§ 402B. Total loss notice and waiver of the gap amount. 1. If the
retail instalment contract provides that the buyer shall be responsible
upon a total loss of the goods occasioned by theft, confiscation or
physical damage for the gap amount as defined in paragraph fifty-two of
subsection (a) of section one hundred seven of the insurance law, the
holder, prior to the execution of the contract, shall by a notice on a
separate document conspicuously disclose that fact and the obligations
for which the buyer would remain liable in the event of a theft,
confiscation or total loss of the goods. If the holder is required under
subdivision two of this section to offer to waive its contractual right
to hold the buyer liable for the gap amount in the event of a total loss
of the goods occasioned by theft or physical damage, the notice shall
also: (a) state that for a separate charge disclosed in the notice the
holder will waive its contractual right to hold the buyer liable for the
gap amount in the event of a total loss of the goods occasioned by theft
or physical damage; (b) contain a provision informing the buyer that he
or she may, as an alternative to purchasing a waiver, be able to
purchase insurance covering the gap amount from an insurance company
which has been licensed by the superintendent of financial services to
write non-motor vehicle debtor gap insurance in this state; and (c)
contain a provision permitting the buyer to indicate whether he or she
wants the holder to waive its contractual right to hold the buyer liable
for the gap amount in the event of a total loss of the goods occasioned
by theft or physical damage. The notice shall be signed by the buyer.
The holder shall provide a copy of the signed notice to the buyer and
shall maintain a copy in the holder's files for at least the term of the
contract. Failure to provide the notice and to obtain the buyer's
signature as required by this subdivision shall invalidate any provision
of the agreement which otherwise would obligate a buyer to pay to the
holder, after a total loss of the goods occasioned by theft,
confiscation or physical damage, the gap amount. No retail instalment
contract shall be conditioned upon the buyer's obtaining of non-motor
vehicle debtor gap insurance as set forth in subparagraph (D) of
paragraph twenty-six of subsection (a) of section one thousand one
hundred thirteen of the insurance law.

2. If the retail instalment contract provides that the buyer shall be
responsible upon a total loss of the goods occasioned by theft or
physical damage for the gap amount, the holder, prior to the execution
of the contract, shall offer to waive its contractual right to hold the
buyer liable for the gap amount in the event of a total loss of the
goods occasioned by theft or physical damage, only if non-motor vehicle
creditor gap insurance coverage is available to the holder and such
coverage is obtained from a property/casualty insurance company, which
has been licensed by the superintendent of financial services of this
state to write non-motor vehicle creditor gap insurance in this state.
This offer may be made contingent upon the payment by the buyer of a
separate charge that shall not exceed the cost of non-motor vehicle
creditor gap insurance covering the retail instalment contract. Nothing
contained in this section shall be construed to authorize a waiver, in
connection with a transaction with respect to which non-motor vehicle
creditor gap insurance has not been obtained, of a contractual right to
hold the buyer liable for the gap amount in the event of a total loss of
the goods occasioned by theft or physical damage.

3. A holder shall not be obligated under subdivision two of this
section to offer to waive its contractual right to hold the buyer liable
for the gap amount if, during the current calendar year or during the
odd-numbered calendar year immediately preceding the calendar year in
which the agreement is entered into, the holder has received non-motor
vehicle creditor gap insurance declination notices or other evidence of
unavailability from every insurance company whose name appears on the
department of financial services compilation of insurance companies
which during that calendar year were authorized to write non-motor
vehicle creditor gap insurance in this state. Evidence of these
declinations shall be retained by such a holder for a period of six
years after the expiration of the calendar year in which they were
issued.

4. In order to enable holders to comply with the requirements imposed
by subdivision two of this section, the superintendent of financial
services shall compile and make available a periodically updated list of
those insurance companies which are authorized to write non-motor
vehicle creditor gap insurance coverage in this state.

5. Nothing in this section shall be construed to apply to the holder
under a retail instalment contract under which the buyer is not liable
upon a total loss of the goods occasioned by theft, confiscation or
physical damage for the gap amount.