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Debt Laws | Federal
Laws | Consumer Protection
State Laws
Kansas Consumer Credit Code
Part 1 INSURANCE IN GENERAL
Part 2 CONSUMER CREDIT INSURANCE
Part 3 PROPERTY AND LIABILITY INSURANCE
Part 1 INSURANCE IN GENERAL
This article shall be known and may be cited as revised uniform consumer credit code--insurance.
(1) Except as provided in subsection (2), this article applies to insurance provided or to be provided in relation to a consumer credit transaction.
(2) The provision on cancellation by a creditor (section 16a-4-304) applies to loans the primary purpose of which is the financing of insurance. No other provision of this article applies to insurance so financed.
In this act "consumer credit insurance" means insurance, other than insurance on property, by which the satisfaction of debt in whole or in part is a benefit provided, but does not include:
(a) Insurance provided in relation to a credit transaction in which a payment is scheduled more than 15 years after the extension of credit;
(b) insurance issued as an isolated transaction on the part of the insurer not related to an agreement or plan for insuring consumers of the creditor; or
(c) insurance indemnifying the creditor against loss due to the consumer's default.
(1) Except as otherwise provided in this article and subject to the provisions on additional charges (section 16a-2-501) and maximum finance charges (parts 2 and 4 of article 2), a creditor may agree to provide insurance, and may contract for and receive a charge for insurance separate from and in addition to other charges. A creditor need not make a separate charge for insurance provided or required by him. This act does not authorize the issuance of any insurance prohibited under any statute, or rule thereunder, governing the business of insurance.
(2) The excess amount of a charge for insurance provided for in agreements in violation of this article is an excess charge for the purposes of the provisions of the article on remedies and penalties (article 5) as to effect of violations on rights of parties (section 16a-5-201) and of the provisions of the article on administration (article 6) as to civil actions by the administrator (section 16a-6-113).
If a creditor agrees with a consumer to provide insurance
(1) the insurance shall be evidenced by an individual policy or certificate of insurance delivered to the consumer, or sent to him at his address as stated by him, within thirty (30) days after the term of the insurance commences under the agreement between the creditor and consumer; or
(2) the creditor shall promptly notify the consumer of any failure or delay in providing the insurance.
(1) In applying the provisions of this act on unconscionability (sections 16a-5-108 and 16a-6-111) to a separate charge for insurance, consideration shall be given, among other factors, to
(a) potential benefits to the consumer including the satisfaction of his obligations;
(b) the creditor's need for the protection provided by the insurance; and
(c) the relation between the amount and terms of credit granted and the insurance benefits provided.
(2) If consumer credit insurance otherwise complies with this article and other applicable law, neither the amount nor the term of the insurance nor the amount of a charge therefor is unconscionable.
(1) Except as provided in subsection (2), if a creditor contracts for or receives a separate charge for insurance, the amount charged to the consumer for the insurance may not exceed the premium to be charged by the insurer, as computed at the time the charge to the consumer is determined, conforming to any rate filings required by law and made by the insurer with the commissioner of insurance.
(2) A creditor who provides consumer credit insurance in relation to open end credit may calculate the charge to the consumer in each billing cycle by applying the current premium rate to the unpaid balance of debt in the same manner as is permitted with respect to finance charges by the provisions on finance charges for consumer credit sales pursuant to open end credit (section 16a-2-202).
(1) Upon prepayment in full of a consumer credit sale or consumer loan by the proceeds of consumer credit insurance, the consumer or his estate is entitled to a refund of any portion of a separate charge for insurance which by reason or prepayment is retained by the creditor or returned to him by the insurer unless the charge was computed from time to time on the basis of the balances of the consumer's account.
(2) This article does not require a creditor to grant a refund or credit to the consumer if all refunds and credits due to him under this article amount to less than one dollar ($1), and except as provided in subsection (1) does not require the creditor to account to the consumer for any portion of a separate charge for insurance because
(a) the insurance is terminated by performance of the insurer's obligation;
(b) the creditor pays or accounts for premiums to the insurer in amounts and at times determined by the agreement between them; or
(c) the creditor receives directly or indirectly under any policy of insurance a gain or advantage not prohibited by law.
