New Jersey Administrative Code
Title 3 - BANKING
Chapter 17 - CONSUMER LENDERS AND SALES FINANCE COMPANIES
Subchapter 6 - INSURANCE
Section 3:17-6.2 - Insurance provisions applicable to consumer lenders
Current through Register Vol. 56, No. 18, September 16, 2024
(a) When a consumer loan is repaid in full or renewed, or if the insurance is terminated prior to the scheduled maturity date of a consumer loan, the consumer lender shall refund to the borrower any unearned insurance premiums.
(b) If a borrower has repaid a consumer loan in full, or if a beneficiary named in a policy under a claim is due a refund of unearned premiums and the consumer lender is unable to locate the borrower or beneficiary after due diligence, but in no event longer than 180 days, the licensee shall return all unearned premiums to the insurer, stating the reason therefor. The consumer lender shall file evidence in the borrower's file of his or her efforts to locate the borrower.
(c) All refunds and credits made by consumer lenders pursuant to this section shall be computed by the "Sum of Digits Method" commonly known as the "Rule of 78ths." These are rules for computing refunds of unearned finance charges on early payment of a loan so that the refund is proportional to the monthly unpaid balance. Tables for calculating refunds and credits according to this methodology can be obtained from Financial Publishing Company, 82 Brookline Drive, Brookline, MA 02212, (617) 262-4040, http://www.financial-publishing.com. When the refund or credit of the unearned insurance premium is less than $ 1.00, no refund is required.
(d) If a borrower has credit life insurance, interest charges shall cease accruing on the account at the death of the insured.
(e) If a consumer loan contract contains credit life insurance, the consumer lender shall file a death claim with the insurer upon receipt of notice of the death of the insured. The death claim filed by a consumer lender with an insurer shall be made for the full amount of the coverage held at death by the insured.
(f) A policy for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance may provide for the insurance of more than one person. If the policy is silent regarding whether the insurance covers more than one person, the person whose signature appears on the first line of the lines provided for the signatures on the loan contract shall be considered as the only borrower insured by the policy and the consumer lender shall disclose to the borrower in writing the effect of the order of signing the loan contract.
