CHAPTER 4. INSURANCE
IC 24-4.5-4
Chapter 4. Insurance
(Part 1. Insurance in General)
IC 24-4.5-4-101
Short title
Sec. 101. Short Title _ This Chapter shall be known and may becited as Uniform Consumer Credit Code - Insurance.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-102
Application; relation to credit insurance act
Sec. 102. (1) Except as provided in subsection (2), this chapterapplies to insurance provided or to be provided in relation to aconsumer credit sale (IC 24-4.5-1-301.5(8)), a consumer lease (IC24-4.5-2-106), or a consumer loan (IC 24-4.5-1-301.5(9)).
(2) The provision on cancellation by a creditor (IC 24-4.5-4-304)applies to loans the primary purpose of which is the financing ofinsurance. No other provision of this chapter applies to insurance sofinanced.
(3) This chapter supplements and does not repeal IC 27-8-4 (thecredit insurance act). The provisions of this article concerningadministrative controls, liabilities, and penalties do not apply topersons acting as insurers, and the similar provisions of IC 27-8-4 donot apply to creditors and debtors.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.153-1986, SEC.1; P.L.35-2010, SEC.61.
IC 24-4.5-4-103
"Consumer credit insurance" defined
Sec. 103. In this article, "consumer credit insurance" meansinsurance, other than insurance on property, by which the satisfactionof debt in whole or in part is a benefit provided, but does not include:
(1) insurance issued as an isolated transaction on the part of theinsurer not related to an agreement or plan for insuring debtorsof the creditor; or
(2) insurance indemnifying the creditor against loss due to thedebtor's default.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.153-1986, SEC.2.
IC 24-4.5-4-104
Creditor's provisions of and charge for insurance; excess amountof charge
Sec. 104. Creditor's Provisions of and Charge for Insurance;Excess Amount of Charge - (1) Except as otherwise provided in thisChapter and subject to the provisions on additional charges (IC24-4.5-2-202 and IC 24-4.5-3-202) and maximum charges (Part 2 ofChapter 2 and Chapter 3), a creditor may agree to provide insurance,
and may contract for and receive a charge for insurance separatefrom and in addition to other charges. A creditor need not make aseparate charge for insurance provided or required by him. ThisArticle does not authorize the issuance of any insurance prohibitedunder any statute, or rule thereunder, governing the business ofinsurance.
(2) The excess amount of a charge for insurance provided for inagreements in violation of this Chapter is an excess charge for thepurposes of the provisions of the Chapter on remedies and penalties(Chapter 5) as to effect of violations on rights of parties (IC24-4.5-5-202) and of the provisions of the Chapter on administration(Chapter 6) as to civil actions by the department (IC 24-4.5-6-113).
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended by P.L.14-1992,SEC.41.
IC 24-4.5-4-105
Conditions applying to insurance to be provided by creditor
Sec. 105. Conditions Applying to Insurance to be Provided byCreditor _ If a creditor agrees with a debtor to provide insurance
(1) the insurance shall be evidenced by an individual policy orcertificate of insurance delivered to the debtor, or sent to him at hisaddress as stated by him, within thirty (30) days after the term of theinsurance commences under the agreement between the creditor anddebtor; or
(2) the creditor shall promptly notify the debtor of any failure ordelay in providing the insurance.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-106
Unconscionability
Sec. 106. Unconscionability _ (1) In applying the provisions ofthe Article on unconscionability (24-4.5-5-108 and 24-4.5-6-111) toa separate charge for insurance, consideration shall be given, amongother factors, to
(a) potential benefits to the debtor including the satisfaction of hisobligations;
(b) the creditor's need for the protection provided by theinsurance; and
(c) the relation between the amount and terms of credit grantedand the insurance benefits provided.
(2) If consumer credit insurance otherwise complies with thisChapter and other applicable law, neither the amount nor the term ofthe insurance nor the amount of a charge therefor is in itselfunconscionable.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-107
Maximum charge by creditor for insurance; methods forcalculating charge
Sec. 107. Maximum Charge by Creditor for Insurance - (1) Except
as provided in subsection (2), if a creditor contracts for or receivesa separate charge for insurance, the amount charged to the debtor forthe insurance may not exceed the premium to be charged by theinsurer, as computed at the time the charge to the debtor isdetermined, conforming to any rate filings required by law and madeby the insurer with the Insurance Commissioner.
