Form Number: GAP (Ed. 10/2018)
NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES
GAP INSURANCE FILING COMPLIANCE QUESTIONNAIRE
PAGE 1 OF 2
COMPANY
Co. File No.
Company Contact:
Phone Number:
E-Mail Address:
Instructions: All applicable items must be answered. Responses in the shaded area indicate non-compliance with
Sections 107, 1101, 1113 and 3427 of the Insurance Law. Failure to complete all items, or responses in the shaded area,
will result in this filing being returned without further review.
All policy forms require the Department’s prior approval pursuant to Section 2307 of the Insurance Law.
I.
Background
When a vehicle is purchased under a loan agreement, or leased under a leasing agreement, there are usually “early
termination” provisions contained in these contracts, which require the borrower/lessee to pay a defined amount of money in
order to satisfy their obligations under that contract in the event there is a total loss to the vehicle.
Most such contracts also require that physical damage insurance be maintained on the vehicle, naming the lender/lessor
as the loss payee. In many cases, usually in the earlier part of the contract, this amount is substantially greater than the
Actual Cash Value (ACV) settlement that will be paid by the first-party insurer under comprehensive or collision coverage.
This is due to the fact that the vehicle’s value depreciates faster than the loan balance, as well as other charges and/or
penalties built into the “early termination” provisions. The difference between the ACV settlement and the amount owed by
the borrower or lessee is called the “gap amount”.
The “gap amount” may be covered by insurance in one of two ways:
(1) Motor Vehicle Lessor/Creditor Gap [§1113(a)(26)(A)]
(2) Motor Vehicle Lessor/Debtor Gap [§1113(a)(26)(B)]
II.
All GAP Policies
a. Company is licensed to write gap insurance [§1113(a)(26)]
YES
NO
b. Cancellation provisions must comply with §3427.
YES
NO
c. The amount covered by the insuring agreement must comply
with the definition of the “gap amount” set forth in
[§107(a)(52)] of the Insurance Law.
YES
NO
d. Does the gap policy cover the amount of the lessee/borrower’s
physical damage deductible? [OGC Opinion Aug 30, 2001]
YES
NO
e. Is it made clear that the trigger for gap coverage is a total loss
of the covered vehicle?
YES
NO
f. Does the coverage territory include U.S. Territories &
Possessions and Canada? (Note: this is not required but is
present in approved filings)
YES
NO
g. Is there an “automatic termination” provision for cancellation?
(Note: a policy provision that coverage for a specific vehicle
terminates when the insured’s interest on the vehicle expires
IS permissible).
YES
NO
h. The definition of “actual cash value”, and the method used to
determine it (such as NADA or Redbook value) in the absence
of payment by a primary physical damage insurance carrier,
must be specific (if the coverage is not being provided as part
of that primary physical damage policy).
YES
NO
III.
Lessor/Lender Gap Policies: (Motor Vehicle Lessor/Creditor Gap
[§1113(a)(26)(A)])
a. Does the gap waiver form to be used in conjunction with the
issuance of the policy comply with [§1101(b)(3)] of the
Insurance Law, in that it waives “any and all” obligations for
payment of the gap amount? Although a gap waiver is not a
policy form subject to approval under §2307(b), it should be
submitted for review.
YES
NO
NOTE: All citations in Brackets are to the applicable Sections of New York Insurance Law (unless otherwise noted).
Form Number: GAP (Ed. 10/2018)
NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES
GAP INSURANCE FILING COMPLIANCE QUESTIONNAIRE
PAGE 2 OF 2
COMPANY
Instructions: All applicable items must be answered. Responses in the shaded area indicate non-compliance with Sections
107, 1101, 1113 and 3427of the Insurance Law. Failure to complete all items, or responses in the shaded area, will result in this
filing being returned without further review.
b. The policy should include a provision requiring the creditor
(insured) to inform the insurer of the dollar amount customers
(borrowers/lessees) are charged for individual gap waivers
(usually this is part of the monthly premium reporting
requirements).
YES
NO
c. Are there provisions in the gap policy relating to or requiring
actions by the borrower/lessee (such as to provide any
paperwork or proof not required in the lease/loan agreement,
or to require inspection of the vehicle), who has no direct
relationship with the gap insurer?
YES
NO
d. Does the policy address the situation where the ownership of
a lease or loan is transferred or assigned to another dealer or
lending institution? (note that this does NOT create an illegal
group insurance situation, per [§3427(k)])
YES
NO
e. Is coverage continued on waivers issued and in effect at the
time of cancellation [§1101(b)(3)]?
YES
NO
f. Is there a provision that purports to “void” the entire policy due
to misrepresentation/fraud? (Note: there may be a provision
to refer to coverage being void with respect to the particular
vehicle [lease/loan contract] involved in any instance of
misrepresentation/fraud.)
YES
NO
g. Is the premium for a particular covered loan/lease contract
refunded if coverage is “voided” for that waiver?
YES
NO
h. Is there a “subrogation” provision? This would be inapplicable,
as gap coverage is specifically based on a waiver of any such
liability by the borrower/lessee; in addition, no policy other
than a gap policy should cover this amount.
YES
NO
IV.
Consumer Gap Policies: Motor Vehicle Lessee/Debtor Gap
[§1113(a)(26)(B)]
a. The gap coverage must be in effect for the full length of the
lease/loan contract. [§3427(c)(4)] and [§3427(e)(4)]
YES
NO
b. If the proposed rate is on an annual basis, notice should be
provided to the policyholder that the need for gap coverage
may terminate at an earlier point than the end of the financing
contract, as at some point the outstanding balance may fall
below the actual cash value of the vehicle.
YES
NO
c. There should be clear notice that no coverage is provided (or
necessary) if a gap waiver agreement has already been
purchased from the dealer or lending institution leasing or
financing the vehicle.
YES
NO
V.
Other Items - Arbitration
a. Is there a provision requiring that disputes between the
company and insured be resolved through arbitration?
YES
NO
NOTE: All citations in Brackets are to the applicable Sections of New York Insurance Law (unless otherwise noted).
