Cal. Code Regs. Tit. 10, § 1513 - Limitations on Refinance of Loans Covered by Credit Insurance

(a) During any period when a borrower is disabled, and such disability is, or will become upon the completion of the waiting period provided for in the applicable policy, compensable under an existing policy of credit disability insurance, there may be no renewal or refinancing of such borrower's existing loan. Any additional loans or advances which the licensee desires to make to such a borrower during such a period must be accomplished by a new and separate loan, subject, however, to Section 22327 of the Financial Code.
(b) If, with respect to any program for the sale of credit disability insurance, either (a) the credit disability insurance policy excludes from coverage those disabilities arising out of injuries or illnesses existing on or before the effective date of the insurance; and/or (b) such credit disability insurance policies written or offered in connection with the renewal or refinancing of loans contain any terms or conditions which are different (other than as to the amount and term of coverage occasioned by such renewal or refinancing) from the terms and/or conditions of the policy relating to the loan being renewed or refinanced; then, prior to any renewal or refinancing of such borrower's existing loan, a notice, in writing, shall be given to the borrower by the licensee, advising the borrower as to either or both of the following, whichever may be applicable;
(1) That if the borrower's loan is renewed or refinanced, the borrower will not be entitled to recover any disability benefits for any disability resulting from any accident or illness which occurred subsequent to the date of the borrower's existing loan but prior to the date of such renewal or refinancing, even though credit disability insurance may again be provided for in connection with such renewal or refinancing.
(2) That if the borrower's loan is renewed or refinanced, and a new policy of credit disability insurance is again provided, the borrower's right to recover upon such insurance policy will be limited to the coverage provided by such new policy, which is different from that under which the borrower had been previously insured. Such notice shall then explain the substance of such differences.
(c) When a borrower's loan is insured by a policy of credit life insurance, his loan may not be renewed or refinanced without credit life insurance of substantially the same type and coverage being offered to the borrower in connection with such renewal or refinancing, unless, prior thereto, a notice, in writing, is given to the borrower by the licensee. Such notice shall inform the borrower that in the event of such renewal or refinancing his/her right to credit life insurance will terminate and he/she will no longer be entitled to the credit life insurance benefits which had theretofore been in effect with respect to the existing loan.


Cal. Code Regs. Tit. 10, § 1513

Note: Authority cited: Section 22150, Financial Code. Reference: Sections 22150,22314 and 22315, Financial Code.

1. Amendment filed 12-29-83; effective thirtieth day thereafter (Register 83, No. 53).
2. Change without regulatory effect amending subsections (a), (b)(2) and Note filed 6-14-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 24).

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