(2) A creditor who provides consumer credit insurance in relationto a revolving charge account (IC 24-4.5-2-108) or revolving loanaccount (IC 24-4.5-3-108) may calculate the charge to the debtor ineach billing cycle by applying the current premium rate to:
(a) the average daily unpaid balance of the debt in the cycle;
(b) the unpaid balance of the debt or a median amount within aspecified range of unpaid balances of debt on approximately thesame day of the cycle. The day of the cycle need not be the day usedin calculating the credit service charge (IC 24-4.5-2-207) or loanfinance charge (IC 24-4.5-3-201 and IC 24-4.5-3-508), but thespecified range shall be the range used for that purpose;
(c) the unpaid balances of principal calculated according to theactuarial method; or
(d) the amount of the insurance benefit for the cycle.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.141-2005, SEC.2.
IC 24-4.5-4-108
Prepayment by proceeds of consumer credit insurance; refundrequired; documentation; amount; interest; civil penalty
Sec. 108. Refund or Credit Required; Amount _ (1) Uponprepayment in full of a consumer credit sale or consumer loan by theproceeds of consumer credit insurance, the debtor or the debtor'sestate is entitled to a refund of:
(a) any portion of a separate charge for insurance which byreason of prepayment is retained by the creditor or returned tothe creditor by the insurer unless the charge was computed fromtime to time on the basis of the balances of the debtor's account;and
(b) any portion of an additional charge that is:
(i) assessed in accordance with IC 24-4.5-2-202(1)(c) orIC 24-4.5-3-202(1)(e); and
(ii) subject to rebate upon prepayment.
(2) This chapter does not require a creditor to grant a refund orcredit to the debtor if all refunds and credits due to the debtor underthis chapter amount to less than one dollar ($1), and except asprovided in subsection (1) does not require the creditor to account tothe debtor for any portion of a separate charge for insurance because:
(a) the insurance is terminated by performance of the insurer'sobligation;
(b) the creditor pays or accounts for premiums to the insurer inamounts and at times determined by the agreement betweenthem; or
(c) the creditor receives directly or indirectly under any policy
of insurance a gain or advantage not prohibited by law.
(3) Except as provided in subsection (2), the creditor or thecreditor's assignee shall promptly make an appropriate refund orcredit to the debtor for any separate charge made for insurance or foran additional charge described in subsection (1)(b) if:
(a) the insurance is not provided or is provided for a termshorter than the term for which the charge to the debtor forinsurance was computed; or
(b) the insurance or the protection provided in exchange for theadditional charge described in subsection (1)(b) terminates priorto the end of the scheduled term of the coverage because ofprepayment in full or otherwise.
(4) An initial creditor, a subsequent creditor, or an assignee of aninitial or a subsequent creditor, shall maintain documentation of anyaccount that is subject to a refund or credit under this section. Theinformation maintained under this subsection shall be made availableto the department as necessary to determine compliance with thissection.
(5) A refund or credit required by subsection (3) is appropriate asto amount if it is computed according to a method prescribed orapproved by the insurance commissioner or a formula filed by theinsurer with the insurance commissioner at least thirty (30) daysbefore the debtor's right to a refund or credit becomes determinable,unless the method or formula is used after the insurancecommissioner notifies the insurer that it is disapproved.
(6) If a refund or credit required by subsection (1) or (3) is notmade to the debtor within sixty (60) days after the date the debt isterminated, due to prepayment in full or otherwise, the creditor shallpay to the debtor for each day after the sixty (60) day period hasexpired an amount equal to the daily interest at the contracted annualpercentage rate on the amount of the refund required by subsection(1) due at the time of prepayment or termination. The director mayimpose an additional civil penalty of not greater than one thousanddollars ($1,000) per occurrence if a creditor engages in a pattern orpractice of failing to comply with this subsection.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.122-1994, SEC.29; P.L.172-1997, SEC.7; P.L.213-2007,SEC.13; P.L.217-2007, SEC.12; P.L.90-2008, SEC.12.
