(a) No person shall require, as a condition to the lending of money or extension of credit, or a renewal thereof, that the person to whom the money or credit is extended, or whose obligation a creditor is to acquire or finance, negotiate an insurance policy or renewal thereof through a particular insurer or group of insurers or agent, broker, or group of agents or brokers.
(b) No person who lends money or extends credit shall:
(1) Solicit insurance for the protection of real property after a person indicates interest in securing a first mortgage credit extension until the person has received a commitment in writing from the lender as to a loan or credit extension;
(2) Unreasonably reject an insurance policy provided by a borrower for the protection of property securing a credit or lien. A rejection shall not be unreasonable if it is based on reasonable standards and uniformly applied relating to the extent of coverage required and the financial soundness and the services of an insurer. The standards shall not discriminate against a particular type of insurer or reject a policy because it contains coverage in addition to that required in the credit transaction;
(3) Require, directly or indirectly, that a debtor, borrower, mortgagor, purchaser, insurer, broker, or agent pay a separate charge or consideration in connection with the handling of an insurance policy required as security for a loan on real estate or pay a separate charge or consideration of any kind for substituting the insurance policy of one insurer for that of another. This prohibition shall not include the interest which may be charged on premium loans or premium advancements in accordance with the terms of the security instrument;
(4) Use or disclose, without the prior written consent of the borrower, mortgagor, or purchaser taken at a time other than the making of the loan or extension of credit, information relative to an insurance policy which is required by the credit transaction for the purpose of replacing the insurance; or
(5) Require a procedure or condition of duly licensed agents, brokers, or insurers not customarily required of agents, brokers, or insurers affiliated, or in any way connected, with the person who lends money or extends credit.
(c) A person who lends money or extends credit and who solicits insurance on real and personal property shall explain to the borrower in writing that the insurance related to the credit extension may be purchased from an insurer or agent of the borrower’s choice, subject only to the lender’s right to reject a given insurer or agent as provided in subsection (b)(2) of this section. Compliance with disclosures as to insurance required by truth-in-lending laws or comparable state laws shall constitute compliance with this subsection.
(d) The Commissioner may examine and investigate those insurance-related activities of a person or insurer that the Commissioner believes may be in violation of this section. A affected person may submit to the Commissioner a complaint or material pertinent to the enforcement of this section.
(e) Nothing herein shall prevent a person who lends money or extends credit from placing insurance on real or personal property if the mortgagor, borrower, or purchaser has failed to provide required insurance in accordance with the terms of the loan or credit document.
(f) Nothing contained in this section shall apply to credit life or credit accident and health insurance.
(Apr. 3, 2001, D.C. Law 13-265, § 120, 48 DCR 1225.)