Dealer Guide Debt Waiver Guaranteed Auto Protection

Dealer Guide Debt Waiver Guaranteed Auto Protection Automotive Market

Contents Product overview ...............................................................................................................................................1 Eligibility ........................................................................................................................................................1 Coverage .......................................................................................................................................................1 Financing of GAP ...........................................................................................................................................1 State Requirements ........................................................................................................................................2 Administrative procedures .................................................................................................................................3 New business .................................................................................................................................................3 Transfers ........................................................................................................................................................3 Cancellations .................................................................................................................................................3 Claims ...........................................................................................................................................................4 Appendix A – F&I Rate Track ..............................................................................................................................5 Quoting GAP .................................................................................................................................................5 eContracting GAP ..........................................................................................................................................5

©2016 Zurich American Insurance Company. All rights reserved. Property of Zurich – Intended for dealership use only. Additional external distribution is strictly prohibited. Do not copy. V36650FR Debt Waiver (06/2016)

Product overview Guaranteed Auto Protection (GAP) is a point of sale product designed to cover the difference between the outstanding loan/lease contract balance and the customers’ primary auto insurance settlement in the event of a total loss. The dealer must be a creditor in the transaction. The assigned financial source must be agreeable to the Zurich GAP Addendum, as it is an amendment to the retail installment sales contract (or lease agreement). Zurich provides administration and claims services for GAP. Zurich also provides a contractual liability policy to cover the dealer’s, and assigned creditors’, liabilities under the GAP Addendum.

Eligibility The GAP Addendum is void If the finance agreement or vehicle is found to be ineligible. Dealerships should be completely familiar with the eligibility requirements to avoid sales where eligibility is in question. Finance Agreement Eligibility: 1. The dealer is a creditor in the transaction; 2. Coverage is voluntary; 3. Does not already include a GAP coverage provision; 4. Includes uniform monthly payments (except incidental differences in first and last month payments); 5. First payment is due no longer than 90 days from the origination date; 6. Term is no longer than 84 months. Ineligible Vehicles*: 1. Not licensed for highway use; 2. Used to carry goods or passengers for compensation; 3. Used to transport or to tow for hire; 4. Used as an emergency or police vehicle; 5. Has a branded title, including salvage titles; 6. Motor homes; 7. Has a GVWR greater than 12,500 pounds if financed by Ford Motor Credit. *Vehicle usage eligibility may vary per lender requirements.

Coverage The maximum amount waived is:  

New Vehicles: The Manufacturer’s Suggested Retail Price or $50,000*, whichever is less. Used Vehicles: The NADA or equivalent guide, less the actual cash value, or $50,000*, whichever is less.

The amount waived may include up to $1,000 of the primary physical damage policy deductible, if permitted by state law. *See State Requirements section for any exceptions in your state.

Financing of GAP The Zurich GAP Addendum is an amendment to the retail installment sales contract (or lease agreement). Therefore, dealers must obtain approval from their financing sources to include GAP into the financial terms. Zurich can assist dealers by providing financial packages and other information to assist in gaining approval of our GAP program. Not seeking prior approval to include GAP may result in a loan/lease rejection by your financial institution. The seller of a GAP Addendum must not vary the benefits, terms, conditions or price of the GAP waiver due to the borrower’s race, sex, sexual orientation, income or other protected class.

©2016 Zurich American Insurance Company. All rights reserved. Property of Zurich – Intended for dealership use only. Additional external distribution is strictly prohibited. Do not copy.

1 V36650FR Debt Waiver (06/2016)

State Requirements From a general consumer protection law perspective, the retail price charged for GAP coverage should be relative to the potential benefit to the consumer. Many states have specific requirements pertaining to GAP.

California

The customer must be provided with a translation of the proposed contract in the language of the negotiation. The GAP addendum must be physically attached to the retail installment sales contract.

Colorado

Customer retail price is $300 or 2% of the amount financed, whichever is higher, for all loan terms. The consumer must be provided a separate written cancellation form upon acceptance of GAP coverage. This form is included in the state specific Colorado contract.

Indiana

Cannot be sold if amount financed less the cost of the GAP, the cost of credit insurance, and the cost of warranties, is less than 80% of the MSRP for a new vehicle or 80% of the NADA average retail value for a used vehicle. Effective 07/01/2014, customer retail price is $506 for all loan terms. Indiana DFI GAP coverage endorsement form, VGDDFI, must be delivered to the consumer, become a permanent part of the finance file, and must be sent to the lender with the retail contract financing package.

Louisiana

GAP coverage disclosure must be delivered to the consumer and is a permanent part of the finance file.

Maryland

A cap on the amount waived is not allowed. The amount waived may not be reduced by amounts financed over the MSRP limit.

Massachusetts

GAP is part of the finance charge and the APR must be recalculated to assume the APR is not greater than 21%.

Minnesota

GAP cannot be sold in conjunction with the sale or lease of any used motor vehicle that is valued less than $5,000.