IC 24-4.5-4-109
Existing insurance; choice of insurer
Sec. 109. Existing Insurance; Choice of Insurer _ If a creditorrequires insurance, upon notice to the creditor the debtor shall havethe option of providing the required insurance through an existingpolicy of insurance owned or controlled by the debtor, or through apolicy to be obtained and paid for by the debtor, but the creditor mayfor reasonable cause decline the insurance provided by the debtor.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-110 Charge for insurance connection with a deferral, refinancing, orconsolidation; duplicate charges
Sec. 110. (1) A creditor may not contract for or receive a separatecharge for insurance in connection with a deferral (IC 24-4.5-2-204or IC 24-4.5-3-204), a refinancing (IC 24-4.5-2-205 orIC 24-4.5-3-205), or a consolidation (IC 24-4.5-2-206 orIC 24-4.5-3-206), unless:
(a) the debtor agrees at or before the time of the deferral,refinancing, or consolidation that the charge may be made;
(b) the debtor is or is to be provided with insurance for anamount or a term, or insurance of a kind, in addition to that towhich he would have been entitled had there been no deferral,refinancing, or consolidation;
(c) the debtor receives a refund or credit on account of anyunexpired term of existing insurance in the amount that wouldbe required if the insurance were terminated (IC 24-4.5-4-108);and
(d) the charge does not exceed the amount permitted by thischapter (IC 24-4.5-4-107).
(2) A creditor may not contract for or receive a separate chargefor insurance which duplicates insurance with respect to which thecreditor has previously contracted for or received a separate charge.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.152-1986, SEC.66.
IC 24-4.5-4-111
Cooperation between administrator and insurance commissioner
Sec. 111. Cooperation Between the Department and InsuranceCommissioner - The department and the Insurance Commissioner areauthorized and directed to consult and assist one another inmaintaining compliance with this Chapter. They may jointly pursueinvestigations, prosecute suits, and take other official action, as mayseem to them appropriate, if either of them is otherwise empoweredto take the action. If the department is informed of a violation orsuspected violation by an insurer of this Chapter, or of the insurancelaws, rules, and regulations of this State, the department shall advisethe Insurance Commissioner of the circumstances.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended by P.L.14-1992,SEC.42.
IC 24-4.5-4-112
Administrative action of commissioner of insurance
Sec. 112. (1) To the extent that his responsibility under thischapter requires, the commissioner of insurance shall issue rules withrespect to insurers, and with respect to refunds (IC 24-4.5-4-108),forms, schedules of premium rates and charges (IC 24-4.5-4-203),and his approval or disapproval thereof and, in case of violation, maymake an order for compliance.
(2) IC 4-21.5-3 applies to and governs all agency action taken bythe commissioner of insurance pursuant to this section.(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.152-1986, SEC.67; P.L.7-1987, SEC.107.
(Part 2. Consumer Credit Insurance)
IC 24-4.5-4-201
Term of insurance
Sec. 201. Term of Insurance _ (1) Consumer credit insuranceprovided by a creditor may be subject to the furnishing of evidenceof insurability satisfactory to the insurer. Whether or not suchevidence is required, the term of the insurance shall commence nolater than when the debtor becomes obligated to the creditor or whenthe debtor applies for the insurance, whichever is later, except asfollows:
(a) if any required evidence of insurability is not furnished untilmore than thirty (30) days after the term would otherwise commence,the term may commence on the date when the insurer determines theevidence to be satisfactory; or
(b) if the creditor provides insurance not previously providedcovering debts previously created, the term may commence on theeffective date of the policy.
(2) The originally scheduled term of the insurance shall extend atleast until the due date of the last scheduled payment of the debtexcept as follows:
(a) if the insurance relates to a revolving charge account orrevolving loan account, the term need extend only until the paymentof the debt under the account and may be sooner terminated after atleast thirty (30) days' notice to the debtor; or
(b) if the debtor is advised in writing that the insurance will bewritten for a specified shorter time, the term need extend only untilthe end of the specified time.
(3) The term of the insurance shall not extend more than fifteen(15) days after the originally scheduled due date of the last scheduledpayment of the debt unless it is extended without additional cost tothe debtor or as an incident to a deferral; refinancing, orconsolidation.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-202
Amount of insurance
Sec. 202. (1) Except as provided in subsection (2):
(a) in the case of consumer credit insurance providing lifecoverage, the amount of insurance may not initially exceed thedebt and, if the debt is payable in instalments, may not at anytime exceed the greater of the scheduled or actual amount of thedebt; or
(b) in the case of any other consumer credit insurance, the totalamount of periodic benefits payable may not exceed the total ofscheduled unpaid instalments of the debt, and the amount of anyperiodic benefit may not exceed the original amount of debt
divided by the number of periodic instalments in which it ispayable.
