Vehicle value protection agreements; define and provide regulatory framework for.

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To: Insurance
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative Ford (54th)

HOUSE BILL NO. 1168

AN ACT TO AUTHORIZE VEHICLE VALUE PROTECTION AGREEMENTS 1
OFFERED IN CONFORMITY WITH THE PROVISIONS OF THIS ACT; TO PROVIDE 2
THAT A VEHICLE VALUE PROTECTION AGREEMENT IS NOT INSURANCE; TO 3
PROVIDE THAT A MOTOR VEHICLE SALE OR EXTENSION OF CREDIT MAY NOT 4
BE CONDITIONED UPON PURCHASE OF A VEHICLE VALUE PROTECTION 5
AGREEMENT; TO REQUIRE CERTAIN DISCLOSURES TO BE INCLUDED IN A 6
VEHICLE VALUE PROTECTION AGREEMENT; TO BRING FORWARD SECTIONS 7
83-52-1 THROUGH 83-52-15, MISSISSIPPI CODE OF 1972, WHICH RELATE 8
TO GUARANTEED ASSET PROTECTION WAIVERS, FOR THE PURPOSE OF 9
POSSIBLE AMENDMENT; AND FOR RELATED PURPOSES. 10
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 11
SECTION 1. (1) The Legislature declares that vehicle value 12
protection agreements are not insurance and are not subject to 13
insurance premium taxes, rate approval or form filing 14
requirements. 15
(2) As used in this section, the following words have the 16
meanings as defined in this subsection, unless the context clearly 17
indicates otherwise: 18
(a) "Administrator" means a person responsible for the 19
administrative or operational functions of a vehicle value 20
protection agreement, including adjudication of claims. 21
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(b) "Commercial" means a transaction in which a motor 22
vehicle is primarily used for business purposes rather than 23
personal use. 24
(c) "Contract holder" means a person who purchases or 25
holds a vehicle value protection agreement. 26
(d) "Consumer" means an individual purchaser of a motor 27
vehicle or borrower under a finance agreement. 28
(e) "Finance agreement" means a loan, retail 29
installment sales contract, or lease secured by a motor vehicle 30
with a term of at least twelve (12) months. 31
(f) "Free look period" means a period of not less than 32
thirty (30) days during which a vehicle value protection agreement 33
may be cancelled without penalty. 34
(g) "Insurer" means an insurance company authorized to 35
transact insurance in the State of Mississippi. 36
(h) "Motor Vehicle" means a self-propelled or towed 37
vehicle designed for personal or commercial use. 38
(i) "Person" means an individual, company, association, 39
partnership, corporation or other legal entity. 40
(j) "Provider" means a person obligated to provide 41
benefits under a vehicle value protection agreement. 42
(k) "Vehicle value protection agreement" means a 43
contractual agreement providing a benefit toward reduction of a 44
finance agreement deficiency balance or toward purchase or lease 45
of a replacement motor vehicle upon an adverse event. Vehicle 46
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value protection agreements are not a form of insurance and do not 47
include debt waivers. 48
(3) (a) Vehicle value protection agreements may be offered 49
in the State of Mississippi in compliance with this section. 50
(b) Any charge for a vehicle value protection agreement 51
shall be separately stated and shall not constitute a finance 52
charge or interest for purposes of state law related to usury, 53
lending or retail installment. 54
(c) A motor vehicle sale or extension of credit may not 55
be conditioned upon purchase of a vehicle value protection 56
agreement. Providers shall ensure financial responsibility by 57
meeting any of the following requirements: 58
(i) Insuring all obligations under a reimbursement 59
insurance policy issued by an insurer authorized in Mississippi; 60
(ii) Maintaining a funded reserve account of not 61
less than forty percent (40%) of gross consideration received, 62
subject to examination by the Mississippi Commissioner of 63
Insurance; or 64
(iii) Maintaining a net worth or stockholders' 65
equity of at least One Hundred Million Dollars ($100,000,000.00), 66
with parent guarantee if applicable. 67
(4) (a) Vehicle value protection agreements shall clearly 68
disclose the relevant provider, administrator, purchase price, 69
cancellation rights, refund methodology and claim procedures. 70
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(b) The disclosure and cancellation requirements of 71
this subsection (4) do not apply to commercial transactions. 72
(5) The Mississippi Commissioner of Insurance may examine 73
providers, enforce compliance, issue cease and desist orders, and 74
impose civil penalties not exceeding Ten Thousand Dollars 75
($10,000.00) per occurrence for violations of this section. 76
