28 Tex. Admin. Code § 5.5006

Current through Register Vol. 49, No. 48, November 29, 2024

Section 5.5006 - Inland Marine Insurance - Consumer Credit Property Insurance

Consumer credit property insurance (filed). These policies provide property coverage for an open- or closed-end consumer credit transaction that is a retail installment transaction. For purposes of this section, "retail installment transaction" has the meaning assigned in Finance Code § 345.001, concerning Definitions.

(1) Policies must include coverage while in transit.

(2) Policies may extend coverage to include vendee, mortgagor, or lessee interests.

(3) Policies may not cover a vendor's, mortgagee's, or lessor's interest beyond the termination of that interest.

(4) All policies or certificates must include a clear statement to the insured about how payments will be allocated to all outstanding purchase obligations. The statement must reference the applicable lending documents to determine how the coverage will be applied.

(5) Premium calculations for coverage involving a closed-end consumer credit transaction may not be based on amounts paid for services, meals, entertainment, finance or service fees, loan interest, delivery charges, or other insurance premiums (for example, credit life, credit disability, credit property, or credit involuntary unemployment insurance coverage).

(6) Offers for coverage involving a closed-end consumer credit transaction must include, at the time of the offer, the following prominent written disclosure in no smaller than 10-point boldface type: "This coverage might duplicate existing coverage if you have a residential property insurance policy. This coverage ceases when you have fully paid the debt. This coverage is primary, so it is the first source to be used in the event of a loss on property it covers. You may cancel this coverage at any time by calling the insurer at the toll-free telephone number provided to you, or by writing to the insurer. This coverage costs {set out the total identifiable credit property insurance charge}."

(7) Offers for coverage involving an open-end consumer credit transaction must include, at the time of the offer, the following prominent written disclosure in no smaller than 10-point boldface type: "This coverage might duplicate existing coverage if you have a residential property insurance policy. It applies to any item of covered property on which you owe a debt. This coverage is primary, so it is the first source to be used in the event of a loss on property it covers. You may cancel this coverage at any time by calling the insurer at the toll-free telephone number provided to you, or by writing to the insurer. This coverage costs ${enter amount} per $100 of outstanding balance on your account. The premium charged for this coverage is based on your entire outstanding balance, but the coverage only applies to tangible personal property purchased on an open-end credit account. Services, meals or other consumables, entertainment, finance or service fees, loan interest, delivery charges, or other insurance premiums, which may be part of your outstanding balance, are not covered."

(8) Policies or certificates must be given to the insured when the coverage is accepted by the insurer, along with written instructions about filing claims under the coverage.

(A) The instructions must include the insurer's toll-free telephone number. The instructions must list the essential elements an insured must provide to perfect a claim.

(B) Policies or certificates given to insureds must include the disclosure in either paragraph (6) or (7) of this section, as applicable, with the same typeface and size requirements.

(9) Policies and certificates for open-end consumer credit transactions must provide that the policyholder or certificate holder will receive a disclosure with the account statement not less than semiannually.

(A) The disclosure must be at least 6-point boldface type on the face of the account statement, or at least 10-point boldface type on a statement insert.

(B) The disclosure must state: "If you are paying a credit property insurance premium, that premium is based on the entire outstanding balance of this account. You may cancel this coverage at any time by calling the insurer at the toll-free telephone number it has provided to you, or by writing to the insurer. Any premium charged for credit property insurance coverage is based on your entire outstanding balance, but the coverage only applies to tangible personal property purchased on an open-end credit account. Services, meals or other consumables, entertainment, finance or service fees, loan interest, delivery charges, or other insurance premiums, which may be part of your outstanding balance, are not covered."

(10) Policies and certificates for open-end consumer credit transactions must provide that the policyholder or certificate holder will receive a statement each billing cycle, but not less frequently than quarterly. The statement must include:

(A) the amount of the credit property insurance charge, separate from any total insurance charge;

(B) the amount of debt to which the insurance charge rate was applied;

(C) the date the rate was applied; and

(D) the period covered by the monthly charge.

28 Tex. Admin. Code § 5.5006

Adopted by Texas Register, Volume 48, Number 21, May 26, 2023, TexReg 2725, eff. 6/4/2023