1 STATE OF OKLAHOMA
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2 1st Session of the 59th Legislature (2023)
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3 SENATE BILL 541 By: Montgomery
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7 AS INTRODUCED
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8 An Act relating to service warranties; amending
8 Sections 3, 4, and 5, Chapter 16, O.S.L. 2022, 15
9 O.S. 2021, Sections 141.4, 141.5, 141.8, 141.13, as
9 amended by Section 1, Chapter 241, O.S.L. 2017,
10 141.14, and 141.33 (15 O.S. Supp. 2022, Sections
10 140.4, 140.5, and 140.6), which relate to debt
11 waivers, vehicle value protection agreements,
11 enforcement, qualification for license, annual
12 license requirements, service warranty forms, annual
12 statements, and claim files; requiring certain
13 administrators to register with the Insurance
13 Department; requiring registration renewal by certain
14 date; requiring certain registrations and
14 registration fees to be submitted electronically;
15 requiring certain contact information changes to be
15 submitted within certain time period; directing
16 certain administrators and service warranty
16 associations to respond to the Insurance Commissioner
17 within certain time period; removing cash payment as
17 an acceptable deposit for certain trust with the
18 Commissioner; requiring certain license application
18 and fee be submitted electronically by certain
19 service warranty association; requiring certain
19 application to include declaration; conforming
20 language; establishing fees for certain renewal
20 processes; requiring certain expired licensees to
21 reapply as if a new applicant; requiring certain
21 applicants to submit certain report; establishing
22 certain fines; requiring certain filing of financial
22 statement include information for certain time
23 period; and providing an effective date.
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2 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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3 SECTION 1. AMENDATORY Section 3, Chapter 16, O.S.L. 2022
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4 (15 O.S. Supp. 2022, Section 140.4), is amended to read as follows:
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5 Section 140.4. A. As used in this section:
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6 1. “Administrator” means a person, other than an insurer or
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7 creditor that performs administrative or operational functions
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8 pursuant to debt waiver programs;
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9 2. “Borrower” means a debtor, retail buyer, or lessee, under a
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10 finance agreement;
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11 3. “Creditor” means:
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12 a. the lender in a loan or credit transaction,
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13 b. the lessor in a lease transaction,
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14 c. any retail seller of motor vehicles,
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15 d. the seller in commercial retail installment
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16 transactions, or
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17 e. the assignees of any of the foregoing to whom the
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18 credit obligation is payable; and
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19 4. “Debt waiver” includes, but is not limited to:
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20 a. “guaranteed asset protection waivers” or “GAP waivers”
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21 means a contractual agreement wherein a creditor
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22 agrees, with or without a separate charge, to cancel
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23 or waive all or part of amounts due on a borrower’s
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24 financial agreement in the event of a total physical
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 1 damage loss or unrecovered theft of the motor vehicle,
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2 which an agreement shall be part of, or as a separate
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3 addendum to, the financial agreement. A GAP waiver
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4 may also provide, with or without a separate charge, a
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5 benefit that waives an amount or provides a borrower
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6 with a credit towards the purchase of a replacement
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7 motor vehicle,
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8 b. “excess wear and use waiver” means a contractual
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9 agreement wherein a creditor agrees, with or without a
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10 separate charge, to cancel or waive all or part of
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11 amounts that may become due under a borrower’s lease
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12 agreement as a result of excessive wear and use of a
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13 motor vehicle, which an agreement shall be part of, or
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14 as a separate addendum to, the lease agreement.
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15 Excess wear and use waivers may also cancel or waive
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16 amounts due for excess mileage, and
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17 c. other products as approved by the Insurance
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18 Commissioner.
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19 B. 1. No administrator or creditor operating as an
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20 administrator shall perform or engage in any administrative or
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21 operational functions of a debt waiver program without first
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22 registering with the Insurance Department. Registration shall be
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23 renewed annually by July 15 of each calendar year. All
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 1 registrations shall be filed, and fees shall be paid electronically
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2 in the manner and form prescribed by the Commissioner.
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3 2. An administrator or a creditor operating as an administrator
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4 shall electronically file an updated registration within thirty (30)
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5 days of any change of name, address, or email address.
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6 3. Every administrator or creditor, upon receipt of any inquiry
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7 from the Commissioner, shall furnish the Commissioner with an
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8 adequate response to the inquiry within twenty (20) days from the
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9 date of receipt of the inquiry.
