Florida Senate - 2024 CS for SB 902
By the Committee on Banking and Insurance; and Senator Boyd
597-02163-24 2024902c1
1 A bill to be entitled
2 An act relating to motor vehicle retail financial
3 agreements; amending s. 520.02, F.S.; revising the
4 definition of the term “guaranteed asset protection
5 product”; amending s. 520.07, F.S.; prohibiting
6 certain entities from deducting more than a specified
7 amount in administrative fees when providing a refund
8 of a guaranteed asset protection product; authorizing
9 guaranteed asset protection products to be cancelable
10 or noncancelable under certain circumstances;
11 authorizing certain entities to pay refunds directly
12 to the holder or administrator of a loan under certain
13 circumstances; creating s. 520.151, F.S.; providing a
14 short title; creating s. 520.152, F.S.; defining
15 terms; creating s. 520.153, F.S.; authorizing the
16 offer, sale, or gift of vehicle value protection
17 agreements in compliance with a certain act;
18 specifying a requirement regarding the amount charged
19 or financed for a vehicle value protection agreement;
20 prohibiting the conditioning of credit offers or terms
21 for the sale or lease of a motor vehicle upon a
22 consumer’s payment for or financing of any charge for
23 a vehicle value protection agreement; authorizing
24 discounting or giving the vehicle value protection
25 agreement at no charge under certain circumstances;
26 authorizing providers to use an administrator or other
27 designee for administration of vehicle value
28 protection agreements; prohibiting vehicle value
29 protection agreements from being sold under certain
30 circumstances; specifying financial security
31 requirements for providers; prohibiting additional
32 financial security requirements from being imposed on
33 providers; creating s. 520.154, F.S.; requiring
34 vehicle value protection agreements to include certain
35 disclosures in writing, in clear and understandable
36 language; requiring vehicle value protection
37 agreements to state the terms, restrictions, or
38 conditions governing cancellation by the provider or
39 the contract holder; specifying requirements for
40 notice by the provider, refund of fees, and deduction
41 of fees in the event the vehicle value protection
42 agreement is canceled; creating s. 520.155, F.S.;
43 providing an exemption for vehicle value protection
44 agreements in connection with a commercial
45 transaction; creating s. 520.156, F.S.; providing
46 noncriminal penalties; defining the term “violations
47 of a similar nature”; creating s. 520.157, F.S.;
48 defining the term “excess wear and use waiver”;
49 authorizing a retail lessee to contract with a retail
50 lessor for an excess wear and use waiver; prohibiting
51 conditioning the terms of the consumer’s motor vehicle
52 lease on his or her payment for any excess wear and
53 use waiver; authorizing discounting or giving the
54 excess wear and use waiver at no charge under certain
55 circumstances; requiring certain disclosures for a
56 lease agreement that includes an excess wear and use
57 waiver; providing construction; providing an effective
58 date.
59
60 Be It Enacted by the Legislature of the State of Florida:
61
62 Section 1. Subsection (7) of section 520.02, Florida
63 Statutes, is amended to read:
64 520.02 Definitions.—In this act, unless the context or
65 subject matter otherwise requires:
66 (7) “Guaranteed asset protection product” means a loan,
67 lease, or retail installment contract term, or modification or
68 addendum to a loan, lease, or retail installment contract, under
69 which a creditor agrees, with or without a separate charge, to
70 cancel or waive a customer’s liability for payment of some or
71 all of the amount by which the debt exceeds the value of the
72 collateral that has incurred total physical damage or is the
73 subject of an unrecovered theft. A guaranteed asset protection
74 product may also provide, with or without a separate charge, a
75 benefit that waives a portion of, or provides a customer with a
76 credit toward, the purchase of a replacement motor vehicle. Such
77 a product is not insurance for purposes of the Florida Insurance
78 Code. This subsection also applies to all guaranteed asset
79 protection products issued before October 1, 2008.
