PURPOSE: This regulation is designed to permit
vendors'/lenders' single interest and make that use consonant with the purpose
of
20 CSR
500-4.100. This regulation is adopted pursuant to
section
374.045,
RSMo and implements sections
303.200,
365.080,
367.170,
375.936, 379.400, 379.470 and 408.280, RSMo.
(1) Scope. This regulation covers individual
vendors'/lenders' single interest, vendors'/ lenders' dual interest or
collateral protection insurance policies sold in connection with a credit
transaction.
(2) Consumers' Rights.
The debtor or consumer, as defined in
20 CSR
500-1.700, shall be vested by the insurance company
with all those rights described in section (4) of that regulation. These
specifically include the rights of substitution, free choice of insurer and
insurance producer and refund upon cancellation. A full and fair disclosure of
those rights must accompany the notice to provide insurance.
(3) Notice Required.
(A) In the event acceptable insurance is not
provided by the debtor at or before the consummation of the credit transaction
or the provided insurance is cancelled, the creditor shall give the debtor
written notice of requirement to provide insurance. This notice shall be
delivered by first-class mail to the last known address of the debtor or in
person and shall contain the following information:
1. That the security instrument requires a
specified amount and type of insurance on the collateral, including a loss
payable clause for the benefit of the creditor;
2. That this insurance has not been received
by the creditor;
3. That the debtor
may obtain the required insurance from any insurance producer duly licensed in
Missouri s/he may choose and from any company authorized to do business in
Missouri;
4. That if the insurance
is not received within thirty (30) days, the creditor will obtain insurance to
protect the interest of the creditor and charge the debtor, including
applicable finance charges at the same rate that the security instrument calls
for pertaining to the underlying indebtedness; and
5. That the policy obtained by the creditor
will not provide bodily injury nor property damage liability
insurance.
(B) This
insurance may be from an individual policy or from a policy issued and
delivered to the creditor. The individual policy or certificate of coverage
must be mailed, first class mail, or delivered in person to the last known
address of the debtor, at the time the policy or certificate is issued. This
certificate or policy must state in clear language that-
1. No subrogation shall run against the
debtor from the insurance company; and
2. In the event of a loss, the insurance
company shall pay a minimum of the lesser of the following:
A. The cost of the repair of the collateral
less a maximum deductible of two hundred dollars ($200) computed as a minimum
deductible of one hundred dollars ($100) plus twenty percent (20%) of the next
five hundred dollars ($500);
B. The
actual cash value of the collateral; or
C. The outstanding net balance of the credit
transaction, provided, however, if the net outstanding balance is less than one
thousand dollars ($1,000), then the coverage shall be the lesser of that
described in subparagraph (3)(B)2.A. or B.;
3. Physical damage to the automobile will be
covered under the terms of the policy without being predicated upon the default
or delinquency of the debtor or the repossession of the vehicle; and
(C) Each insurance company, reciprocal,
interinsurance exchange or other legal entity doing business subject to this
regulation shall be responsible for the continuing training and actions of its
insurance producers, as stated in
20 CSR
500-4.100(7).
(4) Policy Requirements. No policy may be
used within the scope of this regulation which predicates the insurer's
liability upon the default or delinquency in payments by the debtor or upon the
repossession of the vehicle. All policies written under it must meet the intent
of this regulation to which end the director will consider substance over form
in any determination of conformity.
(5) Premium Rates and Schedules of Premium
Rates. All premium rates and all schedules of premium rates pertaining to
policies of insurance delivered or issued for delivery in this state shall be
filed with the director prior to their use in this state. The director shall
approve any rate or schedules of premium rates if s/he finds that the rates or
schedule of premium rates are reasonable in relation to the benefits provided
under the policies of insurance. A premium rate or schedule of premium rates
shall be presumed to be reasonable for purposes of this section if the rate or
schedule of rates produces or may reasonably be expected to produce a loss
ratio of sixty percent (60%) or greater.