Cal. Code Regs. Tit. 10, § 1488 - Limitations on Requirement and Sale of Insurance: General
The following are general limitations on the requirement
and sale of insurance. These requirements are in addition to the requirements
contained in Section
1489 of this Article for specific
types of
(a) A finance
company shall not require or sell insurance on any property securing a loan
when:
(1) The insurance coverage exceeds the
reasonable value of the property insured. Reasonable value shall be that value
established by a bona fide written appraisal, a statement of replacement value
signed by the borrower, a recent sales invoice, or other evidence acceptable to
the commissioner .
(2) Insurance on
the loan security is already in force in an amount reasonably sufficient to
protect the finance company considering the circumstances of the
loan.
(b) A finance
company shall not require but may sell insurance on any property securing a
loan when:
(1) The amount of the unpaid
principal balance of a loan, exclusive of any insurance premium, is less than
$500. However, if a loan balance is less than a principal amount of $500 at the
time existing insurance expires, such insurance may be renewed only at the
option of the borrower. The sale of such insurance must be supported by a
statement signed by the borrower to the effect that the insurance was purchased
at the option of the borrower only.
(2) The reasonable value of the property
securing the loan is less than $500.
(c) A finance company shall take reasonable
precautions to prevent the sale of insurance that will result in duplicate
coverage.
(d) Vendors single
interest insurance premiums may not be charged to borrowers.
Notes
2. Change without regulatory effect amending NOTE filed 6-14-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 24).
Note: Authority cited: Section 22150, Financial Code. Reference: Sections 22150, 22311, 22312 and 22313, Financial Code.
2. Change without regulatory effect amending Note filed 6-14-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 24).
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