(6) This section shall apply to agreements issued, modified 77
or renewed on or after July 1, 2026. 78
SECTION 2. Section 83-52-1, Mississippi Code of 1972, is 79
brought forward as follows: 80
83-52-1. (1) The purpose of this chapter is to provide a 81
framework within which guaranteed asset protection waivers are 82
defined and may be offered within this state. 83
(2) This chapter does not apply to: 84
(a) An insurance policy offered by an insurer under the 85
insurance laws of this state; or 86
(b) A debt cancellation or debt suspension contract 87
being offered by any national or state-chartered bank or federal 88
or state-chartered credit union in compliance with 12 CFR Part 37, 89
or 12 CFR Part 721, or any other federal law. 90
(3) Guaranteed asset protection waivers governed under this 91
chapter are not insurance and are exempt from the insurance laws 92
of this state. Persons marketing, selling or offering to sell 93
guaranteed asset protection waivers to borrowers who comply with 94
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this chapter are exempt from insurance licensing and insurance 95
regulation requirements of this state. 96
SECTION 3. Section 83-52-3, Mississippi Code of 1972, is 97
brought forward as follows: 98
83-52-3. The following are terms defined for purposes of 99
this chapter and are not intended to provide actual terms required 100
in guaranteed asset protection waivers: 101
(a) "Administrator" means a person, other than an 102
insurer or creditor, who issues, makes or provides a GAP waiver, 103
or who performs administrative or operational functions pursuant 104
to guaranteed asset protection waiver programs. 105
(b) "Borrower" means a debtor, retail buyer or lessee, 106
under a finance agreement. 107
(c) "Commissioner" means the Commissioner of Insurance 108
for the State of Mississippi. 109
(d) "Creditor" means: 110
(i) The lender in a loan or credit transaction; 111
(ii) The lessor in a lease transaction; 112
(iii) Any "retail seller" of motor vehicles that 113
provides credit to "retail buyers" of such motor vehicles provided 114
that such entities comply with the provisions of this chapter; 115
(iv) The seller in commercial retail installment 116
transactions; or 117
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(v) The assignees of any of the creditors listed 118
in subparagraphs (i) through (iv) of this paragraph to whom the 119
credit obligation is payable. 120
(e) "Finance agreement" means a loan, lease or retail 121
installment sales contract for the purchase or lease of a motor 122
vehicle or any other credit extension secured by a motor vehicle. 123
(f) "Free look period" means the period of time from 124
the effective date of the GAP waiver until the date the borrower 125
may cancel the contract without penalty, fees or costs to the 126
borrower. This period of time shall not be shorter than thirty 127
(30) days. 128
(g) "Guaranteed asset protection waiver" or "GAP 129
waiver" means a contractual agreement wherein a creditor agrees 130
for a separate charge to cancel or waive, or an administrator 131
agrees for a separate charge to pay, all or part of amounts due on 132
a borrower's finance agreement in the event of a total physical 133
damage loss or unrecovered theft of the motor vehicle. A GAP 134
waiver in which the creditor cancels or waives amount due shall be 135
part of, or a separate addendum to, the finance agreement. 136
(h) "Insurer" means an insurance company licensed, 137
registered, or otherwise authorized to do business under the 138
insurance laws of this state. 139
(i) "Motor vehicle" means self-propelled or towed 140
vehicles designed for personal or commercial use, including, but 141
not limited to, automobiles, trucks, motorcycles, recreational 142
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vehicles, all-terrain vehicles, snowmobiles, campers, boats, 143
personal watercraft, and motorcycle, boat, camper and personal 144
watercraft trailers. 145
(j) "Person" includes an individual, company, 146
association, organization, partnership, business trust, 147
corporation, and every form of legal entity. 148
SECTION 4. Section 83-52-5, Mississippi Code of 1972, is 149
brought forward as follows: 150
83-52-5. (1) GAP waivers may be offered, sold or provided 151
to borrowers in this state under this chapter. 152
(2) GAP waivers may, at the option of the creditor or 153
administrator, be sold for a single payment or may be offered with 154
a monthly or periodic payment option. 155
(3) Notwithstanding any other provision of law to the 156
contrary, any cost to the borrower for a guaranteed asset 157
