Ill. Admin. Code tit. 38, § 110.170 - Insurance and Other Products
a)
Licensees may provide insurances to the obligor provided the obligor has
indicated in a specific, dated and separately signed statement that the obligor
desires the insurance coverage. The purchase of any policy of insurance from or
through the licensee shall not be a condition precedent to a loan. The
insurance shall comply with the Illinois Insurance Code and all lawful
requirements of the Director of the Department of Insurance related to that
insurance.
b) The licensee may
provide joint credit life or joint credit accident and health insurance if both
insureds are obligated for the loan; however, this coverage shall not be a
requirement precedent to the extension of credit.
c) When a loan is prepaid in full, cancelled,
renewed, refinanced, or reduced to judgment prior to maturity, the licensee
shall, not later than the 60th day after a loan is
prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior
to maturity, refund or credit the unearned insurance premium or provide written
instruction to the person able to refund or credit the unearned insurance
premium. The licensee shall make all reasonable efforts to ensure that the
person able to refund or credit the unearned insurance premium completes the
refund or credit within 60 days of sending of the written instruction. The
required refund or credit shall be computed according to a method at least as
favorable to the obligor as the actuarial method. When the refund of any
insurance premium is less than $1.00, no refund is required. The licensee shall
maintain records to demonstrate their compliance with this Section for at least
two years from the date of refund, credit, or written instruction.
d) It shall be the licensee's responsibility
to explain clearly to the obligor the benefits and limitations of any insurance
requested in connection with any loan or loan extensions.
e) The licensee shall also deliver or cause
to be delivered to the obligor a copy of the policy, or policies, certificate,
or other evidence at the time the loan is made, and all obligors shall sign and
receive a copy of a separate agreement clearly and conspicuously disclosing the
limits of coverage.
f) No obligor
shall be required to purchase any policy of insurance from any certain company,
agent, broker, or person as a condition precedent to a loan. No licensee shall
decline new or existing insurance that is approved by the Director of the
Department of Insurance or prevent any obligor from obtaining the insurance
from any other source.
g) When the
loan is made, the insurance charges shall be computed for no more than the term
of the loan contract on an amount that does not exceed the total amount
required to pay the combined total of principal and interest charges.
h) The obligor's estate shall be paid the
amount due between the unpaid balance and the insurance benefit paid. Evidence
of this payment shall be maintained by the licensee.
i) In the case of a precomputed contract, the
amount of the net unpaid balance shall be the unpaid balance of the note less
any required rebate for prepayment in full on the date of the borrower's death,
plus accrued but unpaid delinquency charges. In the case of an interest-bearing
contract, the amount of the net unpaid balance shall be the principal balance
plus accrued interest to the date of the borrower's death.
j) Account records shall indicate the date of
death and the refunds of interest or loan charges and unearned insurance
premiums paid to the estate. The refund check or voucher shall be available on
demand.
k) Property damage
insurance against loss or damage to real or personal property given as security
for a loan or liability arising out of ownership may be required of an obligor.
No licensee may require an obligor to purchase more than one form of property
damage insurance against loss or damage to real or personal property. The
purchase of such insurance through the licensee or from an agent, broker or
insurer specified by the licensee shall not be a condition precedent to the
granting of the loan. No licensee may require an obligor to purchase property
damage insurance that the obligor cannot reasonably purchase from an agent,
broker or insurer unrelated to and not specified by the licensee.
l) Property insurance provided by a licensee
shall be consistent with the amount and term of the loan and shall not extend
beyond the maturity of the loan unless the loan is delinquent when it may be
extended 30 days beyond the original expiration date without charge to the
obligor.
m) Upon cancellation of
the loan by prepayment or refinancing, the obligor shall be entitled to a
refund not less than the unearned insurance premium in any amount exceeding
$1.00.
n) The licensee or affiliate
may receive compensation for the sale of any insurance or debt cancellation
contract or other such product purchased pursuant to the loan made or held by
the licensee, provided the licensee discloses to the obligor that either the
licensee or an affiliate may receive something of value in connection with the
purchase by the obligor. This must be prominently disclosed in the loan
contract.
o) In the event of a
judgment prior to maturity, the judgment shall be decreased by the amount equal
to any unearned insurance premium. Evidence of this decrease shall be
maintained by the licensee.
