Prerequisites for creditor to insure collateral; right of debtor to insure collateral
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In order for the creditor to place insurance on the collateral pledged by the debtor and pass the cost of the insurance on to the debtor:
The creditor must have a security interest in the personal property;
The credit agreement must require the debtor to maintain insurance on the collateral to protect the creditor's interest;
The credit agreement must authorize the creditor to place the insurance if the debtor fails to provide evidence of the insurance; and
The information set forth in paragraphs (a) through (c) of this subsection (1) must be clearly disclosed to the debtor at the inception of the credit transaction.
The debtor shall always have the right to provide required insurance through existing policies of insurance owned or controlled by the debtor or of procuring and furnishing the required coverage through an insurer authorized to transact insurance within this state. However, a creditor may establish maximum acceptable deductibles, insurer solidity standards and other reasonable conditions with respect to the required insurance.