Or. Admin. Code § 836-060-0011

Current through Register Vol. 63, No. 12, December 1, 2024

Section 836-060-0011 - Rights and Treatment of Debtors

(1) Multiple Plans of Insurance. If a creditor makes available to debtors more than one plan of credit life insurance or more than one plan of credit health insurance, the creditor must inform each debtor of all such plans.

(2) Substitution. When a creditor requires credit life insurance, credit health insurance or both as additional security for an indebtedness, the creditor shall give the debtor the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by the debtor, or of procuring and furnishing the required coverage through any insurer authorized to transact insurance in this state. The debtor shall be informed by the creditor before the transaction is completed of this right to provide alternative coverage.

(3) Evidence of Coverage. All credit insurance shall be evidenced by an individual policy or, in the case of group insurance, by a certificate of insurance. The policy or certificate shall be delivered to the debtor in accordance with ORS 743.377, and shall set forth the information required by 743.377 and other provisions of the Insurance Code.

(4) Claims Processing. All credit insurance claims shall be processed in accordance with ORS 743.380.

(5) Claim Standards. The following requirements apply to claims:

(a) All claim payments shall go first to pay the balance of the indebtedness of the insured. Any residual benefit shall be paid to the insured or the designated beneficiary or the estate of the debtor;

(b) All claims are covered upon the earlier of the date of acceptance by the insurer for insurability or 30 days after the date of the application for coverage if not rescinded. Except for falsified statements, no claim may be denied for reason of ineligibility or uninsurability if the coverage is issued and not rescinded before the date of the claim; and

(c) All claims for consumer credit insurance are subject to ORS 746.230 and OAR 836-080-0205 to OAR 836-080-0235.

(6) Termination of Group Credit Insurance Policy:

(a) If a debtor is covered by a group credit insurance policy providing for the payment of single premiums to the insurer, provision shall be made by the insurer that, in the event of termination of the policy for any reason, insurance coverage with respect to the debtor shall be continued for the entire period for which the single premium was paid, subject to cancellation by the insured person;

(b) If a debtor is covered by a group credit insurance policy providing for the payment of premiums to the insurer on a monthly outstanding balance basis, the policy shall provide that, in the event of termination of the policy for any reason, notice of the termination shall be given to the debtor at least 30 days prior to the effective date of termination, unless replacement of the coverage by the same or another insurer in the same or greater amount occurs without lapse of coverage. This notice shall be given by the insurer or, at the option of the insurer, by the creditor.

(7) Interest on Premiums. If a creditor adds identifiable insurance charges or premiums for credit insurance to an indebtedness, and any direct or indirect finance, carrying, credit or service charge is made to the debtor on such insurance charges or premiums, the creditor shall remit and the insurer shall collect the insurance charges or premiums within 60 days after they are added to the indebtedness.

(8) Renewal or Refinancing of Indebtedness. If an indebtedness is discharged because of renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness. In all such cases of termination prior to scheduled maturity, a refund shall be paid or credited to the debtor as provided in OAR 836-060-0036. In the renewal or refinancing of the indebtedness, the effective date of the insurance coverage with respect to any policy provision shall be considered to be the first date on which the debtor became insured under the policy covering the indebtedness which was renewed or refinanced, at least to the extent of the amount and term of the indebtedness outstanding at the time of the renewal or refinancing of the debt.

(9) Maximum Aggregate Provisions. A provision in an individual policy or a group certificate that sets a maximum limit on total payments shall apply only to that individual policy or group certificate.

(10) Voluntary Prepayment of Indebtedness. If a debtor prepays the indebtedness other than as a result of a death payment or a lump-sum disability payment:

(a) Any credit life insurance covering the indebtedness shall be terminated and an appropriate refund of credit life insurance premium shall be paid to the debtor in accordance with OAR 836-060-0036;

(b) Any credit health insurance covering the indebtedness shall be terminated and an appropriate refund of credit health insurance premium shall be paid to the debtor in accordance with OAR 836-060-0036. If a claim under the coverage is in progress at the time of prepayment, the amount of refund may be determined as if the prepayment did not occur until the payment of benefits terminates. No refund need be paid during any period of disability for which credit health insurance benefits are payable. A refund shall be computed as if prepayment occurred at the end of the disability period; and

(c) A refund of premium that is owing because of early termination of a loan is determined as of the date the loan or coverage is terminated. The creditor shall promptly refund the amount owing the debtor or report a refund due to the insurer. In all cases, the insurer is responsible for a prompt refund. The refund shall be made not later than the 30th day after the loan is terminated.

(11) Involuntary Prepayment of Indebtedness. If an indebtedness is prepaid by the proceeds of a credit life insurance policy or by a lump-sum payment of a disability claim under a credit insurance policy covering the debtor, it shall be the responsibility of the insurer that the following are paid to the insured debtor, if living, or to the beneficiary, other than the creditor, named by the debtor, or to the debtor's estate:

(a) In the case of prepayment by the proceeds of a credit life insurance policy, or by the proceeds of a lump-sum total and permanent disability benefit under credit life insurance coverage, an appropriate refund of the credit health insurance premium in accordance with OAR 836-060-0036.

(b) In the case of prepayment by a lump-sum payment of a disability claim, an appropriate refund of the credit life insurance premium in accordance with OAR 836-060-0036; and

(c) In either case, the amount of the benefits in excess of the amount required to repay the indebtedness after crediting any unearned interest or finance charges.

(12) Amounts insured. The following types of insurance must provide benefits as follows:

(a) Credit life insurance based on gross coverage must provide benefits not to exceed the amount of indebtedness outstanding;

(b) Credit life insurance based on net coverage must provide benefits not to exceed the amount of indebtedness outstanding less the unearned interest and finance charges;

(c) Credit health insurance must provide benefits not to exceed the amount of outstanding indebtedness inclusive of unearned interest or finance charges for the benefit period unless paid in a lump sum.

(13) Participation. No group policy shall contain a minimum participation percentage.

Or. Admin. Code § 836-060-0011

IC 7-1982, f. 2-12-82, ef. 6-1-82; Repealed by IC 13-1982, f. 11-30-82, ef. 12-1-82; IC 1-1983, f. 1-28-83, ef. 2-1-83; ID 24-1990, f. 12-28-90, cert. ef. 1-1-91; ID 12-2000, f. 11-14-00, cert. ef. 1-1-01

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 743.376-743.378, 743.380, 746.220 & 746.240