p) If
the Director has authorized a licensee to offer debt cancellation products or
other credit-related ancillary products, and an obligor has purchased a debt
cancellation product or other credit-related ancillary product, when a loan is
prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior
to maturity, the licensee shall, not later than the
60th day after a loan is prepaid in full, cancelled,
renewed, refinanced, or reduced to judgment prior to maturity, refund or credit
the unearned debt cancellation charge or other unearned credit-related
ancillary product charge, as applicable, or provide written instruction to the
person able to refund the unearned debt cancellation charge or other unearned
credit-related ancillary product charge, as applicable. The licensee shall make
all reasonable efforts to ensure that the person able to refund the unearned
debt cancellation charge or credit-related ancillary product charge completes
the refund or credit within 60 days of sending of a written instruction. The
refund or credit shall be calculated according to a method at least as
favorable to the obligor as the actuarial method. The licensee shall maintain
records to demonstrate their compliance with this Section for at least two
years from the date of refund, credit, or written instruction.
q) Vehicle service contracts as defined in
215 ILCS
152/5, and vehicle protection products or warranties
as defined in 215 ILCS
5/155.39(a) are not subject to
subsection (p) of this Section.
Notes
Amended at 35 Ill. Reg. 7319, effective April 21, 2011
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
a) Licensees may provide insurances to the obligor provided the obligor has indicated in a specific, dated and separately signed statement that the obligor desires the insurance coverage. The purchase of any policy of insurance from or through the licensee shall not be a condition precedent to a loan . The insurance shall comply with the Illinois Insurance Code and all lawful requirements of the Director of the Department of Insurance related to that insurance.
b) The licensee may provide joint credit life or joint credit accident and health insurance if both insureds are obligated for the loan ; however, this coverage shall not be a requirement precedent to the extension of credit.
c) When a loan is prepaid in full, the obligor shall receive a refund of the insurance charges. When the refund of any insurance premium is less than $1.00, no refund is required.
d) It shall be the licensee 's responsibility to explain clearly to the obligor the benefits and limitations of any insurance requested in connection with any loan or loan extensions.
e) The licensee shall also deliver or cause to be delivered to the obligor a copy of the policy, or policies, certificate, or other evidence at the time the loan is made, and all obligors shall sign and receive a copy of a separate agreement clearly and conspicuously disclosing the limits of coverage.
f) No obligor shall be required to purchase any policy of insurance from any certain company, agent, broker, or person as a condition precedent to a loan . No licensee shall decline new or existing insurance that is approved by the Director of the Department of Insurance or prevent any obligor from obtaining the insurance from any other source.
g) When the loan is made, the insurance charges shall be computed for no more than the term of the loan contract on an amount that does not exceed the total amount required to pay the combined total of principal and interest charges.
h) The obligor 's estate shall be paid the amount due between the unpaid balance and the insurance benefit paid. Evidence of this payment shall be maintained by the licensee .
i) In the case of a precomputed contract, the amount of the net unpaid balance shall be the unpaid balance of the note less any required rebate for prepayment in full on the date of the borrower's death, plus accrued but unpaid delinquency charges. In the case of an interest-bearing contract, the amount of the net unpaid balance shall be the principal balance plus accrued interest to the date of the borrower's death.
j) Account records shall indicate the date of death and the refunds of interest or loan charges and unearned insurance premiums paid to the estate. The refund check or voucher shall be available on demand.
k) Insurance against loss or damage to real or personal property given as security for a loan or liability arising out of ownership may be required of an obligor .
l) Property insurance provided by a licensee shall be consistent with the amount and term of the loan and shall not extend beyond the maturity of the loan unless the loan is delinquent when it may be extended 30 days beyond the original expiration date without charge to the obligor .
m) Upon cancellation of the loan by prepayment or refinancing, the obligor shall be entitled to a refund not less than the unearned insurance premium in any amount exceeding $1.00.
n) The licensee or affiliate may receive compensation for the sale of any insurance or debt cancellation contract or other such product purchased pursuant to the loan made or held by the licensee , provided the licensee discloses to the obligor that either the licensee or an affiliate may receive something of value in connection with the purchase by the obligor . This must be prominently disclosed in the loan contract.
o) In the event of a judgment prior to maturity, the judgment shall be decreased by the amount equal to any unearned insurance premium. Evidence of this decrease shall be maintained by the licensee .
p) If the Director has authorized a licensee to offer debt cancellation products, when a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, the obligor shall be entitled to a refund of any unearned debt cancellation premium, calculated by the actuarial method.
Notes
Amended at 35 Ill. Reg. 7319, effective April 21, 2011