Tennessee § 56-59-103 - GAP waiver — Insurance policy.

§ 56-59-103. GAP waiver — Insurance policy.

GAP waivers may be offered, sold, or provided to borrowers in this state in compliance with this chapter. GAP waivers may, at the option of the creditor, be sold for a single payment or may be offered with a monthly or periodic payment option. Notwithstanding any other law, any cost to the borrower for a GAP waiver entered into in compliance with the Truth in Lending Act (15 U.S.C. § 1601 et seq.), and its implementing regulations, must be separately stated and is not to be considered a finance charge or interest. A retail seller shall insure its GAP waiver obligations under a contractual liability or other insurance policy issued by an insurer; provided, that: A retail seller that does not assign the financing agreement of which the GAP waiver is a part to anyone other than the retail seller's related finance company is not required to insure its GAP waiver obligation; and Retail sellers that are lessors of motor vehicles are not required to insure obligations related to GAP waivers on leased vehicles. A creditor not otherwise required to insure its GAP waiver obligation pursuant to subdivision (d)(1) may insure its GAP waiver obligation under a contractual liability policy or other such policy issued by an insurer. Any such insurance policy may be directly obtained by a creditor, retail seller, or may be procured by an administrator to cover a creditor or retail seller's obligations. The GAP waiver remains a part of the finance agreement upon the assignment, sale or transfer of such finance agreement by the creditor. Neither the extension of credit, the term of credit, nor the term of the related motor vehicle sale or lease may be conditioned upon the purchase of a GAP waiver. Any creditor that offers a GAP waiver must report the sale of, and forward funds received on all such waivers to the designated party, if any, as prescribed in any applicable administrative services agreement, contractual liability policy, other insurance policy or other specified program documents. 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 must be held by such creditor or administrator in a fiduciary capacity. Acts 2008, ch. 1055, § 4; 2014, ch. 971, § 2. Compiler's Notes. Acts 2008, ch. 1055, § 11 provided that the commissioner may adopt administrative rules and regulations consistent with this chapter as are necessary to implement the provisions of this act. The rules and regulations shall be adopted in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. Acts 2014, ch. 971, § 3 provided that the act shall apply to all retail sales of motor vehicles occurring on or after July 1, 2014.