ENROLLED 2024 Legislature CS for CS for SB 902 2024902er 1 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.; requiring entities 6 to refund the portions of the purchase price of the 7 contract for a guaranteed asset protection product 8 under certain circumstances; prohibiting certain 9 entities from deducting more than a specified amount 10 in administrative fees when providing a refund of a 11 guaranteed asset protection product; authorizing 12 guaranteed asset protection products to be cancelable 13 or noncancelable under certain circumstances; 14 authorizing certain entities to pay refunds directly 15 to the holder or administrator of a loan under certain 16 circumstances; creating s. 520.151, F.S.; providing a 17 short title; creating s. 520.152, F.S.; defining 18 terms; creating s. 520.153, F.S.; authorizing the 19 offer, sale, or gift of vehicle value protection 20 agreements in compliance with a certain act; 21 specifying a requirement regarding the amount charged 22 or financed for a vehicle value protection agreement; 23 prohibiting the conditioning of credit offers or terms 24 for the sale or lease of a motor vehicle upon a 25 consumer’s payment for or financing of any charge for 26 a vehicle value protection agreement; authorizing 27 discounting or giving the vehicle value protection 28 agreement at no charge under certain circumstances; 29 authorizing providers to use an administrator or other 30 designee for administration of vehicle value 31 protection agreements; prohibiting vehicle value 32 protection agreements from being sold under certain 33 circumstances; specifying financial security 34 requirements for providers; prohibiting additional 35 financial security requirements from being imposed on 36 providers; creating s. 520.154, F.S.; requiring 37 vehicle value protection agreements to include certain 38 disclosures in writing, in clear and understandable 39 language; requiring vehicle value protection 40 agreements to state the terms, restrictions, or 41 conditions governing cancellation by the provider or 42 the contract holder; specifying requirements for 43 notice by the provider, refund of fees, and deduction 44 of fees in the event the vehicle value protection 45 agreement is canceled; creating s. 520.155, F.S.; 46 providing an exemption for vehicle value protection 47 agreements in connection with a commercial 48 transaction; creating s. 520.156, F.S.; providing 49 noncriminal penalties; defining the term “violations 50 of a similar nature”; creating s. 520.157, F.S.; 51 defining the term “excess wear and use waiver”; 52 authorizing a retail lessee to contract with a retail 53 lessor for an excess wear and use waiver; prohibiting 54 conditioning the terms of the consumer’s motor vehicle 55 lease on his or her payment for any excess wear and 56 use waiver; authorizing discounting or giving the 57 excess wear and use waiver at no charge under certain 58 circumstances; requiring certain disclosures for a 59 lease agreement that includes an excess wear and use 60 waiver; providing construction; providing an effective 61 date. 62 63 Be It Enacted by the Legislature of the State of Florida: 64 65 Section 1. Subsection (7) of section 520.02, Florida 66 Statutes, is amended to read: 67 520.02 Definitions.—In this act, unless the context or 68 subject matter otherwise requires: 69 (7) “Guaranteed asset protection product” means a loan, 70 lease, or retail installment contract term, or modification or 71 addendum to a loan, lease, or retail installment contract, under 72 which a creditor agrees, with or without a separate charge, to 73 cancel or waive a customer’s liability for payment of some or 74 all of the amount by which the debt exceeds the value of the 75 collateral that has incurred total physical damage or is the 76 subject of an unrecovered theft. A guaranteed asset protection 77 product may also provide, with or without a separate charge, a 78 benefit that waives a portion of, or provides a customer with a 79 credit toward, the purchase of a replacement motor vehicle. Such 80 a product is not insurance for purposes of the Florida Insurance 81 Code. This subsection also applies to all guaranteed asset 82 protection products issued before October 1, 2008. 83 Section 2. Paragraph (g) of subsection (11) of section 84 520.07, Florida Statutes, is amended, and paragraphs (h) and (i) 85 are added to that subsection, to read: 86 520.07 Requirements and prohibitions as to retail 87 installment contracts.