Section 3427. Gap insurance; cancellation, renewal and other provisions

(a)
  Definitions. As used in this section:
    (1)  "Covered policy" means, for purposes of this section, a policy or
  contract of gap insurance, issued or issued for delivery in this  state,
  on a risk located or resident in this state.
    (2)  "Nonpayment of premium" means the failure of the named insured to
  discharge any obligations in connection with the payment of premiums  on
  a  policy  of  insurance or any installment of such premium, whether the
  premium is payable directly to the insurer or its agent,  or  indirectly
  under  any  premium  finance plan or extension of credit. Payment to the
  insurer, or to an agent or broker authorized to  receive  such  payment,
  shall  be  timely,  if made within fifteen days after the mailing to the
  insured of a notice of cancellation for nonpayment of premium.
    (b) Lessor gap insurance:
    (1) A covered policy of lessor gap insurance shall be subject  to  all
  the provisions of section three thousand four hundred twenty-six of this
  article, except as otherwise provided in this section.
    (2)  Subject  to  the notice requirements of subsection (c) of section
  three thousand four hundred twenty-six of this article, a covered policy
  of lessor gap insurance may be cancelled only for:
    (A)  one  or  more  of  the  bases  for  cancellation  set  forth   in
  subparagraphs  (A)  through (D), and (F) through (H) of paragraph one of
  subsection (c) of section three thousand four hundred twenty-six of this
  article;
    (B) material change in the nature or extent  of  the  risk,  occurring
  after  issuance  or  last annual renewal anniversary date of the policy,
  which causes the  risk  of  loss  to  be  substantially  and  materially
  increased  beyond that contemplated at the time the policy was issued or
  last renewed; or
    (C) if the policy automatically provides coverage for the  gap  amount
  waived  under  new leases entered into by the lessor, or acquired by the
  lessor's assignee, the lessor's or assignee's (whichever is the insured)
  failure to provide, within sixty days or as otherwise specified  in  the
  policy,  the  insurer with the name and address of each lessee and other
  information reasonably required by the insurer.
    (c) Lessee gap insurance: (1) Except as provided in this section,  the
  provisions of sections three thousand four hundred twenty-five and three
  thousand  four  hundred  twenty-six of this article shall not apply to a
  covered policy of lessee gap insurance.
    (2) During the first  sixty  days  a  covered  policy  of  lessee  gap
  insurance is initially in effect, no cancellation shall become effective
  until  twenty  days  after  written  notice is mailed to the first named
  insured at the mailing address shown in the policy, except for the bases
  for cancellation set forth in subparagraphs (A) through (H) of paragraph
  one of subsection (c) of section three thousand four hundred  twenty-six
  of this article for which fifteen days notice shall be given.
    (3)  After a covered policy of lessee gap insurance has been in effect
  for sixty days, or on or after the effective date if  the  policy  is  a
  renewal,  no  cancellation  or  nonrenewal  shall become effective until
  fifteen days after written notice is mailed or delivered  to  the  first
  named   insured   at  the  mailing  address  shown  in  the  policy  and
  cancellation or nonrenewal is conditioned upon the  termination  of  the
  lease  for  reasons  other  than  a  total loss of the personal property
  caused by its theft or physical damage, or is based on one  or  more  of
  the  reasons set forth in subparagraphs (A) through (H) of paragraph one
  of subsection (c) of section three thousand four hundred  twenty-six  of
  this  article;  except  that where the lease is for ten years or longer,
  the policy may be cancelled or nonrenewed forty-five days after  written

