§ 27-5-3.2 - Property insurance.
SECTION 27-5-3.2
§ 27-5-3.2 Property insurance. – (a) No lending institution, as defined in § 19-9-1, doing business in thisstate, its affiliates or subsidiaries, or a bank holding company, as defined in12 U.S.C. § 1841, its affiliates or subsidiaries, shall, as a condition ofthe mortgage or as a term of the mortgage deed, require that the mortgagorcarry property insurance on the property which is the subject of the mortgagein excess of the replacement cost of any buildings or appurtenances subject tothe mortgage; provided, when in the course of selling, transferring, conveyingor assigning a mortgage, the servicing rights of the mortgage are similarlytransferred, conveyed or assigned, then and in that event it shall be theresponsibility of the holder of the mortgage to notify the insurance producerissuing the property insurance policy and the insurer in writing of that sale,transfer, conveyance, or assignment. This notice shall be made in writing andshall be sent to the insurance producer and the insurer within thirty (30) daysof the sale, transfer, conveyance, or assignment by mail. In the event that theholder of a mortgage shall fail to notify the insurance producer and theinsurer who issued the property insurance policy that is in force, in writing,of that sale, transfer, conveyance, or assignment within thirty (30) days, theholder shall indemnify and hold the insurance producer harmless.
(b) Notwithstanding any provision in this title to thecontrary, no such holder of a mortgage shall be entitled to payment of a claimunder a property insurance policy for a loss to a covered building which equalsless than three thousand five hundred dollars ($3,500), and for which suchholder of a mortgage is otherwise entitled to payment, unless no liabilityexists as to the mortgagor.