(3) Except as provided in subsection (2), the creditor shall promptly make or cause to be made an appropriate refund or credit to the consumer with respect to any separate charge made to him for insurance if
(a) the insurance is not provided or is provided for a shorter term than that for which the charge to the consumer for insurance was computed; or
(b) the insurance terminates prior to the end of the term for which it was written because of prepayment in full or otherwise.
(4) A refund or credit required by subsection (3) is appropriate as to amount if it is computed according to a method prescribed or approved by the commissioner of insurance or a formula filed by the insurer with the commissioner of insurance at least thirty (30) days before the consumer's right to a refund or credit becomes determinable, unless the method or formula is employed after the commissioner of insurance notifies the insurer that he disapproves it.
If a creditor requires insurance, the consumer shall have the option of providing the required insurance through an existing policy of insurance owned or controlled by the consumer, or through a policy to be obtained and paid for by the consumer, but the creditor may for reasonable cause decline the insurance provided by the consumer. The creditor shall provide the consumer with a written notice on the loan agreement or other instrument fully informing the consumer of the option authorized by this section.
(1) A creditor may not contract for or receive a separate charge for insurance in connection with a refinancing (section 16a-2-504) or a consolidation (section 16a-2-505), unless:
(a) The consumer agrees at or before the time of refinancing or consolidation that the charge may be made;
(b) the consumer is or is to be provided with insurance for an amount or a term, or insurance of a kind, in addition to that to which he would have been entitled had there been no refinancing or consolidation;
(c) the consumer receives a refund or credit on account of any unexpired term of existing insurance in the amount that would be required if the insurance were terminated (section 16a-4-108); and
(d) the charge does not exceed the amount permitted by this article (section 16a-4-107).
(2) A creditor may not contract for or receive a separate charge for insurance which duplicates insurance with respect to which the creditor has previously contracted for or received a separate charge.
The administrator and the commissioner of insurance are authorized and directed to consult and assist one another in maintaining compliance with this article. They may jointly pursue investigations, prosecute suits, and take other official action, as may seem to them appropriate, if either of them is otherwise empowered to take the action. If the administrator is informed of a violation or suspected violation by an insurer of this article, or of the insurance laws, rules, and regulations of this state, he shall advise the commissioner of insurance of the circumstances.
(1) To the extent that the commissioner's responsibility under this article requires, the commissioner of insurance shall issue rules with respect to insurers, and with respect to refunds (K.S.A. 16a-4-108, and amendments thereto), forms, schedules of premium rates and charges (K.S.A. 16a-4-203, and amendments thereto), and the commissioner's approval or disapproval thereof and, in case of violation, may make an order for compliance.
(2) Each provision on administrative procedures and judicial review of the article on administration (article 6) which applies to and governs administrative action taken by the administrator also applies to and governs all administrative action taken by the commissioner of insurance pursuant to this section.
Part 2 CONSUMER CREDIT INSURANCE
(1) Consumer credit insurance provided by a creditor may be subject to the furnishing of evidence of insurability satisfactory to the insurer. Whether or not such evidence is required, the term of the insurance shall commence no later than when the consumer becomes obligated to the creditor or when the consumer applies for the insurance, whichever is later, except as follows:
(a) if any required evidence of insurability is not furnished until more than thirty (30) days after the term would otherwise commence, the term may commence on the date when the insurer determines the evidence to be satisfactory; or
(b) if the creditor provides insurance not previously provided covering debts previously created, the term may commence on the effective date of the policy.
(2) The originally scheduled term of the insurance shall extend at least until the due date of the last scheduled payment of the debt except as follows:
(a) if the insurance relates to an open end credit account, the term need extend only until the payment of the debt under the account and may be sooner terminated after at least thirty (30) days' notice to the consumer; or
(b) if the consumer is advised in writing that the insurance will be written for a specified shorter time, the term need extend only until the end of the specified time.