— 88 (11) In conjunction with entering into any new retail 89 installment contract or contract for a loan, a motor vehicle 90 retail installment seller as defined in s. 520.02, a sales 91 finance company as defined in s. 520.02, or a retail lessor as 92 defined in s. 521.003, and any assignee of such an entity, may 93 offer, for a fee or otherwise, optional guaranteed asset 94 protection products in accordance with this chapter. The motor 95 vehicle retail installment seller, sales finance company, retail 96 lessor, or assignee may not require the purchase of a guaranteed 97 asset protection product as a condition for making the loan. In 98 order to offer any guaranteed asset protection product, a motor 99 vehicle retail installment seller, sales finance company, or 100 retail lessor, and any assignee of such an entity, shall comply 101 with the following: 102 (g) If a contract for a guaranteed asset protection product 103 is terminated, the entity shall refund to the buyer allany104 unearned portions of the purchase price offees paid forthe 105 contract unless the contract provides otherwise. A refund is not 106 due to a consumer who receives a benefit under such product. In 107 order to receive a refund, the buyer must notify the entity of 108 the event terminating the contract and request a refund within 109 90 days after the occurrence of the event terminating the 110 contract. An entity may offer a buyer a contract that does not 111 provide for a refund only if the entity also offers that buyer a 112 bona fide option to purchase a comparable contract that provides 113 for a refund. An entity may not deduct more than $75 in 114 administrative fees from a refund made under this subsection. 115 (h) Guaranteed asset protection products may be cancelable 116 or noncancelable after a free-look period as defined in s. 117 520.152. 118 (i) If the termination of the guaranteed asset protection 119 product occurs because of a default under the retail installment 120 contract or contract for a loan, the repossession of the motor 121 vehicle associated with the retail installment contract or 122 contract for a loan, or any other termination of the retail 123 installment contract or contract for a loan, the entity may pay 124 any refund due directly to the holder or administrator and apply 125 the refund as a reduction of the amount owed under the retail 126 installment contract or contract for a loan, unless the buyer 127 can show that the retail installment contract has been paid in 128 full. 129 Section 3. Section 520.151, Florida Statutes, is created to 130 read: 131 520.151 Florida Vehicle Value Protection Agreements Act. 132 Sections 520.151-520.156 may be cited as the “Florida Vehicle 133 Value Protection Agreements Act.” 134 Section 4. Section 520.152, Florida Statutes, is created to 135 read: 136 520.152 Definitions.—As used in ss. 520.151-520.156, unless 137 the context or subject matter otherwise requires, the term: 138 (1) “Administrator” means the person who is responsible for 139 the administrative or operational function of managing vehicle 140 value protection agreements, including, but not limited to, the 141 adjudication of claims or benefit requests by contract holders. 142 (2) “Commercial transaction” means a transaction in which 143 the motor vehicle subject to the transaction is used primarily 144 for business or commercial purposes. 145 (3) “Contract holder” means a person who is the purchaser 146 or holder of a vehicle value protection agreement. 147 (4) “Finance agreement” means a loan, retail installment 148 sales contract, or lease for the purchase, refinancing, or lease 149 of a motor vehicle. 150 (5) “Free-look period” means the period of time, commencing 151 on the effective date of the contract, during which the buyer 152 may cancel the contract for a full refund of the purchase price. 153 This period may not be shorter than 30 days. 154 (6) “Motor vehicle” has the same meaning as provided in s. 155 520.02. 156 (7) “Provider” means a person that is obligated to provide 157 a benefit under a vehicle value protection agreement. A provider 158 may function as an administrator or retain the services of a 159 third-party administrator. 160 (8) “Vehicle value protection agreement” includes a 161 contractual agreement that provides a benefit toward either the 162 reduction of some or all of the contract holder’s current 163 finance agreement deficiency balance or the purchase or lease of 164 a replacement motor vehicle or motor vehicle services upon the 165 occurrence of an adverse event to the motor vehicle, including, 166 but not limited to, loss, theft, damage, obsolescence, 167 diminished value, or depreciation. The term does not include 168 guaranteed asset protection products as defined in s. 520.02. 169 Such a product is not insurance for purposes of the Florida 170 Insurance Code. 171 Section 5. Section 520.153, Florida Statutes, is created to 172 read: 173 520.153 Requirements and prohibitions as to vehicle value 174 protection agreements.— 175 (1) Vehicle value protection agreements may be offered, 176 sold, or given to consumers in this state in compliance with 177 this act. 178 (2) Notwithstanding any other law, any amount charged or 179 financed for a vehicle value protection agreement is not 180 considered a finance charge or interest and must be separately 181 stated in the finance agreement and in the vehicle value 182 protection agreement. 