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10 C. As required for offering debt waivers:
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11 1. A retail seller shall insure its debt waiver obligations
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12 under a contractual liability or other insurance policy issued by an
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13 insurer. A creditor other than retail sellers may insure its debt
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14 waiver obligations under a contractual liability policy or other
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15 such policy issued by an insurer. Any such insurance policy may be
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16 directly obtained by a creditor or retail seller or may be obtained
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17 by an administrator to cover a creditor’s or retail seller’s
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18 obligations. However, retail sellers that are lessors on motor
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19 vehicles are not required to insure obligations related to debt
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20 waivers on such leased motor vehicles;
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21 2. The debt waiver remains a part of the finance agreement upon
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22 the assignment, sale, or transfer of such finance agreement by the
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23 creditor;
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 1 3. Any creditor that offers a debt waiver shall report the sale
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2 of, and subsequently forward the funds due to, the designated party
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3 or parties; and
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4 4. Funds received or held by a creditor or administrator that
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5 belong to an insurer, creditor, or administrator shall be held by
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6 such creditor or administrator in a fiduciary capacity.
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7 C. D. Contractual Liability or Other Insurance Policies.
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8 1. Contractual liability or other insurance policies insuring
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9 debt waivers shall state the obligation of the insurer to reimburse
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10 or pay to the creditor any sums the creditor is legally obligated to
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11 waive under a debt waiver.
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12 2. Coverage under a contractual liability or other insurance
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13 policy insuring a debt waiver shall also cover any subsequent
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14 assignee upon the assignment, sale, or transfer of the finance
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15 agreement.
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16 3. Coverage under a contractual liability or other insurance
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17 policy insuring a debt waiver shall remain in effect unless canceled
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18 or terminated in compliance with applicable insurance laws of this
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19 state.
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20 4. The cancelation or termination of a contractual liability or
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21 other insurance policy shall not reduce the insurer’s responsibility
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22 for debt waivers issued by the creditor prior to the date of
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23 cancelation or termination and for which the premium has been
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24 received by the insurer.
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 1 D. E. Debt waivers shall disclose in writing and in clear,
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2 understandable language the following:
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3 1. The name and address of the initial creditor and the
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4 borrower at the time of sale and identity of any administrator if
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5 different from the creditor;
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6 2. The purchase price, if any, and the terms of the debt waiver
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7 including without limitation, the requirements of protection,
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8 conditions, or exclusions associated with the debt waiver;
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9 3. That the borrower may cancel the debt waiver within a free
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10 look period, as specified in the debt waiver, and will be entitled
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11 to a full refund of the purchase price paid by the borrower, if any,
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12 as long as no benefits have been provided;
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13 4. The procedures the borrower shall follow, if any, to obtain
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14 debt waiver benefits under the terms and conditions of the debt
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15 waiver including, if applicable, a telephone number or website and
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16 address where the borrower may apply for debt waiver benefits;
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17 5. Whether or not the debt waiver may be canceled after the
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18 free look period and the conditions under which it may be canceled
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19 or terminated including the procedures for requesting any refund of
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20 amounts paid;
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21 6. That in order to receive any refund due in the event of a
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22 borrower’s cancelation of the debt waiver, the borrower, in
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23 accordance with the term of the debt waiver, shall provide a written
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24 request to cancel to the creditor, administrator, or other such
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 1 party. If the cancelation of a debt waiver is due to an early
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2 termination of the finance agreement and no benefit has been or will
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3 be provided, then the borrower, in accordance with the terms of the
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4 debt waiver, shall provide a written request to cancel to the
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5 creditor or administrator within ninety (90) days of the occurrence
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6 of the event terminating the finance agreement;
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7 7. The methodology for calculating any refund of the unearned
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8 purchase price of the debt waiver, if any, shall be due in the event
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9 of cancelation of the debt waiver or early termination of a finance
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10 agreement; and
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11 8. That neither the extension of credit, the terms of the
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12 credit, nor the terms of the related motor vehicle sale or lease,
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13 may be conditioned upon the borrower’s purchase of a debt waiver.
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14 E. F. Cancelation.