80 Section 2. Paragraph (g) of subsection (11) of section
81 520.07, Florida Statutes, is amended, and paragraphs (h) and (i)
82 are added to that subsection, to read:
83 520.07 Requirements and prohibitions as to retail
84 installment contracts.—
85 (11) In conjunction with entering into any new retail
86 installment contract or contract for a loan, a motor vehicle
87 retail installment seller as defined in s. 520.02, a sales
88 finance company as defined in s. 520.02, or a retail lessor as
89 defined in s. 521.003, and any assignee of such an entity, may
90 offer, for a fee or otherwise, optional guaranteed asset
91 protection products in accordance with this chapter. The motor
92 vehicle retail installment seller, sales finance company, retail
93 lessor, or assignee may not require the purchase of a guaranteed
94 asset protection product as a condition for making the loan. In
95 order to offer any guaranteed asset protection product, a motor
96 vehicle retail installment seller, sales finance company, or
97 retail lessor, and any assignee of such an entity, shall comply
98 with the following:
99 (g) If a contract for a guaranteed asset protection product
100 is terminated, the entity shall refund to the buyer any unearned
101 fees paid for the contract unless the contract provides
102 otherwise. A refund is not due to a consumer who receives a
103 benefit under such product. In order to receive a refund, the
104 buyer must notify the entity of the event terminating the
105 contract and request a refund within 90 days after the
106 occurrence of the event terminating the contract. An entity may
107 offer a buyer a contract that does not provide for a refund only
108 if the entity also offers that buyer a bona fide option to
109 purchase a comparable contract that provides for a refund. An
110 entity may not deduct more than $75 in administrative fees from
111 a refund made under this subsection.
112 (h) Guaranteed asset protection products may be cancelable
113 or noncancelable after a free-look period as defined in s.
114 520.152.
115 (i) If the termination of the guaranteed asset protection
116 product occurs because of a default under the retail installment
117 contract or contract for a loan, the repossession of the motor
118 vehicle associated with the retail installment contract or
119 contract for a loan, or any other termination of the retail
120 installment contract or contract for a loan, the entity may pay
121 any refund due directly to the holder or administrator and apply
122 the refund as a reduction of the amount owed under the retail
123 installment contract or contract for a loan, unless the buyer
124 can show that the retail installment contract has been paid in
125 full.
126 Section 3. Section 520.151, Florida Statutes, is created to
127 read:
128 520.151 Florida Vehicle Value Protection Agreements Act.
129 Sections 520.151-520.156 may be cited as the “Florida Vehicle
130 Value Protection Agreements Act.”
131 Section 4. Section 520.152, Florida Statutes, is created to
132 read:
133 520.152 Definitions.—As used in ss. 520.151-520.156, unless
134 the context or subject matter otherwise requires, the term:
135 (1) “Administrator” means the person who is responsible for
136 the administrative or operational function of managing vehicle
137 value protection agreements, including, but not limited to, the
138 adjudication of claims or benefit requests by contract holders.
139 (2) “Commercial transaction” means a transaction in which
140 the motor vehicle subject to the transaction is used primarily
141 for business or commercial purposes.
142 (3) “Contract holder” means a person who is the purchaser
143 or holder of a vehicle value protection agreement.
144 (4) “Finance agreement” means a loan, retail installment
145 sales contract, or lease for the purchase, refinancing, or lease
146 of a motor vehicle.
147 (5) “Free-look period” means the period of time, commencing
148 on the effective date of the contract, during which the buyer
149 may cancel the contract for a full refund of the purchase price.
150 This period may not be shorter than 30 days.
151 (6) “Motor vehicle” has the same meaning as provided in s.
152 520.02.
153 (7) “Provider” means a person that is obligated to provide
154 a benefit under a vehicle value protection agreement. A provider
155 may function as an administrator or retain the services of a
156 third-party administrator.
157 (8) “Vehicle value protection agreement” includes a
158 contractual agreement that provides a benefit toward either the
159 reduction of some or all of the contract holder’s current
160 finance agreement deficiency balance or the purchase or lease of
161 a replacement motor vehicle or motor vehicle services upon the
162 occurrence of an adverse event to the motor vehicle, including,
163 but not limited to, loss, theft, damage, obsolescence,
164 diminished value, or depreciation. The term does not include
165 guaranteed asset protection products as defined in s. 520.02.
166 Such a product is not insurance for purposes of the Florida
167 Insurance Code.
168 Section 5. Section 520.153, Florida Statutes, is created to
169 read:
170 520.153 Requirements and prohibitions as to vehicle value
171 protection agreements.—
172 (1) Vehicle value protection agreements may be offered,
173 sold, or given to consumers in this state in compliance with
174 this act.
