§3543. Property insurance

A. An extender of credit may, in addition, request or require a consumer to insure property, all or part of which is involved in a contract or agreement, made under the authority of this Chapter, and include the cost of the insurance as a separate charge in the contract or agreement. The property shall be described so as to readily identify it and such description shall be included as part of the contract or agreement. This insurance and the premiums or charges thereon shall bear a reasonable relationship to the amount, term, and conditions of the contract or agreement, and to the existing hazards or risk of loss, damage, or destruction. This insurance and the premiums or charges thereon shall also bear a reasonable relationship to the character and value of the property insured or to be insured, when, in the event of loss, such insurance policy does not pay off the entire balance of the loan. Such insurance shall not provide for unusual or exceptional risks or coverages which are not ordinarily included in policies issued to the general public.

B. Where a consumer fails to maintain required property insurance or fails to provide the creditor with timely notice of the purchase or renewal of such insurance coverage, the creditor may, after notice to the consumer and expiration of a fifteen day curative period from the mailing of said notice, purchase insurance on the customer's property, including insurance protecting only the creditor's interest in such property. Such insurance premiums may be added to the outstanding balance of the customer's indebtedness and made subject to additional loan finance charges or credit service charges at the rate previously agreed to by the consumer.

Added by Acts 1972, No. 454, §1, eff. Jan. 1, 1973; Acts 1985, No. 554, §1; Acts 1986, No. 584, §1, eff. July 2, 1986; Acts 1992, No. 146, §1; Acts 1999, No. 1315, §1, eff. Jan. 1, 2000.