Insurance Protection for Home Improvement Installment Loans
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An association in making an installment loan in excess of three hundred dollars ($300) may require a borrower to insure tangible personal property offered as security for the loan against any substantial risk of loss, damage or destruction for any amount not to exceed the actual value of the property or the approximate amount of the loan, whichever is lesser, and for a term and upon conditions that are reasonable and appropriate considering the nature of the property and maturity and other circumstances of the loan; provided, that the insurance is sold by a licensed agent, broker or solicitor, and the borrower may furnish the borrower's own insurance policy.
The association may also request as security for any loan obligation in excess of three hundred dollars ($300) insurance on the life of the borrower or one (1) of them, if there are two (2) or more. The initial amount of credit life insurance shall not exceed the total amount repayable under the total amount of the indebtedness. Not more than one (1) policy of life insurance may be written in connection with any installment loan transaction unless requested by the borrower, comaker or endorser.
In accepting any insurance provided for in this section as security for a loan, the association may deduct the premiums for the insurance from the proceeds of the loan, and remit the premiums to the insurance company writing the insurance and any gain or advantage to the association or any employee, officer, director, agent, affiliate, or associate from the insurance or its sale shall not be considered an additional or further charge or interest in connection with any loan made hereunder.
Every insurance policy or certificate written in connection with a loan transaction pursuant to of this section shall provide for cancellation of coverage and a refund of the premium unearned upon the discharge of the loan obligation for which the insurance is security without prejudice to any claim existing at the time of discharge. Whenever insurance is written in connection with a loan transaction, the association shall deliver, or cause to be delivered, to the borrower a policy, certificate or other memorandum that shows the coverages and the costs of coverage, if any, to the borrower within thirty (30) days from the date of the loan.