(3) The term of the insurance shall not extend more than fifteen (15) days after the originally scheduled due date of the last scheduled payment of the debt unless it is extended without additional cost to the consumer or as an incident to a deferral, refinancing, or consolidation.
(1) Except as provided in subsection (2),
(a) in the case of consumer credit insurance providing life coverage, the amount of insurance may not initially exceed the debt and, if the debt is payable in installments, may not at any time exceed the greater of the scheduled or actual amount of the debt; or
(b) in the case of any other consumer credit insurance, the total amount of periodic benefits payable may not exceed the total of scheduled unpaid installments of the debt, and the amount of any periodic benefit may not exceed the original amount of debt divided by the number of periodic installments in which it is payable.
(2) If consumer credit insurance is provided in connection with an open end credit account, the amounts payable as insurance benefits may be reasonably commensurate with the amount of debt as it exists from time to time. If consumer credit insurance is provided in connection with a commitment to grant credit in the future, the amounts payable as insurance benefits may be reasonably commensurate with the total from time to time of the amount of debt and the amount of the commitment.
(1) A creditor may not use a form or a schedule of premium rates or charges, the filing of which is required by this section, if the commissioner of insurance has disapproved the form or schedule and has notified the insurer of his disapproval. A creditor may not use a form or schedule unless
(a) the form or schedule has been on file with the commissioner of insurance for thirty (30) days, or has earlier been approved by him; and
(b) the insurer has complied with this section with respect to the insurance.
(2) Except as provided in subsection (3), all policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders relating to consumer credit insurance delivered or issued for delivery in this state, and the schedules of premium rates or charges pertaining thereto, shall be filed by the insurer with the commissioner of insurance. Within thirty (30) days after the filing of any form or schedule, he shall disapprove it if the premium rates or charges are unreasonable in relation to the benefits provided under the form, or if the form contains provisions which are unjust, unfair, inequitable, or deceptive, or encourage misrepresentation of the coverage, or are contrary to any provision of the insurance code or of any rule or regulation promulgated thereunder.
(3) If a group policy has been delivered in another state, the forms to be filed by the insurer with the commissioner of insurance are the group certificates and notices of proposed insurance. He shall approve them if
(a) they provide the information that would be required if the group policy were delivered in this state; and
(b) the applicable premium rates or charges do not exceed those established by his rules or regulations.
Part 3 PROPERTY AND LIABILITY INSURANCE
(1) A creditor may not contract for or receive a separate charge for insurance against loss of or damage to property unless
(a) the insurance covers a substantial risk of loss of or damage to property related to the credit transaction;
(b) the amount, terms, and conditions of the insurance are reasonable in relation to the character and value of the property insured or to be insured; and
(c) the term of the insurance is reasonable in relation to the terms of credit.
(2) The term of the insurance is reasonable if it is customary and does not extend substantially beyond a scheduled maturity.
(3) A creditor may not contract for or receive a separate charge for insurance against loss of or damage to property unless property is purchased pursuant to a credit card or in a transaction pursuant to open end credit, or unless the amount financed exclusive of charges for the insurance is $900 or more, and the value of the property is $900 or more.
If a creditor contracts for or receives a separate charge for insurance against loss of or damage to property, the risk of loss or damage not willfully caused by the consumer is on the consumer only to the extent of any deficiency in the effective coverage of the insurance, even though the insurance covers only the interest of the creditor.
A creditor may not contract for or receive a separate charge for insurance against liability unless the insurance covers a substantial risk of liability arising out of the ownership or use of property related to the credit transaction.
A creditor shall not request cancellation of a policy of property or liability insurance except after the consumer's default or in accordance with a written authorization by the consumer, and in either case the cancellation does not take effect until written notice is delivered to the consumer or mailed to him at his address as stated by him. The notice shall state that the policy may be cancelled on a date not less than ten (10) days after the notice is delivered, or, if the notice is mailed, not less than thirteen (13) days after it is mailed.
KS Kansas Official State Statutes
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