183 (3) The extension of credit, the terms of credit, or the 184 terms of the related motor vehicle sale or lease may not be 185 conditioned upon the consumer’s payment for or financing of any 186 charge for a vehicle value protection agreement. However, a 187 vehicle value protection agreement may be discounted or given at 188 no charge in connection with the purchase of other noncredit 189 related goods or services. 190 (4) A provider may use an administrator or other designee 191 to administer a vehicle value protection agreement. 192 (5) A vehicle value protection agreement may not be sold to 193 any person unless he or she has been or will be provided access 194 to a copy of such vehicle value protection agreement at a 195 reasonable time after such vehicle value protection agreement is 196 sold. 197 (6) A vehicle value protection agreement may not be sold if 198 coverage is duplicative of another vehicle value protection 199 agreement sold to a person or duplicative of a guaranteed asset 200 protection product. 201 (7) Each provider shall do one of the following: 202 (a) Insure all of its vehicle value protection agreements 203 under a policy that pays or reimburses the contract holder in 204 the event the provider fails to perform its obligations under 205 the vehicle value protection agreement. The insurer must be 206 licensed or otherwise authorized or eligible to do business in 207 this state. 208 (b) Maintain a funded reserve account for its obligations 209 under its contracts issued and outstanding in this state. The 210 reserves may not be less than 40 percent of gross consideration 211 received, less claims paid, on the sale of the vehicle value 212 protection agreement for all in-force contracts in this state. 213 The reserve must be placed in trust with the office and have a 214 financial security deposit valued at not less than 5 percent of 215 the gross consideration received, less claims paid, on the sale 216 of the vehicle value protection agreements for all vehicle value 217 protection agreements issued and in force in this state, but at 218 least $25,000. The reserve account must consist of one of the 219 following: 220 1. A surety bond issued by an authorized surety. 221 2. Securities of the type eligible for deposit by insurers 222 as provided in s. 625.52. 223 3. Cash. 224 4. A letter of credit issued by a qualified financial 225 institution. 226 (c) Maintain, or together with its parent corporation 227 maintain, a net worth or stockholders’ equity of $100 million 228 and, upon request, provide the office with a copy of the 229 provider’s or the provider’s parent company’s Form 10-K or Form 230 20-F filed with the Securities and Exchange Commission within 231 the last calendar year, or if the company does not file with the 232 Securities and Exchange Commission, a copy of the company’s 233 audited financial statements, which must show a net worth of the 234 provider or its parent company of at least $100 million. If the 235 provider’s parent company’s Form 10-K, Form 20-F, or financial 236 statements are filed to meet the provider’s financial security 237 requirement, the parent company must agree to guarantee the 238 obligations of the provider relating to vehicle value protection 239 agreements sold by the provider in this state. 240 (8) A financial security requirement other than those 241 imposed in subsection (7) may not be imposed on vehicle value 242 protection agreement providers. 243 Section 6. Section 520.154, Florida Statutes, is created to 244 read: 245 520.154 Disclosures.— 246 (1) A vehicle value protection agreement must disclose in 247 writing, in clear, understandable language, all of the 248 following: 249 (a) The name and address of the provider, contract holder, 250 and administrator, if any. 251 (b) The terms of the vehicle value protection agreement, 252 including, but not limited to, the purchase price to be paid by 253 the contract holder, if any, the requirements for eligibility 254 and conditions of coverage, and any exclusions. 255 (c) Whether the vehicle value protection agreement may be 256 canceled by the contract holder during a free-look period as 257 defined in s. 520.152, and that, in the event of cancellation, 258 the contract holder is entitled to a full refund of the purchase 259 price, if any, so long as no benefits have been provided. 260 (d) The procedure the contract holder must follow, if any, 261 to obtain a benefit under the terms and conditions of the 262 vehicle value protection agreement, including, if applicable, a 263 telephone number, website, or mailing address where the contract 264 holder may apply for a benefit. 