§ 23-66-312 - Favored agent or insurer -- Coercion of debtors.
23-66-312. Favored agent or insurer -- Coercion of debtors.
(a) No person, including, but not limited to, depository institutions and affiliates of depository institutions, primary and secondary mortgagees, vendors, or lenders may:
(1) Unreasonably disapprove the insurance policy or binder provided by a borrower for the protection of the property securing the credit or lien;
(2) (A) Require, directly or indirectly, that any borrower, mortgagor, purchaser, insurer, broker, or agent pay a separate charge in connection with the handling of any insurance policy or binder required as security for a loan on real estate or pay a separate charge to substitute the insurance policy or binder of one (1) insurer for that of another.
(B) Subdivision (a)(2)(A) of this section does not apply to charges that would be required if the person or depository institution or affiliate of a depository institution is the licensed producer providing the insurance; or
(3) Use or disclose information resulting from a requirement that a borrower, mortgagor, or purchaser furnish insurance of any kind when that information is to the advantage of the mortgagee, vendor, or lender or is to the detriment of the borrower, mortgagor, purchaser, insurer, or the agent or broker complying with this requirement.
(b) (1) Subdivision (a)(2) of this section does not include the interest that may be charged on premium loans or premium advancements in accordance with the security instrument.
(2) (A) For purposes of subdivision (a)(1) of this section, a rejection shall not be deemed unreasonable if it is based on uniformly applied reasonable standards relating to the extent of coverage required and the financial soundness and the services of an insurer.
(B) The standards shall not discriminate against any particular type of insurer, nor shall the standards call for rejection of a policy because it contains coverage in addition to that required in the credit transaction.
(3) Subdivision (a)(3) of this section does not restrict or limit the release of insurance information of a customer by a depository institution to any officer, director, employee, agent, or affiliate of the depository institution for the purpose of soliciting or selling insurance.
(4) (A) The Insurance Commissioner may investigate the affairs of any person to whom this subsection applies to determine whether the person has violated this subsection.
(B) If a violation of this subsection is found, the person in violation shall be subject to the same procedures and penalties as are applicable to 23-66-203, 23-66-206, 23-66-207, and 23-66-209 -- 23-66-213 and shall be liable for actual or compensatory damages resulting from an unreasonable disapproval of an insurance policy or binder.
(5) Once a binder has been issued, the insurer must issue a policy within ninety (90) days.
(6) All information given on the binder must be without material change when the policy is issued.
(c) The provisions of this section do not apply to credit-related insurance, such as credit life or credit accident and health insurance.