Section 1488 - Limitations on Requirement and Sale of Insurance: GeneralThe following are general limitations on the requirement and sale of insurance. These requirements are in addition to the requirements contained in Section 1489 of this Article for specific types of security.
(a) A finance company shall not require or sell insurance on any property securing a loan when: (1) The insurance coverage exceeds the reasonable value of the property insured. Reasonable value shall be that value established by a bona fide written appraisal, a statement of replacement value signed by the borrower, a recent sales invoice, or other evidence acceptable to the commissioner.(2) Insurance on the loan security is already in force in an amount reasonably sufficient to protect the finance company considering the circumstances of the loan.(b) A finance company shall not require but may sell insurance on any property securing a loan when:(1) The amount of the unpaid principal balance of a loan, exclusive of any insurance premium, is less than $500. However, if a loan balance is less than a principal amount of $500 at the time existing insurance expires, such insurance may be renewed only at the option of the borrower. The sale of such insurance must be supported by a statement signed by the borrower to the effect that the insurance was purchased at the option of the borrower only.(2) The reasonable value of the property securing the loan is less than $500.(c) A finance company shall take reasonable precautions to prevent the sale of insurance that will result in duplicate coverage.(d) Vendors single interest insurance premiums may not be charged to borrowers.Cal. Code Regs. Tit. 10, § 1488
1. New NOTE filed 12-29-83; effective thirtieth day thereafter (Register 83, No. 53).
2. Change without regulatory effect amending NOTE filed 6-14-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 24). Note: Authority cited: Section 22150, Financial Code. Reference: Sections 22150, 22311, 22312 and 22313, Financial Code.
1. New NOTE filed 12-29-83; effective thirtieth day thereafter (Register 83, No. 53).
2. Change without regulatory effect amending Note filed 6-14-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 24).