(1) (a) Except as provided in subsection (3) of this section, an appropriate refund or credit of unearned premiums shall be made to the person entitled thereto with respect to any separate charge made to the consumer for insurance if:
The insurance is not provided or is provided for a shorter term than that for which thecharge to the consumer for insurance was computed; or
The insurance terminates prior to the end of the term for which it was written because of prepayment in full of the indebtedness or the insurance terminates for any other reason.
(b) All consumer credit insurance shall terminate upon prepayment in full of the indebtedness.
(2) If a refund or credit of unearned premiums is required pursuant to the provisions of subsection (1) of this section:
The original creditor, if he or she is the holder of the indebtedness at the time ofprepayment, shall either promptly make the appropriate refund or credit or shall promptly notify the consumer and the insurer in writing that a refund or credit is due. Upon the receipt of notice that a refund or credit is due, the insurer shall promptly make an appropriate refund or credit of unearned premiums pursuant to the provisions of section 10-10-110 (2), C.R.S. For purposes of this section, "original creditor" means the person to whom the indebtedness was initially payable, and "insurer" means every person engaged as principal, indemnitor, surety, or contractor in the business of making contracts of insurance, excluding any licensed insurance agent.
(I) The assignee, if the indebtedness has been assigned, shall either promptly makethe appropriate refund or credit or shall promptly notify the consumer, the original creditor, and the insurer, if known, in writing that a refund or credit is due. For the purposes of this section, "assignee" means a person other than the original creditor who at the time of prepayment holds the indebtedness.
(II) The original creditor, upon receipt of notice pursuant to subparagraph (I) of this paragraph (b), shall either promptly make the appropriate refund or credit or shall promptly notify the insurer in writing that a refund or credit of unearned premiums is due.
The insurer, upon the receipt of notice that a refund or credit is due pursuant toparagraph (a) or (b) of this subsection (2), shall make an appropriate refund or credit of unearned premiums pursuant to the provisions of section 10-10-110 (2), C.R.S., and subsection (1) of this section.
An assignee or original creditor gives notice pursuant to this section upon delivery ormailing of the notice to the last address provided to him or her. Once an original creditor or an assignee has notified the appropriate party, as provided in paragraphs (a) and (b) of this subsection (2), the original creditor and the assignee shall have no further obligations.
(3) This article does not require a refund or credit of unearned premiums if:
All refunds and credits due to the debtor under this article amount to less than onedollar; or
The charge for insurance is computed from time to time on the outstanding balanceof the indebtedness and the charge relates to only one premium period.
(4) Except as otherwise required, a refund or credit is not required because:
The insurance is terminated by payment of proceeds under the policy; or
The original creditor or assignee pays or accounts for premiums to the insurer in theamounts and at the times determined by the agreement between them; or
The original creditor or assignee receives directly or indirectly under any policy ofinsurance a gain or advantage not prohibited by law.
If a single type of insurance is terminated by the payment of proceeds under thepolicy pursuant to paragraph (a) of subsection (4) of this section, a refund or credit of unearned premiums for all other types of consumer credit insurance issued on the same indebtedness shall be made if so required by the provisions of this section and section 10-10-110 (2), C.R.S.
A refund or credit required by subsection (1) of this section is appropriate as toamount if it is computed according to a method prescribed or approved by the commissioner of insurance or a formula filed by the insurer with the commissioner of insurance at least thirty days before the consumer's right to a refund or credit becomes determinable unless the method or formula is employed after the commissioner of insurance notifies the insurer that he or she disapproves it.
Source: L. 2000: Entire article R&RE, p. 1227, § 1, effective July 1.
Editor's note: This section is similar to former § 5-4-108, as it existed prior to 2000.