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286.7-480 Additional charges prohibited -- Allowed collateral.
In addition to the charge permitted by KRS 286.7-410 to 286.7-600, no further
amount shall be directly or indirectly charged, contracted for or received on any such
installment loan, except lawful fees actually paid to a public official for filing,
recording or releasing any instrument securing the loan, delinquency and deferral
charges as set out in subsection (1) of KRS 286.7-500. Provided, however, that the
certificate holder may request, as collateral for any loan, and collect premiums for:
(1) Notwithstanding the provisions of this or any other law:
(a) A certificate holder may request a borrower to insure tangible personal
property, except household goods, offered as security for a loan not
exceeding seven thousand five hundred dollars ($7,500) under KRS
286.7-410 to 286.7-600 against any substantial risk of loss, damage or
destruction for any amount not to exceed the actual value of such
property or the approximate amount of the loan, whichever is lesser, and
for a term and upon conditions which are reasonable and appropriate
considering the nature of the property and the maturity and other
circumstances of the loan; provided, such insurance is sold by a licensed
agent, broker or solicitor.
(b) A certificate holder may also request as security for any loan obligation
insurance on the life of the borrower, or one of them if there are two or
more. The initial amount of credit life insurance shall not exceed the total
amount repayable under the contract of indebtedness and, where an
indebtedness is repayable in substantially equal installments, the amount
of insurance shall at no time exceed the scheduled or actual amount of
unpaid indebtedness, whichever is greater. Not more than one policy of
life insurance may be written in connection with any loan transaction
under KRS 286.7-410 to 286.7-600.
(c) In accepting any insurance provided for by KRS 286.7-410 to 286.7-600
as security for a loan the certificate holder, its officers, agents or
employees may deduct the premiums or identifiable charge therefor from
the proceeds of the loan, and remit such premiums to the insurance
company writing such insurance and any gain or advantage to the
certificate holder or any employee, officer, director, agent, affiliate or
associate from such insurance or its sale, shall not be considered as
additional or further charge in connection with any loan made under KRS
286.7-410 to 286.7-600. The arranging for and collecting of an identifiable
charge shall not be deemed the sale of insurance.
(d) Every insurance policy or certificate written in connection with a loan
transaction pursuant to paragraph (b) of this subsection shall provide for
cancellation of coverage and a refund of the premium or identifiable
charge unearned upon the discharge of the loan obligation for which such
insurance is security without prejudice to any claim.
(e) Whenever insurance is written in connection with a loan transaction
pursuant to KRS 286.7-410 to 286.7-600, the certificate holder shall
deliver or cause to be delivered to the borrower a policy, certificate or
other memorandum which shall show the coverages and the costs
thereof, if any, to the borrower within thirty days from the date of the loan.
(f)
(2)
(3)
All such insurance shall be written by a company authorized to conduct
such business in this state and the certificate holder shall not require the
purchase of such insurance from any agent or broker designated by the
certificate holder nor shall the certificate holder decline existing coverages
which equal or exceed the standards of KRS 286.7-410 to 286.7-600.
Insurance on real property pledged as security for a loan in an amount not to
exceed the actual value of such property or the approximate amount of the
loan whichever is lesser.
Accident and health insurance on not less than a fourteen-day retroactive
basis, covering one borrower in aggregate amount not to exceed the
approximate amount of the loan with each periodic indemnity payment not to
exceed the original indebtedness divided by the number of periodic
installments; all subject to the general provisions and limitations of KRS
286.7-410 to 286.7-600. Premium rates for accident and health insurance
written pursuant to KRS 286.7-410 to 286.7-600 shall be reasonable in relation
to benefits, and shall be filed with the commissioner of insurance.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 753, effective July 15, 2010. -Amended 1972 Ky. Acts ch. 317, sec. 3. -- Created 1962 Ky. Acts ch. 166,
sec. 6 (first clause of subsection (2)).
Formerly codified as KRS 291.480.
Legislative Research Commission Note (7/12/2006). In accordance with 2006
Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a
section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS
references within this statute have been adjusted to conform with the 2006
renumbering of that code.
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