Select a state

Please choose your state from the selections below:

Questions and suggestions

Fill out the form below to Ask PIA a question or offer a suggestion (* signifies a required field):

Contact me by: Phone  Fax  E-mail


Employees of PIA member agencies may log on below:

GAP waiver bill signed into law

A bill (A-3601/S-2209) that would provide a regulatory framework within which guaranteed asset protection waivers may be offered was signed into law by Gov. Chris Christie on May 11.

"GAP waivers," are contractual agreements entered into directly between a borrower and a finance company, and commonly used in the motor vehicle industry. GAP waivers are classified as addenda to traditional finance contracts, and are meant to protect borrowers from having to make a large lump-sum payment to the lender if their vehicles are deemed a total loss and there is a gap between the amount of money owed to the lender and the amount of money at which the insurance adjuster values the "totaled" vehicle. In the event of a total loss, insurance companies only compensate the insured for the market value of the vehicle.

The law (P.L.2017, c.82) clarifies that the "GAP waivers" are not considered insurance policies and are exempt from the state's insurance laws. Under the new law, GAP wavier agreements must disclose the name and address of the initial creditor and borrower; the purchase price and terms of the GAP waiver; that the borrower may cancel the GAP waiver during the "free-look" period; the procedure for receiving GAP waiver benefits; whether the GAP waiver is cancellable after the "free-look" period ends; that in order to receive a refund for a canceled GAP waiver, the borrower must submit a written request to the lender within 90 days of the event terminating the finance agreement; the methodology for calculating any refund of the unearned purchase price of the waiver; and that the extension of credit, finance, sale or lease may not be conditioned upon the purchase of the GAP waiver. The law provides the framework for which GAP waivers can be offered in the state and it specifically differentiates waivers from the "GAP insurance" offered by insurance carriers. To that end, the new law specifically states that the act does not apply to an insurance policy offered by an insurer under the insurance laws of the state.

This act, which was sponsored by Assemblyman Gary S. Schaer, D-36, and Sen. Joseph F. Vitale, D-19, takes effect immediately and it will apply to all GAP waivers executed on or after Nov. 7, 2017.