38.2-1806 - Interest with respect to credit extended or money lent for premiums on certain policies.
§ 38.2-1806. Interest with respect to credit extended or money lent forpremiums on certain policies.
A. Any agent licensed in this Commonwealth to sell, solicit or negotiateproperty and casualty insurance, mutual assessment property and casualtyinsurance, or ocean marine insurance may charge interest on credit extendedby the agent to the holder of any fire, casualty, surety or marine insurancepolicy, written or being serviced by or through such agent, for the premiumdue on such policy. The rate of interest shall not exceed one and one-halfpercent per month of the unpaid balance. However, the extension of credit orthe making of the loan shall not be in conflict with the contract between theagent and the insurer that issues the policy.
B. A licensed insurance agent extending credit as authorized in this sectionshall not be required to comply with the provisions of Chapter 47 (§38.2-4700 et seq.) of this title with respect to the licensing of premiumfinance companies.
C. Notwithstanding the provisions of §§ 38.2-2114 and 38.2-2212, if anyinsured fails to discharge any of his obligations to a licensed insuranceagent when due in connection with the payment of any premium for a policy ofinsurance, that agent may request in writing that the insurer cancel suchpolicy for nonpayment of premium. Within ten business days of the receipt ofsuch written request, which shall also state the amount owed the agent by thepolicyholder, the insurer shall deliver or mail a written notice ofcancellation to the named insured at the address shown in the policy and toany mortgagee or lienholder. This notice shall state the date on which thecancellation shall become effective. That date shall be established by givingat least the number of days notice prior to cancellation that are required bystatute or the terms of the policy. Except for statutory requirements andcontractual obligations, there shall be no liability on the part of theinsurer for improper cancellation under this section if the insurer (i) ingood faith relies upon the request of the agent and (ii) gives notice ofcancellation in compliance with the provisions of this section.
D. The insurance agent shall have a lien on any return premium for the policyto the extent of the amount owed by the policyholder. Within thirty calendardays of the mailing of the notice of cancellation, the insurer shall forwardthat amount to the agent and shall forward the remainder, if any, of thereturn premium to the policyholder.
(Code 1950, § 38.1-293.1; 1970, c. 370; 1979, c. 513, § 38.1-327.7; 1980, c.581; 1985, c. 33; 1986, c. 562; 1987, c. 521; 2001, c. 706.)