175 (2) Notwithstanding any other law, any amount charged or
176 financed for a vehicle value protection agreement is not
177 considered a finance charge or interest and must be separately
178 stated in the finance agreement and in the vehicle value
179 protection agreement.
180 (3) The extension of credit, the terms of credit, or the
181 terms of the related motor vehicle sale or lease may not be
182 conditioned upon the consumer’s payment for or financing of any
183 charge for a vehicle value protection agreement. However, a
184 vehicle value protection agreement may be discounted or given at
185 no charge in connection with the purchase of other noncredit
186 related goods or services.
187 (4) A provider may use an administrator or other designee
188 to administer a vehicle value protection agreement.
189 (5) A vehicle value protection agreement may not be sold to
190 any person unless he or she has been or will be provided access
191 to a copy of such vehicle value protection agreement at a
192 reasonable time after such vehicle value protection agreement is
193 sold.
194 (6) A vehicle value protection agreement may not be sold if
195 coverage is duplicative of another vehicle value protection
196 agreement sold to a person or duplicative of a guaranteed asset
197 protection product.
198 (7) Each provider shall do one of the following:
199 (a) Insure all of its vehicle value protection agreements
200 under a policy that pays or reimburses the contract holder in
201 the event the provider fails to perform its obligations under
202 the vehicle value protection agreement. The insurer must be
203 licensed or otherwise authorized or eligible to do business in
204 this state.
205 (b) Maintain a funded reserve account for its obligations
206 under its contracts issued and outstanding in this state. The
207 reserves may not be less than 40 percent of gross consideration
208 received, less claims paid, on the sale of the vehicle value
209 protection agreement for all in-force contracts in this state.
210 The reserve must be placed in trust with the office and have a
211 financial security deposit valued at not less than 5 percent of
212 the gross consideration received, less claims paid, on the sale
213 of the vehicle value protection agreements for all vehicle value
214 protection agreements issued and in force in this state, but at
215 least $25,000. The reserve account must consist of one of the
216 following:
217 1. A surety bond issued by an authorized surety.
218 2. Securities of the type eligible for deposit by insurers
219 as provided in s. 625.52.
220 3. Cash.
221 4. A letter of credit issued by a qualified financial
222 institution.
223 (c) Maintain, or together with its parent corporation
224 maintain, a net worth or stockholders’ equity of $100 million
225 and, upon request, provide the office with a copy of the
226 provider’s or the provider’s parent company’s Form 10-K or Form
227 20-F filed with the Securities and Exchange Commission within
228 the last calendar year, or if the company does not file with the
229 Securities and Exchange Commission, a copy of the company’s
230 audited financial statements, which must show a net worth of the
231 provider or its parent company of at least $100 million. If the
232 provider’s parent company’s Form 10-K, Form 20-F, or financial
233 statements are filed to meet the provider’s financial security
234 requirement, the parent company must agree to guarantee the
235 obligations of the provider relating to vehicle value protection
236 agreements sold by the provider in this state.
237 (8) A financial security requirement other than those
238 imposed in subsection (7) may not be imposed on vehicle value
239 protection agreement providers.
240 Section 6. Section 520.154, Florida Statutes, is created to
241 read:
242 520.154 Disclosures.—
243 (1) A vehicle value protection agreement must disclose in
244 writing, in clear, understandable language, all of the
245 following:
246 (a) The name and address of the provider, contract holder,
247 and administrator, if any.
248 (b) The terms of the vehicle value protection agreement,
249 including, but not limited to, the purchase price to be paid by
250 the contract holder, if any, the requirements for eligibility
251 and conditions of coverage, and any exclusions.
252 (c) Whether the vehicle value protection agreement may be
253 canceled by the contract holder during a free-look period as
254 defined in s. 520.152, and that, in the event of cancellation,
255 the contract holder is entitled to a full refund of the purchase
256 price, if any, so long as no benefits have been provided.
257 (d) The procedure the contract holder must follow, if any,
258 to obtain a benefit under the terms and conditions of the
259 vehicle value protection agreement, including, if applicable, a
260 telephone number, website, or mailing address where the contract
261 holder may apply for a benefit.
