, provided no benefits
have been paid; or in the event benefits have been paid, the borrower may
receive a full or partial refund if the waiver so provides.
(b)
In the event of a borrower´s cancellation of the guaranteed asset
protection waiver or early termination of the finance agreement, after the
agreement has been in effect beyond the free look period, the borrower may be
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 within 90 days
after the borrower´s decision to cancel the waiver or the occurrence of the
event terminating the finance agreement.
(c)
If the cancellation of a guaranteed asset protection 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 subsection (d) of this Code
section.
(d)
Any cancellation refund under subsection (a), (b), or (c) of this Code section
may be applied by the creditor as a reduction of the amount owed under the
finance agreement unless the borrower can show that the finance agreement has
been paid in full.
33-62-8.
Subsection
(c) of Code Section 33-62-4 and Code Sections 33-62-6 and 33-62-9 shall not be
applicable to a guaranteed asset protection waiver offered in connection with a
lease or retail installment sale associated with a commercial
transaction.
33-62-9.
The
Commissioner of Insurance may take action which is necessary or appropriate to
enforce the provisions of this chapter and to protect guaranteed asset
protection waiver holders in this state. After proper notice and opportunity
for hearing, the commissioner may:
(1)
Order the creditor, administrator, or any other person not in compliance with
this chapter to cease and desist from further guaranteed asset protection waiver
related operations which are in violation of this chapter; and
(2)
Impose a penalty of not more than $500.00 per violation and not more than
$10,000.00 in the aggregate for all violations of similar nature. For purposes
of this paragraph, violations must be of a similar nature if the violation
consists of the same or similar course of conduct, action, or practice,
irrespective of the number of times the conduct, action, or practice which is
determined to be a violation of this chapter occurred."
SECTION
2.
This
Act shall become effective on July 1, 2008, and apply to all guaranteed asset
protection waivers which shall become effective on or after January 1,
2009.
SECTION
3.
All
laws and parts of laws in conflict with this Act are repealed.