Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This amendment modernizes the
rule.
(1) Scope. This
regulation covers the stated insurance aspects of goods and of physical damage
to motor vehicles subjected to liens under Chapter 365 (Motor Vehicle Time
Sales), section
408.100
(Small Loans) and sections 408.250-408.280 (Retail Credit Sales), RSMo. It does
not include mobile homes as defined in
20 CSR
500-2.500 nor does it include lenders'/vendors' single
interest subject to
20 CSR
500-2.500 except where incorporated by reference.
Payment of premium by the lender without charge to the consumer shall exempt
any such insurance from this regulation.
(2) Definitions.
(A) "Consumer" includes the purchaser in a
credit transaction, the mortgagor of newly acquired or previously owned
property, and the equitable owner of any property subject to a lien within the
scope of this regulation.
(B)
"Goods," as used, means all tangible chattels, personal, and merchandise
certificates or coupons exchangeable for this tangible personal property, but
does not include motor vehicles, nonprocessed farm products, livestock, money,
things in action, or intangible personal property. This term includes personal
property which can be or is attached to realty so as to become a fixture
whether or not severed or severable.
(C) "Loss payable clause" means any clause
duly filed by the insurer with the department as added to a policy affording
substantial protection.
(D) "Motor
vehicle" includes any new or used automobile, motorcycle, truck, trailer,
semi-trailer, truck tractor, or bus.
(E) Substantial protection as used is
afforded a consumer when the goods are covered by a standard fire policy with
extended coverage endorsement or when the motor vehicle is covered by a policy
providing collision and comprehensive insurance and both are duly filed with
the department. In these policies, the owner of the property must be protected
from his/her risk of casualty loss for the causes covered by these policies and
must be sole loss payee absent a loss payable clause. The amount payable to the
consumer shall be no less than the actual cash value of the goods or motor
vehicle insured.
(3)
Substantial Protection .
(A) Lienholders',
sellers', interests of both, may be protected only by a standard loss payable
clause attached to a policy which substantially protects the consumer's
interest in the motor vehicle or goods. No additional premium may be charged
for a loss payable clause. Lienholders, sellers of motor vehicles or goods, or
both, may not be listed as additional insureds or appear in any other manner as
insureds on an automobile or fire insurance policy where the policy is
purchased by the owner of the property insured. These policies may not be
written in Missouri.
(B) A motor
vehicle is substantially protected only when it is insured for at least its
actual cash value and not when it is insured only for a lesser loan amount
outstanding upon it or the payoff value of that loan. If both the actual cash
value and the payoff amount of the loan are to be used as measures of the
benefits payable under a policy, then that policy must pay the greater of these
two (2) amounts in case of a total loss. The use of any policy provision which
limits the benefits payable under motor vehicle insurance to the declining loan
balance payable only is prohibited except as provided in
20 CSR
500-2.400.
(C) No insurance carrier shall write the
following coverages upon vehicles insured by coverage subject to this
regulation unless included as part of an insurance policy substantially
protecting the interests of the consumer, subject to the provisions of the
Department of Economic Development, and the department's insurance regulations:
fire, theft, and collision and comprehensive (except on vehicles ten (10) years
old); towing and labor; and medical payments.
(4) Consumers' Rights.
(A) The consumer shall not be required to
obtain insurance from any particular insurer nor through any particular
insurance producer or representative of a company as a condition precedent to
the granting of a loan. No insurer shall participate or knowingly allow its
insurance producers to participate in a scheme of requirements.
(B) If the consumer does voluntarily elect to
obtain insurance through the lienholder or seller and files no claim against
this coverage, s/he shall have thirty (30) days after the date of the loan an
unconditioned right to substitute a valid and collectible policy with a loss
payable clause in favor of the lienholder or seller for this coverage, if the
substitute was in effect on the date of the loan. If s/he elects to make this
substitution, the consumer shall receive a full refund of all premiums paid on
the policy purchased from the creditor. A consumer shall not be enticed,
induced or compelled to cancel a valid existing policy insurance s/he has
previously purchased on any motor vehicle or goods later included as collateral
in a loan.
(C) The consumer shall
have the unconditional right to cancel the insurance at any time upon
prepayment of the indebtedness or submission of a valid and collectible loss
payable endorsement in favor of the lienholder or seller. The insurer shall
then refund the premium to the consumer on a pro rata basis, except when
coverage is substituted under subsection (4)(B) of this regulation.
(5) Rates.
(A) No insurance carrier writing insurance in
connection with consumer loans shall charge a rate in excess of the standard
rate for this coverage. The standard rate means the rate(s) on file with the
department.
(B) No rate charged for
any policy written within the scope of this regulation shall be discriminatory
against credit insureds as members of a class compared with insureds having the
same hazard who may purchase equivalent coverage independent of the credit
transaction. These rates shall not be excessive when viewed in conjunction with
any restrictions upon effective competition imposed by any creditor and
insurance producer.
(C) No
insurance carrier shall write coverage in connection with consumer loans when
the premium to be charged for physical damage or property coverage plus the
deductible amount set out in the policy exceeds fifty percent (50%) of the
value of the collateral so insured.
(D) 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.
(6) Statement .
No insurer shall write credit-connected insurance within the scope of this
regulation unless the consumer executes as part of his/her application for
coverage the following statement or similar statement approved by the director
of the department: "I understand that I am free to insure my __________________
(auto, motorcycle, or furniture) with whatever licensed company or insurance
producer I may choose; that I may do so at any time after the date of this
loan; that I have not cancelled existing insurance on my ______________ if I
owned it before this loan; and that this loan cannot be denied me simply
because I did not purchase my insurance through the lender or seller."
(7) Training . Any insurance
company engaging in coverage subject to this regulation shall be responsible
for the education and training of its insurance producers operating in
connection with credit institutions to insure that they are fully knowledgeable
of the contents of this regulation and any other pertinent insurance laws and
regulations. Each company shall be responsible for the continuing training and
supervision of the activities of its insurance producers placing that
business.
(8) Severability Clause.
If any section or portion of a section of these regulations or their
applicability to any person or circumstances is held invalid by a court, the
remainder of the regulations and the applicability of the provision to other
persons or circumstances shall not be affected by it.
*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; 379.318, RSMo 1972; 379.351, RSMo 1972; 379.470, RSMo 1947; and
408.280, RSMo 1961, amended 1989.
