Senate Counsel, Research
and Fiscal Analysis
Minnesota Senate Bldg.
95 University Avenue W. Suite 3300
St. Paul, MN 55155
(651) 296-4791
Tom Bottern
State of Minnesota
S.F. No. 1051 - GAP Waivers
Author: Senator Dan Sparks
Prepared By: Christopher B. Stang, Senate Counsel (651/296-0539)
Date: March 5, 2015


Section 1 provides that this new chapter of law does not apply to insurance policies, or debt cancellation or suspension contracts. GAP waivers are not insurance or subject to state insurance laws, and persons selling GAP waivers are not required to be licensed insurance agents.

Section 2 provides definitions for purposes of the bill. A “GAP waiver” is a contract where the creditor agrees for a separate charge to cancel all or part of amounts due on a finance agreement in the event of total physical damage loss or unrecovered theft of a motor vehicle.

Section 3 provides that specified parts of the bill do not apply in connection with non-consumer transactions.

Section 4 establishes requirements for GAP waivers. Costs to the borrower are not interest if entered into in compliance with federal law. GAP waiver obligations must be insured by the retail seller. Extension of credit or term of a motor vehicle sale or lease may not be conditioned on purchase of a GAP waiver. Specified funds held by a creditor or administrator must be held in a fiduciary capacity.

Section 5 regulates coverage, term, and effect of cancellation of insurance policies insuring GAP waivers.

Section 6 requires specified disclosures for GAP waivers.

Section 7 requires that GAP waivers may be canceled within a “free look” period for full refund. After the free look period any refund is subject to terms of the waiver. Refunds may be applied to borrower obligations in the case of default or repossession of the motor vehicle.



Check on the status of this bill
Back to Senate Counsel and Research Bill Summaries page

This page is maintained by the Office of Senate Counsel, Research, and Fiscal Analysis for the Minnesota Senate.
Last review or update: 03/05/2015
If you see any errors on this page, please e-mail us at