protection waiver entered into in compliance with the Truth in 158
Lending Act (15 USC 1601 et seq.) and its implementing 159
regulations, as they may be amended from time to time, shall be 160
separately stated and is not to be considered a finance charge or 161
interest. 162
(4) A retail seller or administrator shall insure its GAP 163
waiver obligations under a contractual liability or other 164
insurance policy issued by an insurer. A creditor, other than a 165
retail seller, may insure its GAP waiver obligations under a 166
contractual liability policy or other such policy issued by an 167
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insurer. Any such insurance policy may be directly obtained by a 168
creditor, retail seller, or may be procured by an administrator to 169
cover a creditor's or retail seller's obligations. However, 170
retail sellers that are lessors on motor vehicles are not required 171
to insure obligations related to GAP waivers on such leased 172
vehicles. 173
(5) The GAP waiver shall remain a part of the finance 174
agreement upon the assignment, sale or transfer of such finance 175
agreement by the creditor. 176
(6) Neither the extension of credit, the term of credit, nor 177
the term of the related motor vehicle sale or lease may be 178
conditioned upon the purchase of a GAP waiver. 179
(7) Any creditor or administrator that offers a GAP waiver 180
shall report the sale of, and forward funds received on all such 181
waivers to the designated party, if any, as prescribed in any 182
applicable administrative services agreement, contractual 183
liability policy, other insurance policy or other specified 184
program documents. 185
(8) Funds received or held by a creditor or administrator 186
and belonging to an insurer, creditor or administrator, pursuant 187
to the terms of a written agreement, shall be held by such 188
creditor or administrator in a fiduciary capacity. 189
SECTION 5. Section 83-52-7, Mississippi Code of 1972, is 190
brought forward as follows: 191
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83-52-7. (1) Contractual liability or other insurance 192
policies insuring GAP waivers shall state the obligation of the 193
insurer to reimburse or pay to the creditor or administrator any 194
sums the creditor is legally obligated to waive, or administrator 195
is legally obligated to pay, under the GAP waivers issued by the 196
creditor or administrator and purchased or held by the borrower. 197
(2) Coverage under a contractual liability or other 198
insurance policy insuring a GAP waiver shall also cover any 199
subsequent assignee upon the assignment, sale or transfer of the 200
finance agreement. 201
(3) Coverage under a contractual liability or other 202
insurance policy insuring a GAP waiver shall remain in effect 203
unless cancelled or terminated in compliance with applicable 204
insurance laws of this state. 205
(4) The cancellation or termination of a contractual 206
liability or other insurance policy shall not reduce the insurer's 207
responsibility for GAP waivers issued by the creditor or 208
administrator prior to the date of cancellation or termination and 209
for which the premium has been received by the insurer. 210
SECTION 6. Section 83-52-9, Mississippi Code of 1972, is 211
brought forward as follows: 212
83-52-9. Guaranteed asset protection waivers shall disclose, 213
as applicable, in writing and in clear, understandable language 214
that is easy to read, the following: 215
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(a) The name and address of the initial creditor and 216
the borrower at the time of sale, and the identity of any 217
administrator if different from the creditor. 218
(b) The purchase price and the terms of the GAP waiver, 219
including, without limitation, the requirements for protection, 220
conditions, or exclusions associated with the GAP waiver. 221
(c) That the borrower may cancel the GAP waiver within 222
a free look period as specified in the waiver, and will be 223
entitled to a full refund of the purchase price, so long as no 224
benefits have been provided. 225
(d) The procedure the borrower shall follow, if any, to 226
obtain GAP waiver benefits under the terms and conditions of the 227
waiver, including a telephone number and address where the 228
borrower may apply for waiver benefits. 229
(e) Whether or not the GAP waiver is cancellable after 230
the free look period and the conditions under which it may be 231
cancelled or terminated, including the procedures for requesting 232
any refund due. 233
(f) That in order to receive any refund due in the 234
event of a borrower's cancellation of the GAP waiver agreement or 235
