California Code of Regulations
Title 10 - Investment
Chapter 1 - Commissioner of Business Oversight, Division of Financial Institutions
Subchapter 40 - Industrial Loans
Article 8 - Insurance
Section 40.809 - Requirements and Limitations on Additional Required Insurance when Existing Insurance Expires Before Maturity of Loan

(a) When required insurance expires prior to the maturity date of a loan, an industrial loan company may require additional insurance in a reasonable amount and for a reasonable period, considering the circumstances of the loan.

(b) The premium on the additional insurance shall not be charged to or collected from the borrower prior to the expiration of the existing required insurance except as provided in Section 40.800.

(c) Additional required insurance shall be effective immediately upon the premium being charged to or collected from the borrower except as provided in Section 40.800.

(d) If an industrial loan company elects to place required insurance or act under any authorization taken from a borrower to write or procure additional insurance, upon the expiration of existing insurance, it shall be the duty of the industrial loan company to notify the borrower, at least fifteen days prior to the expiration date of the existing insurance, that it intends to write additional insurance as authorized. If an industrial loan company does not notify the borrower, and the borrower procured additional insurance prior to, and to be effective upon, the expiration of the existing insurance, any insurance procured by the industrial loan company pursuant to this authorization shall, on notice from the borrower, be canceled at no cost to the borrower.

(e) If an industrial loan company elects to act under any authorization taken from a borrower to write or procure additional insurance in the event of cancellation of existing insurance, it shall be the duty of the industrial loan company to notify the borrower, within five days after receipt by the industrial loan company of notice of cancellation, that it intends to write the additional insurance as authorized. If an industrial loan company does not notify the borrower, and the borrower procured additional insurance prior to, and to be effective upon, the cancellation of the existing insurance, any insurance procured pursuant to the authorization shall, on notice from the borrower, be canceled at no cost to the borrower.

(f) Any notice by the industrial loan company that it intends to place required insurance or sell additional insurance shall state the type of insurance to be sold, the effective date, the amount of the premium, any change in the terms of the loan, and any additional precomputed charges.