  notice  is mailed or delivered to the first named insured at the mailing
  address shown in the policy if the cancellation or nonrenewal is  to  be
  effective  upon  the  tenth  anniversary  date  of  the  policy  or  any
  subsequent annual anniversary date.
    (4) If the policy is not issued for a term coextensive with the length
  of  the  lease,  the insurer shall renew it for successive terms for the
  duration of the lease, unless cancelled or nonrenewed in accordance with
  the provisions of this subsection.
    (d) Creditor gap insurance:
    (1) A covered policy of creditor gap insurance shall be subject to all
  the provisions of section three thousand four hundred twenty-six of this
  article, except as otherwise provided in this section.
    (2) Subject to the notice requirements of subsection  (c)  of  section
  three thousand four hundred twenty-six of this article, a covered policy
  of creditor gap insurance may be cancelled only for:
    (A)   One  or  more  of  the  bases  for  cancellation  set  forth  in
  subparagraphs (A) through (D), and (F) through (H) of paragraph  one  of
  subsection (c) of section three thousand four hundred twenty-six of this
  article;
    (B)  Material  change  in  the nature or extent of the risk, occurring
  after issuance or last annual renewal anniversary date  of  the  policy,
  which  causes  the  risk  of  loss  to  be  substantially and materially
  increased beyond that contemplated at the time the policy was issued  or
  last renewed; or
    (C)  If  the policy automatically provides coverage for the gap amount
  waived under new loans or other credit transactions entered into by  the
  creditor  or  acquired  by  the  creditor's  assignee, the creditor's or
  assignee's (whichever is the insured) failure to provide,  within  sixty
  days  or as otherwise specified in the policy, the insurer with the name
  and address of each debtor and other information reasonably required  by
  the insurer.
    (e) Debtor gap insurance:
    (1)  Except  as  provided  in this section, the provisions of sections
  three thousand four hundred twenty-five and three thousand four  hundred
  twenty-six of this article shall not apply to a covered policy of debtor
  gap insurance.
    (2)  During  the  first  sixty  days  a  covered  policy of debtor gap
  insurance is initially in effect, no cancellation shall become effective
  until twenty days after written notice is  mailed  to  the  first  named
  insured at the mailing address shown in the policy, except for the bases
  for cancellation set forth in subparagraphs (A) through (H) of paragraph
  one  of subsection (c) of section three thousand four hundred twenty-six
  of this article for which fifteen days notice shall be given.
    (3) After a covered policy of debtor gap insurance has been in  effect
  for  sixty  days,  or  on or after the effective date if the policy is a
  renewal, no cancellation or  nonrenewal  shall  become  effective  until
  fifteen  days  after  written notice is mailed or delivered to the first
  named  insured  at  the  mailing  address  shown  in  the   policy   and
  cancellation  or  nonrenewal  is conditioned upon the termination of the
  loan for reasons other than a total loss of the personal property caused
  by its theft or physical damage, or is based  on  one  or  more  of  the
  reasons  set  forth in subparagraphs (A) through (H) of paragraph one of
  subsection (c) of section three thousand four hundred twenty-six of this
  article; except that where the loan or other credit transaction  is  for
  ten  years  or  longer,  the  policy  may  be  cancelled  or  nonrenewed
  forty-five days after written notice is mailed or delivered to the first
  named insured at  the  mailing  address  shown  in  the  policy  if  the

  cancellation or nonrenewal is to be effective upon the tenth anniversary
  date of the policy or any subsequent annual anniversary date.
    (4) If the policy is not issued for a term coextensive with the length
  of  the loan or other credit transaction, the insurer shall renew it for
  successive  terms  for  the  duration  of  the  loan  or  other   credit
  transaction,  unless  cancelled  or  nonrenewed  in  accordance with the
  provisions of this subsection.
    (f) For purposes of this  section,  "property  insured",  as  used  in
  subparagraphs  (E) and (H) of paragraph one of subsection (c) of section
  three thousand four  hundred  twenty-six  of  this  article,  means  the
  property  which  is  the  subject  of  the lease or loan or other credit
  transaction.
    (h) Every notice of cancellation issued pursuant to this section shall
  specify the grounds for cancellation.
    (i) If a lessor, creditor or assignee charges the lessee or debtor for
  the waiver of the gap amount, the lessor or creditor, or, in the absence
  of a waiver by the creditor or lessor, the  assignee,  as  part  of  the
  waiver  offer,  shall  provide  the  lessee  or  debtor  with  a  notice
  specifying the name of  the  insurer  that  has  issued  the  lessor  or
  creditor  gap  insurance  policy, the cost of the lessor or creditor gap
  insurance coverage, and the charge for the  waiver.  Any  person  having
  been  found,  after  notice  and hearing, to have wilfully violated this
  subsection shall be liable to the people  of  this  state  for  a  civil
  penalty in a sum not exceeding five hundred dollars for each violation.
    (j)   Notwithstanding   any  other  provision  of  this  chapter,  the
  cancellation and nonrenewal provisions of this section shall apply  only
  to  the  gap  insurance  provisions  of  a  policy or contract that also
  provides other  coverages  and  the  gap  insurance  coverage  shall  be
  severable  from the other coverages for the purposes of cancellation and
  nonrenewal; except that lessor or debtor gap insurance coverage included
  within a  policy  insuring  a  mobile  home  shall  be  subject  to  the
  cancellation  and  nonrenewal requirements applicable to the mobile home
  policy.
    (k) Notwithstanding section three thousand four hundred thirty-five of
  this article, a covered policy of lessor or creditor gap insurance  that
  insures  a  lessor  or creditor and the lessor's or creditor's assignees
  shall not be considered a group insurance policy.
    (l) The superintendent may  prescribe  by  regulation  minimum  policy
  provisions  for  gap  insurance  which  the  superintendent  deems to be
  necessary  or  appropriate  for  lessor  gap  insurance,  creditor   gap
  insurance,  lessee  gap  insurance and debtor gap insurance contracts or
  policies.