Credit Property Insurance

PURPOSE: This regulation is designed to stimulate open competition among insurers to provide insurance coverage in the credit context at rates which are not unfairly discriminatory or excessive. Where property insurance is sold by a creditor in connection with the extension of credit, the regulating forces of open competition may not operate to control rates and extend benefits. This regulation designates rate levels for certain coverages above which rates for insurance sold in the credit context will be presumed excessive and unfairly discriminatory under statutory standards. It is solely because of the lack of effective price and product controlling competition that the promulgation of these standards has become necessary to policyholders and the public interest. This regulation was adopted pursuant to the provisions of section 374.045, RSMo and to implement sections 367.170, 374.190, 375.012, 375.158, 375.936, 385.010 to 385.080, and 408.280, RSMo. (1) Scope. This regulation applies to credit property as defined in section 385.020, RSMo. (2) Definitions. The following terms are defined for use in this regulation: (A) Affiliated insurance producer means any insurance producer of an insurer who receives any employment remuneration from a dealer or lender or sells insurance primarily to debtors of a dealer or lender group of associated dealers or lenders or whose insurance a dealer or lender controls, directly or indirectly, or regularly designates, recommends, refers, or suggests to the buyer that s/he purchase in connection with the negotiation, execution, extension, or renewal of a contract; (B) Contract includes any credit transaction for household, personal, or family use; (C) Dealer means any person who extends credit for household, personal, or family use or any successor to a creditor’s rights; (D) Lender is any person engaged in the business of making consumer credit loans as defined in section 367.100.2, RSMo and any assignee of a consumer credit loan agreement to include registrants under Chapter 367, RSMo, state banking associations, savings and loan associations, national banking associations to the extent that federal laws do not preempt this regulation, credit unions, and any director, officer, employee, or insurance producer of such a person; and (E) Credit property insurance has the same meaning as in section 385.020.1(5), RSMo. (3) Credit Property Insurance Sold by a Lender (Chapter 367, RSMo). (A) No insurer may issue through an affiliated agent a policy covering security for a loan made under the regulatory authority of Chapter 367, RSMo which exceeds the replacement value of the property given as security for the loan or covering security for such a loan which is less than three hundred dollars ($300). If the insured elects to cancel a policy sold in connection with such a transaction, the insurer shall remit directly to the insured any premium refund due. (B) No insurer shall sell any coverage through an affiliated insurance producer other than the standard fire policy with coverage attachment with extended coverage endorsement and replacement cost provision endorsement. (4) Credit Property Insurance Sold With Credit Transactions (Chapter 408, RSMo). (A) No insurer may write coverage through an affiliated agent to be sold in this context in which the amount of coverage exceeds the replacement cost of the goods insured. (B) No insurer may pay a dealer or by contract grant a dealer’s interest in the affiliated property insurance which exceeds the original indebtedness under the contract. (C) No insurer may issue a contract of insurance through an affiliated dealer which covers any goods other than those sold by that dealer under the terms of the contract secured by those goods. (5) Cancellation Refund Computation. All refunds of any insurance sold subject to this regulation shall be made upon the pro rata refund computation tables. AUTHORITY: sections 374.045, 374.190, 375.012, 375.041, 375.158, 375.936, 379.318, 379.356, 379.470, and 408.280, RSMo 2016.* This rule was previously filed as 4 CSR 190-16.110. Original rule filed Sept. 11, 1975, effective Nov. 15, 1975. Amended: Filed Sept. 12, 1975, effective Nov. 15, 1975. Amended: Filed Aug 14, 1984, effective Jan. 12, 1985. Amended: Filed Dec. 1, 1997, effective May 30, 1998. Amended: Filed July 12, 2002, effective Jan. 30, 2003. Amended: Filed Dec. 13, 2018, effective July 30, 2019. *Original authority: 374.045, RSMo 1967, amended 1993, 1995, 2008; 374.190, RSMo 1939, amended 1949, 1967, 1992; 375.012, RSMo 1961, amended 1965, 1967, 1981, 1993, 1997, 2001, 2007; 375.041, RSMo 1985, amended 1992; 375.158, RSMo 1939, amended 1965, 1967, 1993, 2001; 375.936, RSMo 1959, amended 1967, 1969, 1971, 1976, 1978, 1983, 1991; 379.318, RSMo 1972; 379.356, RSMo 1972, amended 2001; 379.470, RSMo 1947, amended 2015; and 408.280, RSMo 1961, amended 1989.