265 (e) Whether the vehicle value protection agreement is 266 cancelable after the free-look period and the conditions under 267 which it may be canceled, including the procedures for 268 requesting any refund of the unearned purchase price paid by the 269 contract holder. In the event that the agreement is cancelable, 270 it must include the methodology for calculating any refund due 271 of the unearned purchase price of the vehicle value protection 272 agreement. 273 (f) That the extension of credit, the terms of the credit, 274 or the terms of the related motor vehicle sale or lease may not 275 be conditioned upon the purchase of the vehicle value protection 276 agreement. 277 (2) A vehicle value protection agreement must state the 278 terms, restrictions, or conditions governing cancellation of the 279 vehicle value protection agreement before the termination or 280 expiration date of the vehicle value protection agreement by 281 either the provider or the contract holder. The provider of the 282 vehicle value protection agreement shall mail a written notice 283 to the contract holder at the last known address of the contract 284 holder contained in the records of the provider at least 5 days 285 before cancellation by the provider, which notice must state the 286 effective date of the cancellation and the reason for the 287 cancellation. However, such prior notice is not required if the 288 reason for cancellation is nonpayment of the provider fee, a 289 material misrepresentation by the contract holder to the 290 provider or administrator, or a substantial breach of duties by 291 the contract holder relating to the covered motor vehicle or its 292 use. If a vehicle value protection agreement is canceled by the 293 provider for a reason other than nonpayment of the provider fee, 294 the provider must refund to the contract holder 100 percent of 295 the unearned pro rata provider fee paid by the contract holder, 296 if any. If coverage under the vehicle value protection agreement 297 continues after a claim, any refund may reflect a deduction for 298 claims paid and, at the discretion of the provider, an 299 administrative fee of not more than $75. 300 Section 7. Section 520.155, Florida Statutes, is created to 301 read: 302 520.155 Commercial transactions exempt.—Sections 520.154 303 and 520.156 do not apply to vehicle value protection agreements 304 offered in connection with a commercial transaction. 305 Section 8. Section 520.156, Florida Statutes, is created to 306 read: 307 520.156 Penalties.—A provider, an administrator, or any 308 other person who willfully and intentionally violates ss. 309 520.151-520.155 commits a noncriminal violation as defined in s. 310 775.08(3), punishable by a fine not to exceed $500 per violation 311 and not more than $10,000 in the aggregate for all violations of 312 a similar nature. For purposes of this section, the term 313 “violations of a similar nature” means violations that consist 314 of the same or similar course of conduct, action, or practice, 315 irrespective of the number of times the action, conduct, or 316 practice determined to be a violation of ss. 520.151-520.155 317 occurred. 318 Section 9. Section 520.157, Florida Statutes, is created to 319 read: 320 520.157 Excess wear and use waiver.— 321 (1) For purposes of this section, the term “excess wear and 322 use waiver” means a contractual agreement wherein a lessor 323 agrees, regardless of whether subject to a separate fee, to 324 cancel or waive all or part of amounts that may become due under 325 a lease agreement as a result of excess wear and use of a motor 326 vehicle, which agreement must be part of, or a separate addendum 327 to, the lease agreement. Such waivers may also cancel or waive 328 amounts due for excess mileage. 329 (2) A retail lessee may contract with a retail lessor for 330 an excess wear and use waiver in connection with a lease 331 agreement. 332 (3) The terms of the related motor vehicle lease may not be 333 conditioned upon the consumer’s payment for any excess wear and 334 use waiver. However, excess wear and use waivers may be 335 discounted or given at no charge in connection with the purchase 336 of other noncredit-related goods. 337 (4) A lease agreement that includes an excess wear and use 338 waiver must disclose all of the following: 339 (a) The total charge for the excess wear and use waiver. 340 (b) Any exclusions or limitations on the amount of excess 341 wear and use which may be waived under the excess wear and use 342 waiver. 343 (c) The terms, restrictions, or conditions governing 344 cancellation of the excess wear and use waiver before the 345 termination or expiration of the excess wear and use waiver, 346 which may include an administrative fee of not more than $75. 347 (5) An excess wear and use waiver is not insurance for 348 purposes of the Florida Insurance Code. 349 Section 10. This act shall take effect October 1, 2024.