S 5312: Authorizes service charges for gap waivers.

  
  STATE OF NEW YORK ________________________________________________________________________ 5312 2025-2026 Regular Sessions  IN SENATE February 20, 2025 ___________ Introduced by Sen. BAILEY -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law and the personal property law, in relation to authorizing service charges for gap waivers The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subparagraph (iii) of paragraph 3 of subsection (b) of 2 section 1101 of the insurance law, as amended by chapter 140 of the laws 3 of 1995, is amended to read as follows: 4 (iii) in the event the lessor, creditor or assignee purchases lessor 5 or creditor gap insurance, the charge to the lessee or debtor for the 6 waiver does not exceed the cost of the lessor or creditor gap insurance 7 coverage plus any permitted service charge; provided, however, that 8 nothing contained [herein] in this section shall be construed to prohib- 9 it: (A) the creditor or assignee from including the charge for the 10 waiver plus any permitted service charge in its calculation of payments 11 due under a retail instalment contract; or (B) the lessor or assignee 12 from including the charge for the waiver in the capitalized cost as that 13 term is defined in subdivision eleven of section three hundred thirty- 14 one of the personal property law. For purposes of this subparagraph, in 15 the case of a new or used motor vehicle which is subject to a retail 16 instalment contract, such permitted service charge may be paid to the 17 creditor or assignee, or to a motor vehicle dealer registered in this 18 state pursuant to the applicable provisions of the vehicle and traffic 19 law. 20 § 2. Subdivision 2 of section 302A of the personal property law, as 21 amended by chapter 111 of the laws of 1995 and as further amended by 22 section 104 of part A of chapter 62 of the laws of 2011, is amended to 23 read as follows: 24 2. If the retail instalment contract provides that the buyer shall be 25 responsible upon a total loss of the vehicle occasioned by its theft or EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD07478-01-5 
 S. 5312 2 1 physical damage for the gap amount, the holder, prior to the execution 2 of the agreement, shall offer to waive its contractual right to hold the 3 buyer liable for the gap amount in the event of a total loss of the 4 vehicle occasioned by its theft or physical damage, only if motor vehi- 5 cle creditor gap insurance coverage is available to the holder and such 6 coverage is obtained from a property/casualty insurance company, which 7 has been licensed by the superintendent of financial services of this 8 state to write motor vehicle creditor gap insurance in this state. This 9 offer may be made contingent upon the payment by the buyer of a separate 10 charge that shall not exceed the cost of motor vehicle creditor gap 11 insurance covering the retail instalment contract plus a service charge 12 not to exceed seven hundred fifty dollars. Nothing contained in this 13 section shall be construed to authorize a waiver, in connection with a 14 transaction with respect to which motor vehicle creditor gap insurance 15 has not been obtained, of a contractual right to hold the buyer liable 16 for the gap amount in the event of a total loss of the vehicle occa- 17 sioned by its theft or physical damage. 18 § 3. This act shall take effect on the thirtieth day after it shall 19 have become a law.