(2) If consumer credit insurance is provided in connection with arevolving charge account or revolving loan account, the amountspayable as insurance benefits may be reasonably commensurate withthe amount of debt as it exists from time to time. If consumer creditinsurance is provided in connection with a commitment to grantcredit in the future, the amounts payable as insurance benefits maybe reasonably commensurate with the total from time to time of theamount of debt and the amount of the commitment.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.247-1983, SEC.20.
IC 24-4.5-4-203
Filing and approval of rates and forms
Sec. 203. (1) A creditor may not use a form, or a schedule ofpremium rates or charges, the filing of which is required by thissection, if the insurance commissioner has disapproved the form orschedule and has notified the insurer of his disapproval. A creditormay not use a form or schedule unless:
(a) the form or schedule has been on file with the insurancecommissioner for thirty (30) days, or has earlier been approvedby him; and
(b) the insurer has complied with this section with respect to theinsurance.
(2) Except as provided in subsection (3), all policies, certificatesof insurance, notices of proposed insurance, applications forinsurance, endorsements and riders relating to consumer creditinsurance delivered or issued for delivery in this state, and theschedules of premium rates or charges pertaining thereto, shall befiled by the insurer with the insurance commissioner. Within thirty(30) days after the filing of any form or schedule, he shall disapproveit if the premium rates or charges are unreasonable in relation to thebenefits provided under the form, or if the form contains provisionswhich are unjust, unfair, inequitable, or deceptive, or encouragemisrepresentation of the coverage, or are contrary to any provisionof IC 27 or of any rule promulgated under IC 27.
(3) If a group policy has been delivered in another state, the formsto be filed by the insurer with the insurance commissioner are thegroup certificates and notices of proposed insurance. He shallapprove them if:
(a) they provide the information that would be required if thegroup policy were delivered in this state; and
(b) the applicable premium rates or charges do not exceed thoseestablished by his rules.
(Formerly: Acts 1971, P.L.366, SEC.5.) As amended byP.L.152-1986, SEC.68.
(Part 3. Property and Liability Insurance)
IC 24-4.5-4-301
Property insurance
Sec. 301. Property Insurance - (1) A creditor may not contract foror receive a separate charge for insurance against loss of or damageto property unless
(a) the insurance covers a substantial risk of loss of or damage toproperty related to the credit transaction;
(b) the amount, terms, and conditions of the insurance arereasonable in relation to the character and value of the propertyinsured or to be insured; and
(c) the term of the insurance is reasonable in relation to the termsof credit.
(2) The term of the insurance is reasonable if it is customary anddoes not extend substantially beyond a scheduled maturity.
(3) A creditor may not contract for or receive a separate chargefor insurance against loss of or damage to property unless the amountfinanced or principal exclusive of charges for the insurance is threehundred dollars ($300) or more, and the value of the property is threehundred dollar ($300) or more.
(4) The amounts of three hundred dollars ($300) in subsection (3)are subject to change pursuant to the provisions on adjustment ofdollar amounts (24-4.5-1-106).
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-302
Insurance on creditor's interest only
Sec. 302. Insurance on Creditor's Interest Only _ If a creditorcontracts for or receives a separate charge for insurance against lossof or damage to property, the risk of loss or damage not willfullycaused by the debtor is on the debtor only to the extent of anydeficiency in the effective coverage of the insurance, even though theinsurance covers only the interest of the creditor.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-303
Liability insurance
Sec. 303. Liability Insurance _ A creditor may not contract foror receive a separate charge for insurance against liability unless theinsurance covers a substantial risk of liability arising out of theownership or use of property related to the credit transaction.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-304
Cancellation by creditor
Sec. 304. Cancellation by Creditor _ A creditor shall not requestcancellation of a policy of property or liability insurance except afterthe debtor's default or in accordance with a written authorization bythe debtor, and in either case the cancellation does not take effectuntil written notice is delivered to the debtor or mailed to him at hisaddress as stated by him. The notice shall state that the policy may
be cancelled on a date not less than ten (10) days after the notice isdelivered, or, if the notice is mailed, not less than thirteen (13) daysafter it is mailed.
(Formerly: Acts 1971, P.L.366, SEC.5.)
IC 24-4.5-4-305
Refund of unearned premium for property insurance uponpayment of loan
Sec. 305. Upon the payment in full of a consumer credit sale orconsumer loan, the creditor or creditor's assignee shall promptlymake an appropriate refund of the unearned premium for anyproperty insurance with respect to which the creditor or the creditaccount of the consumer is a beneficiary.
As added by P.L.122-1994, SEC.30.