(A)(1) A GAP waiver must include a term stating that if a borrower cancels the waiver within the free-look period, the borrower is entitled to a full refund if no benefits have been provided under the GAP waiver.

(2) A creditor may not charge a fee to a borrower related to the cancellation of a GAP waiver.

(B) A GAP waiver may be either cancellable or noncancellable after the free-look period. A GAP waiver must include:

(1) a statement of whether or not the GAP waiver is cancellable or noncancellable after the expiration of the free-look period; and

(2) if the waiver is cancellable, all of the following terms apply:

(a) a statement that in the event of a borrower's cancellation of the GAP waiver or early termination of the finance agreement, the borrower may be entitled to a refund of any unearned portion of the purchase price of the waiver; and

(b) the procedures by which a borrower may cancel the waiver. This term must include a requirement that if the underlying finance agreement is terminated, cancellation must be made by providing a written request to the creditor, manager, or other party within ninety days of the event terminating the finance agreement.

(C) A cancellation refund under subsections (A) and (B) may be applied by the creditor as a reduction of the amount owed under the finance agreement unless the borrower shows that the finance agreement has been paid in full.

(D) If the purchase price of the GAP waiver is not financed, the creditor shall either provide a refund directly to the borrower or provide the borrower the option to either receive a refund of the unearned purchase price directly or to have the refund applied to reduce the amount owed under the borrower's finance agreement.

HISTORY: 2015 Act No. 31 (S.441), Section 2, eff June 1, 2015.

Editor's Note

2015 Act No. 31, Section 3, provides as follows:

"SECTION 3. This act takes effect upon approval by the Governor and applies to all GAP waivers which become effective one hundred eighty days after the effective date."