The bill codifies and updates rules regarding guaranteed asset
protection agreements (GAP agreement). A GAP agreement relieves a consumer of liability for all or part of the deficiency balance remaining after the payment of all insurance proceeds upon the total loss of the consumer's motor vehicle. Section 2 of the bill permits a creditor to collect additional charges or fees for a GAP agreement as part of a consumer credit transaction. Section 3: •
Sets conditions and provisions that must be a part of any GAP agreement in order for it to be valid and for a creditor to receive an additional charge or fee in relation to the GAP agreement;
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Establishes the method by which the deficiency balance is calculated and what the consumer will be owed pursuant to the GAP agreement in the event of a total loss;
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Details when a consumer must submit the consumer's GAP agreement claim after a total loss;
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Establishes the maximum fee that may be charged for a GAP agreement, which must not exceed 5% of the amount financed in the consumer credit transaction; and
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Prohibits the sale of a GAP agreement in specified circumstances.
