2010 New York Code
PEP - Personal Property
Article 10 - (401 - 422) RETAIL INSTALMENT SALES ACT
402B - Total loss notice and waiver of the gap amount.

§  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 insurance 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 insurance 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
  insurance department 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  insurance
  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.