Default Charges

In the event of a default of more than ten days in the payment in full of any scheduled installment, a default charge may be made and collected in an amount not in excess of five percent of each installment in default. Such charge may not be collected more than once for the same default and may be collected at the time of default or at any time thereafter. It may 2.05: continued be deducted from any payment received after a default occurs, but if this results in the default of a subsequent installment, no charge shall be made for such subsequent default. When an agreement is primarily for personal, family or household purposes, the maximumallowable default charge is $5.00. When the agreement so provides, a cancellation charge which is permitted pursuant to M.G.L. c. 255C, § 15 may be made and collected in an amount not to exceed the greater of 2% of the unpaid balance due on the agreement or $5.00. No cancellationcharge may be assessed except in connection with a cancellation notice pursuant to M.G.L. c. 255C, § 21, which has been issued to the policyholder more than ten days after the effective date of a charge permitted herein under 955 CMR 2.05 and further provided that, when an agreement is primarily for personal, family or household purposes, the maximum allowable cancellation charge shall be Five dollars. It is further provided that the amount, if any, by which any cancellation charge allowed exceeds Five dollars may be collected if and only if the cancellation issued has become effective. No cancellation charge may be assessed or collected for more than one cancellation notice issued during the term of the agreement. Any cancellation charge due may be deducted from the gross unearned premiums received from the insurer. If an agreement is prepaid in full by cash, by a new agreement or by refinancing of such agreement, the debtor shall receive a refund or credit of a portion of the precomputed interest charge. The amount of any such refund or credit shall represent at least as great a proportion of the total amount of the precomputed interest charge as the sum of the scheduled periodic total of payments after the date of prepayment, as the date of prepayment is fixed below bears to the sum of the scheduled periodic total of payment under the schedule of installments in the original agreement. Such computation of refund or credit shall be made under the so-called sum-of-the-digits method. If the prepayment is made other thanonaninstallment due date, it shall be deem to have been made on the first installment due date if the prepayment occurs before that date, and inany other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of prepayment. The term "cash price"as used in M.G.L. c. 255C, § 13, in the case of motor vehicle insurance may include any merit rating surcharges or credits. After the execution of a premium finance agreement and prior to the due date ofthe first payment to be made thereunder, a premium finance agency shall deliver to the insured a statement of account book or a coupon book. If the premium finance agreement contains any separate charge for credit insurance, a copy of the credit insurance policy or policies or a certificate or certificates of credit insurance, as appropriate, shall be attached to the statement of account book or coupon book. This order shall be effective upon publication by the Office of the Secretary of State and shall apply to all agreements covering insurance contracts whose effective dates occur on or after July 2, 1984.