38.2-3721 - Term of credit life insurance and credit accident and sickness insurance.
§ 38.2-3721. Term of credit life insurance and credit accident and sicknessinsurance.
A. The term of any policy or certificate of credit life insurance or creditaccident and sickness insurance shall, subject to acceptance by the insurer,commence on the date when the debtor becomes obligated to the creditor;except that where a group policy provides coverage with respect to existingobligations, the insurance on a debtor with respect to such indebtednessshall commence on the effective date of the policy. Where evidence ofinsurability is required and such evidence is furnished more than thirty daysafter the date when the debtor becomes obligated to the creditor, the term ofthe insurance may commence on the date the insurance company determines theevidence to be satisfactory, and in such event there shall be an appropriaterefund or adjustment of any charge to the debtor for insurance. The term ofsuch insurance shall not extend more than fifteen days beyond the scheduledmaturity date of the indebtedness except when extended without additionalcost to the debtor. In all cases of termination prior to scheduled maturity,a refund shall be paid or credited as provided in § 38.2-3729.
B. Renewal or refinancing of the indebtedness. - If the indebtedness isdischarged due to renewal or refinancing prior to the scheduled maturitydate, the insurance in force shall be terminated before any new insurance maybe issued in connection with the renewed or refinanced indebtedness. In allcases of such termination prior to scheduled maturity, a refund shall be paidor credited to the debtor as provided in § 38.2-3729. In any renewal orrefinancing of the indebtedness, the effective date of the coverage forpurposes of application of any policy provision shall be deemed to be thefirst date on which the debtor became insured under the policy covering theindebtedness which was renewed or refinanced at least to the extent of theremaining amount and duration of coverage in force on the indebtedness thatwas renewed or refinanced.
C. Termination of group credit insurance policy. - 1. If a debtor is coveredby a group credit insurance policy providing for the payment of singlepremiums to the insurer, then provision shall be made by the insurer that inthe event of termination of the policy for any reason, insurance coveragewith respect to any debtor insured under such policy shall be continued forthe entire period for which the single premium has been paid.
2. If a debtor is covered by a group credit insurance policy providing forthe payment of premiums to the insurer on a monthly outstanding balancebasis, then the policy shall provide that, in the event of termination ofsuch policy for whatever reason, notice of termination thereof shall be givento the insured debtor at least thirty days prior to the effective date oftermination except where replacement of the coverage by the same or anotherinsurer in the same or greater amount takes place without lapse of coverage.The notice required in this subdivision shall be given by the insurer or, atthe option of the insurer, by the creditor, in writing, mailed to the insureddebtor at the insured debtor's address as shown in the records of the insureror creditor.
D. Each credit life insurance or credit accident and sickness insurancepolicy or certificate shall contain a provision that the insurance may beterminated upon written request of the debtor except if the insurance wasrequired as security for any indebtedness at the time of the credittransaction. If insurance is required, the debtor shall have the right toterminate the insurance by furnishing evidence of other insurance that is atleast equal in coverage and protection to the creditor.
(1960, c. 67, § 38.1-482.5; 1982, c. 223, § 38.2-3706; 1986, c. 562; 1992, c.586.)