262 (e) Whether the vehicle value protection agreement is
263 cancelable after the free-look period and the conditions under
264 which it may be canceled, including the procedures for
265 requesting any refund of the unearned purchase price paid by the
266 contract holder. In the event that the agreement is cancelable,
267 it must include the methodology for calculating any refund due
268 of the unearned purchase price of the vehicle value protection
269 agreement.
270 (f) That the extension of credit, the terms of the credit,
271 or the terms of the related motor vehicle sale or lease may not
272 be conditioned upon the purchase of the vehicle value protection
273 agreement.
274 (2) A vehicle value protection agreement must state the
275 terms, restrictions, or conditions governing cancellation of the
276 vehicle value protection agreement before the termination or
277 expiration date of the vehicle value protection agreement by
278 either the provider or the contract holder. The provider of the
279 vehicle value protection agreement shall mail a written notice
280 to the contract holder at the last known address of the contract
281 holder contained in the records of the provider at least 5 days
282 before cancellation by the provider, which notice must state the
283 effective date of the cancellation and the reason for the
284 cancellation. However, such prior notice is not required if the
285 reason for cancellation is nonpayment of the provider fee, a
286 material misrepresentation by the contract holder to the
287 provider or administrator, or a substantial breach of duties by
288 the contract holder relating to the covered motor vehicle or its
289 use. If a vehicle value protection agreement is canceled by the
290 provider for a reason other than nonpayment of the provider fee,
291 the provider must refund to the contract holder 100 percent of
292 the unearned pro rata provider fee paid by the contract holder,
293 if any. If coverage under the vehicle value protection agreement
294 continues after a claim, any refund may reflect a deduction for
295 claims paid and, at the discretion of the provider, an
296 administrative fee of not more than $75.
297 Section 7. Section 520.155, Florida Statutes, is created to
298 read:
299 520.155 Commercial transactions exempt.—Sections 520.154
300 and 520.156 do not apply to vehicle value protection agreements
301 offered in connection with a commercial transaction.
302 Section 8. Section 520.156, Florida Statutes, is created to
303 read:
304 520.156 Penalties.—A provider, an administrator, or any
305 other person who willfully and intentionally violates ss.
306 520.151-520.155 commits a noncriminal violation as defined in s.
307 775.08(3), punishable by a fine not to exceed $500 per violation
308 and not more than $10,000 in the aggregate for all violations of
309 a similar nature. For purposes of this section, the term
310 “violations of a similar nature” means violations that consist
311 of the same or similar course of conduct, action, or practice,
312 irrespective of the number of times the action, conduct, or
313 practice determined to be a violation of ss. 520.151-520.155
314 occurred.
315 Section 9. Section 520.157, Florida Statutes, is created to
316 read:
317 520.157 Excess wear and use waiver.—
318 (1) For purposes of this section, the term “excess wear and
319 use waiver” means a contractual agreement wherein a lessor
320 agrees, regardless of whether subject to a separate fee, to
321 cancel or waive all or part of amounts that may become due under
322 a lease agreement as a result of excess wear and use of a motor
323 vehicle, which agreement must be part of, or a separate addendum
324 to, the lease agreement. Such waivers may also cancel or waive
325 amounts due for excess mileage.
326 (2) A retail lessee may contract with a retail lessor for
327 an excess wear and use waiver in connection with a lease
328 agreement.
329 (3) The terms of the related motor vehicle lease may not be
330 conditioned upon the consumer’s payment for any excess wear and
331 use waiver. However, excess wear and use waivers may be
332 discounted or given at no charge in connection with the purchase
333 of other noncredit-related goods.
334 (4) A lease agreement that includes an excess wear and use
335 waiver must disclose all of the following:
336 (a) The total charge for the excess wear and use waiver.
337 (b) Any exclusions or limitations on the amount of excess
338 wear and use which may be waived under the excess wear and use
339 waiver.
340 (c) The terms, restrictions, or conditions governing
341 cancellation of the excess wear and use waiver before the
342 termination or expiration of the excess wear and use waiver,
343 which may include an administrative fee of not more than $75.
344 (5) An excess wear and use waiver is not insurance for
345 purposes of the Florida Insurance Code.
346 Section 10. This act shall take effect October 1, 2024.