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Guaranteed Asset Protection Agreements

Concerning the regulation of guaranteed asset protection agreements.
2023 Regular Session
Financial Services & Commerce
Transportation & Motor Vehicles
Bill Summary

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;
  • 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;
  • Details when a consumer must submit the consumer's GAP agreement claim after a total loss;
  • 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
  • Prohibits the sale of a GAP agreement in specified circumstances.
    (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)




Bill Text

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