402B - Total loss notice and waiver of the gap amount.

§  402B.  Total  loss  notice  and waiver of the gap amount. 1. If the  retail instalment contract provides that the buyer shall be  responsible  upon  a  total  loss  of  the goods occasioned by theft, confiscation or  physical damage for the gap amount as defined in paragraph fifty-two  of  subsection  (a)  of  section one hundred seven of the insurance law, the  holder, prior to the execution of the contract, shall by a notice  on  a  separate  document  conspicuously disclose that fact and the obligations  for which the buyer would  remain  liable  in  the  event  of  a  theft,  confiscation or total loss of the goods. If the holder is required under  subdivision  two of this section to offer to waive its contractual right  to hold the buyer liable for the gap amount in the event of a total loss  of the goods occasioned by theft or physical damage,  the  notice  shall  also:  (a)  state that for a separate charge disclosed in the notice the  holder will waive its contractual right to hold the buyer liable for the  gap amount in the event of a total loss of the goods occasioned by theft  or physical damage; (b) contain a provision informing the buyer that  he  or  she  may,  as  an  alternative  to  purchasing  a waiver, be able to  purchase insurance covering the gap amount  from  an  insurance  company  which  has  been  licensed  by  the superintendent of insurance to write  non-motor vehicle debtor gap insurance in this state; and (c) contain  a  provision  permitting  the buyer to indicate whether he or she wants the  holder to waive its contractual right to hold the buyer liable  for  the  gap amount in the event of a total loss of the goods occasioned by theft  or physical damage. The notice shall be signed by the buyer.  The holder  shall  provide  a  copy  of  the  signed  notice  to the buyer and shall  maintain a copy in the holder's files for  at  least  the  term  of  the  contract.  Failure  to  provide  the  notice  and  to obtain the buyer's  signature as required by this subdivision shall invalidate any provision  of the agreement which otherwise would obligate a buyer to  pay  to  the  holder,   after   a  total  loss  of  the  goods  occasioned  by  theft,  confiscation or physical damage, the gap amount.  No  retail  instalment  contract  shall  be  conditioned upon the buyer's obtaining of non-motor  vehicle debtor gap  insurance  as  set  forth  in  subparagraph  (D)  of  paragraph  twenty-six  of  subsection  (a)  of  section one thousand one  hundred thirteen of the insurance law.    2. If the retail instalment contract provides that the buyer shall  be  responsible  upon  a  total  loss  of  the  goods occasioned by theft or  physical damage for the gap amount, the holder, prior to  the  execution  of  the contract, shall offer to waive its contractual right to hold the  buyer liable for the gap amount in the event of  a  total  loss  of  the  goods  occasioned by theft or physical damage, only if non-motor vehicle  creditor gap insurance coverage is available  to  the  holder  and  such  coverage  is  obtained from a property/casualty insurance company, which  has been licensed by the superintendent of insurance of  this  state  to  write non-motor vehicle creditor gap insurance in this state. This offer  may  be  made  contingent  upon  the  payment by the buyer of a separate  charge that shall not exceed the cost of non-motor vehicle creditor  gap  insurance  covering the retail instalment contract. Nothing contained in  this section shall be construed to authorize  a  waiver,  in  connection  with  a transaction with respect to which non-motor vehicle creditor gap  insurance has not been obtained, of a  contractual  right  to  hold  the  buyer  liable  for  the  gap  amount in the event of a total loss of the  goods occasioned by theft or physical damage.    3. A holder shall not be  obligated  under  subdivision  two  of  this  section to offer to waive its contractual right to hold the buyer liable  for  the  gap  amount if, during the current calendar year or during the  odd-numbered calendar year immediately preceding the  calendar  year  in  which  the  agreement is entered into, the holder has received non-motorvehicle creditor gap insurance declination notices or other evidence  of  unavailability  from  every  insurance company whose name appears on the  insurance department compilation of  insurance  companies  which  during  that  calendar  year were authorized to write non-motor vehicle creditor  gap insurance in this state. Evidence of  these  declinations  shall  be  retained by such a holder for a period of six years after the expiration  of the calendar year in which they were issued.    4.  In order to enable holders to comply with the requirements imposed  by subdivision two of this  section,  the  superintendent  of  insurance  shall  compile  and  make available a periodically updated list of those  insurance companies which are  authorized  to  write  non-motor  vehicle  creditor gap insurance coverage in this state.    5.  Nothing  in this section shall be construed to apply to the holder  under a retail instalment contract under which the buyer is  not  liable  upon  a  total  loss  of  the goods occasioned by theft, confiscation or  physical damage for the gap amount.