early termination of the finance agreement after the free look 236
period of the GAP waiver, the borrower, in accordance with terms 237
of the waiver, shall provide a written request to cancel to the 238
creditor, administrator or such other party. If the GAP waiver is 239
cancelled due to the early termination of the finance agreement, 240
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the borrower must provide the request within ninety (90) days of 241
the occurrence of the event terminating the finance agreement. 242
(g) The methodology for calculating any refund of the 243
unearned purchase price of the GAP waiver due, in the event of 244
cancellation of the GAP waiver or early termination of the finance 245
agreement. 246
(h) That neither the extension of credit, the terms of 247
the credit, nor the terms of the related motor vehicle sale or 248
lease, may be conditioned upon the purchase of the GAP waiver. 249
SECTION 7. Section 83-52-11, Mississippi Code of 1972, is 250
brought forward as follows: 251
83-52-11. (1) Guaranteed asset protection waiver agreements 252
may be cancellable or noncancellable after the free look period. 253
GAP waivers shall provide that if a borrower cancels a waiver 254
within the free look period, the borrower will be entitled to a 255
full refund of the purchase price, so long as no benefits have 256
been provided; or in the event benefits have been provided, the 257
borrower may receive a full or partial refund pursuant to the 258
terms of the waiver. 259
(2) In the event of a borrower's cancellation of the GAP 260
waiver or early termination of the finance agreement, after the 261
agreement has been in effect beyond the free look period, the 262
borrower may be entitled to a refund of any unearned portion of 263
the purchase price of the waiver unless the waiver provides 264
otherwise. In order to receive a refund, the borrower, in 265
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accordance with any applicable terms of the waiver, shall provide 266
a written request to the creditor, administrator or other party. 267
If the GAP waiver is cancelled due to the early termination of the 268
finance agreement, the borrower must provide the request within 269
ninety (90) days of the event terminating the finance agreement. 270
(3) If the cancellation of a GAP waiver occurs as a result 271
of a default under the finance agreement or the repossession of 272
the motor vehicle associated with the finance agreement, or any 273
other termination of the finance agreement, any refund due may be 274
paid directly to the creditor or administrator and applied as set 275
forth in subsection (4) of this section. 276
(4) Any cancellation refund under subsection (1), (2) or (3) 277
of this section may be applied by the creditor as a reduction of 278
the amount owed under the finance agreement, unless the borrower 279
can show that the finance agreement has been paid in full. 280
SECTION 8. Section 83-52-13, Mississippi Code of 1972, is 281
brought forward as follows: 282
83-52-13. Sections 83-52-5(3), 83-52-9 and 83-52-15 of this 283
chapter are not applicable to a guaranteed asset protection waiver 284
offered in connection with a lease or retail installment sale 285
associated with a commercial transaction. 286
SECTION 9. Section 83-52-15, Mississippi Code of 1972, is 287
brought forward as follows: 288
83-52-15. The commissioner may take action which is 289
necessary or appropriate to enforce the provisions of this chapter 290
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ST: Vehicle value protection agreements; define
and provide regulatory framework for.
and to protect guaranteed asset protection waiver holders in this 291
state. After proper notice and opportunity for hearing, the 292
commissioner may: 293
(a) Order the creditor, administrator or any other 294
person not in compliance with this chapter to cease and desist 295
from further guaranteed asset protection waiver-related operations 296
which are in violation of this chapter. 297
(b) Impose a penalty of not more than Five Hundred 298
Dollars ($500.00) per violation and not more than Ten Thousand 299
Dollars ($10,000.00) in the aggregate for all violations of 300
similar nature. For purposes of this paragraph (b), violations 301
shall be of a similar nature if the violation consists of the same 302
or similar course of conduct, action, or practice, irrespective of 303
the number of times the conduct, action, or practice which is 304
determined to be a violation of this chapter occurred. 305
SECTION 10. This act shall take effect and be in force from 306
and after July 1, 2026. 307