| (iv) lawful confiscation by an authorized public official;
(v) the operation, use, or maintenance of the motor
vehicle in any race or speed contest;
(vi) war, whether or not declared, invasion, civil
war, insurrection, rebellion, revolution, or act of terrorism;
(vii) normal wear and tear, freezing, mechanical or
electrical breakdown or failure;
(viii) use of the motor vehicle for primarily commercial
purposes;
(ix) loss that occurs after the motor vehicle has been
repossessed;
(x) damage to the motor vehicle prior to the purchase
of the debt cancellation agreement for total loss or theft of an ordinary
vehicle;
(xi) damage related to any personal property attached
to or within the vehicle;
(xii) damages associated with falsification of documents
by any person not associated with the retail seller or the debt cancellation
provider;
(xiii) abandonment of the motor vehicle by the retail
buyer only if the retail buyer voluntarily discards, or leaves behind,
or otherwise relinquishes possession of the motor vehicle to the extent
that the relinquishment shows intent to forsake and desert the motor
vehicle so that the motor vehicle may be appropriated by any other
person;
(xiv) any loss occurring outside the continental United
States of America, Alaska, or Hawaii (retail seller may opt to cover
losses in Canada);
(xv) any exclusion or limitation approved in writing
by the commissioner;
(C) contain a statement that the retail buyer is required
to notify the retail seller within 75 days, or a longer period as
agreed to in the debt cancellation agreement, of any potential loss
under the debt cancellation agreement for total loss or theft of an
ordinary vehicle;
(D) contain a statement that requests the retail buyer
to provide or complete some or all of the following documents and
provide those documents to the retail seller:
(i) a debt cancellation request form;
(ii) if property insurance is in force and effect,
proof of loss and settlement payment from the retail buyer's primary
comprehensive, collision, or uninsured/underinsured motorist policy
or other parties' liability insurance policy for the settlement of
the insured total loss of the motor vehicle;
(iii) a copy of the police report, if any, filed in
connection with the total loss or theft of the motor vehicle;
(iv) a copy of the damage estimate;
(v) any additional documentation approved in writing
by the commissioner;
(E) contain a statement that the retail seller will
cancel amounts as provided under the debt cancellation agreement for
total loss or theft of an ordinary vehicle;
(F) contain a statement naming the refunding method
to be used to calculate refunds under subsection (f) of this section;
(G) contain a statement explaining the calculation
of the amount canceled under the debt cancellation agreement for total
loss or theft of an ordinary vehicle that is in accordance with subsection
(h)(2) of this section;
(H) contain a statement that the retail seller may
be named as loss payee on any insurance policy covering the motor
vehicle, but may only receive proceeds from an insurance policy on
the motor vehicle in the event of a total loss or theft;
(I) contain a statement that the retail seller may
not require property insurance on the motor vehicle;
(J) contain a statement that the debt cancellation
agreement is not required to obtain credit and will not be a factor
in the credit approval process;
(K) contain a statement that a partial loss of the
motor vehicle is not subject to relief under the debt cancellation
agreement, but may be subject to relief from property insurance voluntarily
purchased by the retail buyer;
(L) contain a statement that upon request of the commissioner,
the administrator will make its records relating to the creation,
processing, and resolution of the debt cancellation agreement available
to the commissioner;
(M) contain a statement that the retail buyer should
consider contacting a tax advisor regarding possible tax consequences;
and
(N) contain, at the election of the drafter, contract
provisions pertaining to the following issues, so long as the provisions
comply with state and federal law and implementing regulations:
(i) a notice provision regarding how notice may be
given or delivered by either party under the debt cancellation agreement;
(ii) a severability provision;
(iii) an arbitration provision;
(iv) any contract provision approved in writing by
the commissioner.
(d) Copy of debt cancellation agreement for total loss
or theft of ordinary vehicle provided to retail buyer. If a retail
buyer purchases a debt cancellation agreement for total loss or theft
of an ordinary vehicle, the retail seller must provide the retail
buyer, within a reasonable amount of time not to exceed 10 days from
the date of the retail installment sales contract, a true and correct
copy of the agreement that clearly sets forth:
(1) the name of the retail buyer, and the name, address,
and telephone number of the place where requests for debt cancellation
are processed;
(2) the amount and term of the debt cancellation agreement
for total loss or theft of an ordinary vehicle;
(3) the cost of the debt cancellation agreement for
total loss or theft of an ordinary vehicle;
(4) the terms, including the limitations, exclusions
and restrictions; and
(5) a statement that the holder will cancel certain
amounts under the debt cancellation agreement for total loss or theft
of an ordinary vehicle substantially similar to the following: "YOU
WILL CANCEL CERTAIN AMOUNTS I OWE UNDER THIS CONTRACT IN THE CASE
OF A TOTAL LOSS OR THEFT OF THE VEHICLE AS STATED IN THE DEBT CANCELLATION
AGREEMENT."
(e) Fee or rate for debt cancellation agreement for
total loss or theft of an ordinary vehicle. The amount of the fee
is based upon the amount financed. The fee for a debt cancellation
agreement can be adjusted to the nearest whole dollar. The fee may
be included in the amount financed and a finance charge may be charged
on the fee. The minimum fee for a debt cancellation agreement under
this subsection is $50.
(1) Debt cancellation agreement for total loss or theft
of ordinary vehicle in which holder bears complete responsibility
for canceling the debt after total loss or theft. The following figure
contains a rate schedule of maximum fees that are deemed to be reasonable
for debt cancellation agreements for total loss or theft of an ordinary
vehicle that are in compliance with subsection (c)(1) of this section.
Attached Graphic
(2) Debt cancellation agreement for total loss or theft
of used ordinary vehicle with a cash price of $15,000 or less in which
the retail seller does not assign the retail installment sales contract
to any party other than a related finance company as defined by Texas
Tax Code, §152.0475(a), and in which the retail seller bears
complete responsibility for canceling the debt after total loss or
theft whether the retail buyer elects to obtain property insurance.
The following figure contains a rate schedule of maximum fees that
are deemed to be reasonable for debt cancellation agreements for total
loss or theft of an ordinary vehicle that are in compliance with subsection
(c)(2) of this section.
Attached Graphic
(f) Refund or credit of unearned debt cancellation
agreement fee.
(1) Notification of cancellation triggering refund
or credit. A holder may require that the retail buyer notify the holder,
retail seller, or any administrator appointed by the holder in writing
should the retail buyer decide to cancel the debt cancellation agreement.
(2) Refunding method. Upon termination of a debt cancellation
agreement prior to the scheduled maturity date of a retail installment
sales contract, the holder or administrator will provide the retail
buyer a refund or credit calculated using a method that is at least
as favorable to the buyer as the Rule of 78s. In the event of a canceled
debt under the debt cancellation agreement, the fee paid for the debt
cancellation agreement is fully earned and no refund or credit is
due.
(3) Cancellation date. The refund or credit of the
debt cancellation agreement fee, if any, must be based upon the earlier
date of:
(A) the prepayment of the retail installment sales
contract in full prior to the original maturity date;
(B) a demand by the holder for payment in full of the
unpaid balance or acceleration;
(C) a request by the retail buyer for cancellation
of the debt cancellation agreement; or
Cont'd... |
