HB 23-1181 Summary

• Codifies and updates regulations for guaranteed asset protection (GAP) agreements, which protect consumers from liability for vehicle deficiency balances after total loss collateral events.

• Caps GAP fees at 4% of total amount financed or $600, whichever is greater, and prohibits creditors from charging multiple fees regardless of co-borrowers or cosigners.

• Requires creditors to provide written notice in bold type disclosing the GAP fee amount, that purchase is optional, benefits may decrease over time, 30-day cancellation rights with full refund if no loss occurred, and that GAP is not a substitute for collision/property damage insurance.

• Mandates GAP agreements cover property damage deductibles up to $500 and waive deficiency balances as if the consumer had maintained property damage insurance, with specified exclusions for unpaid installments, late fees, and salvage value.

• Grants consumers 90 days from loss settlement or creditor notification of deficiency balance to file claims, prohibits sales to ineligible consumers or those with loan-to-value ratios exceeding 150%, and designates the administrator under section 5-6-103 to enforce the article.