218.0148 Guaranteed asset protection agreements.

1,022 words·~5 min read·/wi/chapter-218/218-0148-3

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(1)Definitions. In this section:

(a)“Administrator” means a person, other than an insurer or creditor, that performs administrative or operational functions pursuant to guaranteed asset protection waiver programs.

(b)“Borrower” means a retail buyer who purchases a motor vehicle under a retail installment contract, a lessee, or any other debtor to whom a creditor extends credit for the purchase or refinancing of a motor vehicle.

(c)“Creditor” means a sales finance company, including any motor vehicle dealer described in s. 218.0101

(b), a lessor, or any other lender that extends credit to a borrower for the purchase or refinancing of a motor vehicle, but does not include a depository institution, as defined in 12 USC 1813

(c)(1), or any state or federal credit union.

(d)“Finance agreement” means any of the following:

1. A retail installment contract.

2. A loan agreement in which a creditor extends credit to a borrower for the purchase or refinancing of a motor vehicle.

3. A consumer lease.

(e)“Guaranteed asset protection waiver” means a contractual obligation under which a creditor agrees, for a separate charge, to cancel or waive all or part of amounts due on a borrower’s finance agreement in the event of a total physical damage loss or unrecovered theft of the motor vehicle specified in the finance agreement.

(2)Guaranteed asset protection waivers authorized.

(a)Subject to par.

(b), guaranteed asset protection waivers may be offered and sold to borrowers in this state in compliance with the requirements under this section. A guaranteed asset protection waiver must be part of, or a separate addendum to, the finance agreement for the motor vehicle.

(b)A creditor may not require a borrower to purchase a guaranteed asset protection waiver.

(c)Guaranteed asset protection waivers may, at the option of the creditor, be offered and sold upon a single payment or with required periodic payments.

(d)A guaranteed asset protection waiver may be assigned and the guaranteed asset protection waiver remains a part of the finance agreement upon the assignment, sale, or transfer of the finance agreement by the creditor.

(e)Notwithstanding any other provision of law, any cost to the borrower for a guaranteed asset protection waiver entered into in compliance with the federal Truth in Lending Act, 15 USC 1601 et seq., and regulations adopted under that act, shall be separately stated and is not considered a finance charge or interest.

(f)A retail seller shall insure its guaranteed asset protection waiver obligations under a contractual liability or other insurance policy issued by an insurer. A creditor, other than a retail seller, may insure its guaranteed asset protection waiver obligations under a contractual liability policy or other such policy issued by an insurer. Any such insurance policy may be directly obtained by a creditor or retail seller or may be procured by an administrator to cover a creditor’s or retail seller’s obligations. However, if a retail seller is also a lessor, the retail seller is not required to insure obligations related to guaranteed asset protection waivers on motor vehicles leased under a consumer lease.

(g)Any creditor that offers a guaranteed asset protection waiver shall report the sale of, and forward funds received on, all guaranteed asset protection waivers to the designated party, if any, prescribed in any applicable administrative services agreement, contractual liability policy, other insurance policy, or other specified program documents.

(h)Funds received or held by a creditor or administrator and belonging to an insurer, creditor, or administrator, pursuant to the terms of a written agreement, shall be held by the creditor or administrator in a fiduciary capacity.

(i)Any borrower or potential borrower desiring a guaranteed asset protection waiver shall give a specific, separately signed, affirmative written indication of the borrower’s or potential borrower’s desire to purchase a guaranteed asset protection waiver after receiving the disclosures required in sub.

(3). A separate indication includes a signed, written, affirmative indication within a guaranteed asset protection waiver that is an addendum to the finance agreement.

(j)A creditor may, as a provision within a guaranteed asset protection waiver, provide a discount or credit, or may waive or cancel an additional amount, as an incentive for purchasing, leasing, or financing a replacement vehicle. However, the creditor shall require the borrower to use the benefit on a purchase or lease from the retail seller that sold the original vehicle to the borrower, or with the creditor that financed the purchase or lease of the original vehicle. Inclusion of this provision does not cause the guaranteed asset protection waiver to be considered insurance. Notwithstanding any other provision of law, this paragraph also applies to any state or federally chartered bank or credit union.

(3)Disclosure requirements for offering guaranteed asset protection waivers.

(a)No creditor may offer or sell to a borrower a guaranteed asset protection waiver in this state unless all of the following conspicuous written disclosures are provided prior to or concurrent with the execution of the guaranteed asset protection waiver agreement:

1. That the purchase of the guaranteed asset protection waiver is optional and that neither the extension of credit, nor the terms of the credit, nor the terms of the related motor vehicle sale or lease may be conditioned upon the purchase of the guaranteed asset protection waiver.

2. The cost and terms of the guaranteed asset protection waiver, including terms relating to the borrower’s right to cancel the waiver and obtain a full or partial refund as provided under sub.

(4).

3. The name and address of the initial creditor and the borrower at the time of the sale or lease, and the identity of any administrator if different from the creditor.

4. The purchase price and the terms of the guaranteed asset protection waiver, including the requirements for protection, conditions, or exclusions associated with the guaranteed asset protection waiver.

5. The procedure the borrower must follow, if any, to obtain guaranteed asset protection waiver benefits under the terms and conditions of the waiver, including a telephone number and address where the borrower may apply for waiver benefits.