Nevada

Effective January 1, 2016, GAP debt waiver is allowed. Limited Lines Credit license is not required r required to sell GAP as a waiver product.

Oregon

Effective January 1, 2016, GAP debt waiver is allowed. The maximum amount that may be charged for GAP shall not exceed 5% of the amount financed. A Limited Class Credit Insurance Producer license is not required to sell GAP as a waiver product.

South Carolina

The sale of GAP is not permitted if the amount financed, less the cost of the addendum, the cost of credit insurance, and the cost of service warranties is less than 80% of the MSRP for a new vehicle or 80% of the NADA average retail value for a used vehicle. A bona fide error resulting in the sale of GAP coverage will result in the addendum being void and the customer will receive a full refund of the purchase price of the GAP Addendum. The finance amount of the loan must exceed $4,000 to be able to sell GAP.

Texas

The amount charged for GAP coverage made in connection with a retail installment contract may not exceed 5% of the amount financed. GAP cannot be financed on lease agreements.

Utah

Dealerships and their F&I employees involved in selling GAP are required to hold a limited lines license to sell GAP.

West Virginia

The finance amount of the loan must exceed $2,000 to be able to sell GAP.

Wisconsin

Wisconsin statutes 422.302 (1) c and 422.303 (1) require the creditor to physically attach the signed GAP addendum to the retail installment sales contract. Cancellation refunds requested within the freelook period must also include the applicable amount of finance charge.



Administrative procedures Contact Zurich F&I Customer Service at 888.805.1594 with questions regarding administrative procedures.

New business All new contracts and remit should be submitted to Zurich by the 10th of each month. Remittance process 1. Complete the contract and have the purchaser(s) sign and date where indicated. 2.

Distribute all contract copies to the applicable parties.

3.

Finalize the electronic contracts and close the electronic remit register. Print a copy of the register.

4.

ACH Dealers: A debit transaction for the total amount of all remittances will occur within three business days. Check Dealers: Mail a copy of the register and your check for the total of all remittances by the 10th of each month to Zurich. Zurich P.O. Box 7922 Shawnee Mission, Kansas 66207-0922

Transfers Zurich GAP Addenda are not transferable to any other vehicle or finance agreement.

Cancellations Cancellation provisions vary by state. Refer to the actual GAP Addendum for details. Cancellation process Obtain cancellation quote via MyAccount in DAP or contact F&I Customer Service at 888.805.1594.  

Complete the Cancellation Request Form, select ‘GAP’ as the product to be cancelled and submit to Zurich to receive the cancellation refund. (In Colorado, there is a state specific cancellation form provided within the GAP Addendum.) eMail: [email protected] FAX: 913.664.3247 Zurich P.O. Box 7922 Shawnee Mission, Kansas 66207-0922

Note: The customer’s signature is required unless proof of repossession or total loss is provided. A cancellation fee will be deducted from the refund computation where applicable. Consult contract provisions and state changes for details. ACH Dealers: A credit transaction will occur within three business days of the cancellation being processed by Zurich. Check Dealers: All refund credits will be applied to the dealer statement in the month the cancellation was processed by Zurich.



Claims The customer can call the claims department at 888-801-3078 to report a claim or to request a GAP Claim Form. All claims must be reported to Zurich within the timeframe stated on the GAP Addendum. Claims process Along with the completed claim form, the customer is directed to submit the following documentation when filing a claim: 1. 2. 3. 4. 5.

A copy of the primary auto insurer's claim settlement statement and ACV summary, if applicable; A copy of the original retail installment sales contract; A payment history with the balance due on the loan as of the date of loss from the creditor; Documentation of refundable amounts on other F&I products; and Proof of your primary insurance policy cancellation, an itemized repair estimate and the final copy of any police or fire report must be provided if insurance is not in effect on the date of loss. Note: The customer will be contacted if additional information is required. The dealership may be contacted for additional information, such as the vehicle invoice.

Submit the claim form and required documentation by email, fax or mail: [email protected] fax: 913.498.5587 Zurich Attn: GAP Claims P.O. Box 7986 Shawnee Mission, KS 66207

_____________________________________ This product guide provides summaries of the coverages to be provided and is not intended to substitute for, amend or duplicate contract provisions. The contract contains the actual terms, conditions and limits of the coverage to be provided. If there is any conflict between the descriptions in this guide and the contract, the contract will govern in all cases.



Appendix A – F&I Rate Track Quoting GAP

1.

Choose GAP as the product.

2.

Choose the Sale Type.

3.

Enter the GAP term.

4.

Enter the APR/Money Factor

5.

Enter the Amount Financed

Proceed to save the quote or create the eContract.

eContracting GAP The GAP plan will print on its own eContract form. GAP eContracts are finalized to the GAP register. Proceed to the Remit Register tab after finalizing the eContracts and complete the GAP remit register.



Dealer Guide Debt Waiver Guaranteed Auto Protection

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