Legislation to enact the industry “model” relating to offering Guaranteed Asset Protection (“GAP”) waivers was recently introduced in the State of New Jersey. Assembly Bill 3601 would provide a clear statutory framework within which GAP waivers could be offered in this state.
The legislation defines and distinguishes various types of creditors that may offer GAP waivers and would require that only licensed motor vehicle dealers to insure their GAP waiver obligations under an appropriate reimbursement insurance policy. Such dealers would not be required to insure GAP waivers offered in connection with leased vehicle. Other types of creditors are permitted, but not required, to insure their GAP waiver obligations. The bill also requires specific consumer disclosures in a GAP waiver.
No registration would be required for any type creditor offering GAP waivers nor is registration proposed for administrators of GAP programs. If enacted, this new law would be administered by the New Jersey Department of Banking and Insurance and would become effective 180 days after enactment.