Should Guaranteed Auto Protection (GAP) coverage continue to be regulated as an insurance product (insurer treatment), requiring no legislative change, or should GAP coverage be regulated as a debt cancellation waiver (lender treatment), requiring a legislative change?
GAP coverage should be regulated as an insurance product. Regulation as an insurance product means that the rates and forms for GAP coverage are approved by the Department of Insurance. B. Should the commissions on the sale of GAP coverage be restricted? YES. GAP coverage is different from other insurance products because the incentive to “push” the product is greater when commissions are allowed without restriction. C. Should the Consumer Advocate engage in an education campaign regarding GAP coverage? YES. An education campaign initiated by the State Consumer Advocate could have the double benefit of informing borrowers of the potentially benefits of GAP coverage while at the same time informing them about the rights and responsibilities associated with GAP coverage. Mortgage Guaranty Insurance Should the State of South Carolina enact specific legislation regulating mortgage guaranty insurance cancellation? NO. Rather than enacting legislation, the General Assembly should memorialize
