Vendors’/Lenders’ Single Interest

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 4. The substance in narrative form of the statement in 20 CSR 500-1.700(6). (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. AUTHORITY: sections 303.200, 365.080, 367.170, 374.045, 375.936 and 408.280, RSMo 2000.* This rule was previously filed as 4 CSR 190-17.080. Original rule filed Dec. 20, 1974, effective Dec. 30, 1974. Amended: Filed Dec. 23, 1975, effective Jan. 2, 1976. Amended: Filed Aug. 4, 1989, effective Dec. 1, 1989. Amended: Filed Jan. 13, 1995, effective July 30, 1995. Amended: Filed July 12, 2002, effective Jan. 30, 2003. *Original authority: 303.200, RSMo 1953; 365.080, RSMo 1963, amended 1989; 367.170, RSMo 1951, amended 1984; 374.045, RSMo 1967, amended 1993, 1995; 375.936, RSMo 1959, amended 1967, 1969, 1971, 1976, 1978, 1983, 1991; and 408.280, RSMo 1961, amended 1989.