20-471. Definition of insurance service charge;
limit; prohibited use
A. "Insurance service charge" means any charge, other than the insurance premium,
for the service of placing, renewing, approving or recording on the records and accounts
of any mortgagee, vendor, holder or lender any substitution of insurers or change in
insurance on the collateral security for a loan.
B. Except as provided in subsection C of this section, it shall be unlawful for any
mortgagee, vendor, holder or lender to charge an insurance company, insurance agency,
borrower, mortgagor or purchaser with payment of an insurance service charge.
C. An insurance service charge of eight dollars may be charged as a condition to
acceptance of an insurance policy tendered to satisfy the requirements of a real estate
mortgage contract when a mortgagee, vendor, holder or lender performs services in
connection with this subsection, as follows:
1. An insurance policy is tendered without an authorization signed by the borrower
appointing the insurance producer tendering the policy attached thereto, unless a prior
authorization not revoked has been delivered to the lender.
2. An insurance policy is tendered without the borrower's mortgage loan number as
assigned for payment identification or a legal description of the insured property
printed in bold-faced type on the face of the policy.
3. An original, a renewal or a replacement insurance policy is tendered less than
ten days prior to an expiration date, renewal date or continuous policy premium
anniversary date, or expiration of an insurance binder issued preliminary to issuance of
a permanent policy.
4. An insurance policy is tendered by an agent other than an agent appearing on the
records of the mortgagee as authorized to represent the borrower at any time during the
term of such insurance other than within thirty days prior to the policy's expiration
date, renewal or continuous policy premium anniversary date.
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