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15 1. Debt waiver agreements may be cancelable or non-cancelable
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16 following the free look period. Debt waivers shall provide the
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17 borrower, if a borrower cancels a debt waiver within the free look
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18 period, a full refund of the amount the borrower paid, if any, as
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19 long as no benefits have been provided.
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20 2. In the event of a borrower’s cancelation of the debt waiver
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21 or upon the early termination of the finance agreement after the
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22 debt waiver has been in effect beyond the free look period, the
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23 borrower may be entitled to a refund of the amount the borrower paid
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24 of the unearned portion of the purchase price, if any, minus a
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 1 cancelation fee not to exceed Seventy-five Dollars ($75.00), if no
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2 benefit has been or will be provided. In order to receive any
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3 refund due in the event of a borrower’s cancellation of the debt
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4 waiver, the borrower shall provide a written request to cancel, in
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5 accordance with the terms of the debt waiver, to the creditor or
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6 administrator. If the cancelation is due to the early termination
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7 of the finance agreement, then the borrower, in accordance with the
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8 terms of the debt waiver, shall provide a written request to cancel
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9 to the creditor or administrator within ninety (90) days of the
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10 occurrence of the event terminating the finance agreement.
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11 3. If the cancelation of a debt waiver occurs as a result of a
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12 default under the finance agreement or the repossession of the motor
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13 vehicle associated with the finance agreement, or any other
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14 termination of the finance agreement, any refund due may be paid
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15 directly to the creditor or administrator, unless the borrower can
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16 show that the finance agreement has been paid in full.
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17 F. G. Exempt Transactions.
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18 1. Debt waivers offered by state or federal banks or credit
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19 unions in compliance with the applicable state or federal law are
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20 exempt from this act.
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21 2. Subsection D E of this section and Section 5 of this act
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22 shall not apply to debt waivers offered in connection with
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23 commercial transactions.
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 1 SECTION 2. AMENDATORY Section 4, Chapter 16, O.S.L. 2022
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2 (15 O.S. Supp. 2022, Section 140.5), is amended to read as follows:
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3 Section 140.5. A. As used in this section:
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4 1. “Administrator” means the person who may be responsible for
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5 the administrative or operational function of vehicle value
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6 protection agreements including, but not limited to, the
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7 adjudication of claims or benefits requested by contract holders;
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8 2. “Contract holder” means a person who is the purchaser or
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9 holder of a vehicle value protection agreement;
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10 3. “Provider” means a person that is obligated to provide a
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11 benefit under a vehicle value protection agreement. A provider may
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12 perform as an administrator or retain the services of a third-party
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13 administrator; and
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14 4. “Vehicle value protection agreement” means a contractual
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15 agreement that provides a benefit towards either the reduction of
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16 some or all of the contract holder’s current finance agreement
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17 deficiency balance, or towards the purchase or lease of a
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18 replacement motor vehicle or motor vehicle services, upon the
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19 occurrence of an adverse event to the motor vehicle including, but
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20 not limited to, loss, theft, damage, obsolescence, diminished value,
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21 or depreciation. These agreements do not include debt waivers.
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22 These agreements may include, but not be limited to, trade-in-credit
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23 agreements, diminished value agreements, depreciation benefit
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24 agreements, or other similarly named agreements.
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 1 B. 1. No administrator or provider operating as an
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2 administrator shall perform or engage in any administrative or
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3 operational functions of vehicle value protection agreements without
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4 first registering with the Insurance Department. Registration shall
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5 be renewed annually by July 15 of each calendar year. All
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6 registrations shall be filed, and fees shall be paid electronically
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7 in the manner and form prescribed by the Commissioner.
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8 2. An administrator or a provider operating as an administrator
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9 shall electronically file an updated registration within thirty (30)
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10 days of any change of name, address, or email address.
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11 3. Every administrator and provider, upon receipt of any
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12 inquiry from the Commissioner, shall furnish the Commissioner with
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13 an adequate response to the inquiry within twenty (20) days from the
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14 date of receipt of the inquiry.
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15 C. Requirements for offering vehicle value protection
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16 agreements:
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17 1. A provider may utilize an administrator or other designee to
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18 be responsible for any and all of the administration of vehicle
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19 value protection agreements in compliance with this act;
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20 2. Vehicle value protection agreements shall not be sold unless
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21 the contract holder has been or will be provided access to a copy of
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22 that vehicle value protection agreement;
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23 3. In order to assure the faithful perfor