Section 0780-01-18-.02 - REQUIREMENTS WHICH ARE DEEMED TO BE NECESSARY FOR FULL COMPLIANCE WITH THE LAWThe following procedures are published herewith as requirements which are deemed to be necessary for full compliance with the law:
(a) Purchasers or borrowers, in all credit transactions where insurance coverage is required, must not be misled concerning their right to purchase insurance from any insurance company licensed by this Department and which company provides the necessary coverage. The finance factor or creditor must act affirmatively in such cases in advising the borrower of his rights to a choice of companies or agents. Where insurance is required, the creditor need not accept as evidence of insurance a policy which does not contain a LOSS PAYABLE CLAUSE.(b) When the purchaser or borrower chooses to purchase insurance from the insurer represented by the finance factor or creditor, the seller must furnish the purchaser with evidence of the insurance at the time the sales contract or purchase order is executed. Such insurance evidence must be in the form of an insurance binder. The policy shall be delivered to the purchaser or borrower within twenty-five (25) days following the execution of the initial evidence of insurance.(c) Where single interest is written in connection with a finance or loan transaction, a clear and concise statement shall be furnished to the purchaser or borrower, advising him that the insurance effected is solely for the interest of the dealer, finance factor or lender, and that no protection thereunder exists for the benefit of the purchaser or borrower. Such policies shall be clearly stamped or printed in not less than fourteen point type of the title page, "LENDER'S INTEREST ONLY."(d) If an automobile physical damage policy does not afford automobile bodily injury and property damage insurance, the policy shall state the following notification: "THIS POLICY DOES NOT PROVIDE AUTOMOBILE BODILY INJURY OR PROPERTY DAMAGE INSURANCE AND IS NOT IN COMPLIANCE WITH THE MOTOR VEHICLE FINANCIAL RESPONSIBILITY LAW OF ANY STATE."
This notification must be not less than FOURTEEN point type and it shall be displayed in RED across the face on the filing back of the policy and may be displayed as an overprint or by a rubber stamp impression. This notification shall also be displayed on sales instruments which afford only material damage insurance. USE OF STICKERS FOR THIS PURPOSE IS PROHIBITED.
(e) Property insurance shall not be written in an amount greater than the lessor of 1. the actual cash value of the collateral less any amount which would be payable under existing insurance, or2. the amount of the loan.(f) If the borrower has the same collateral insured under more than one policy or certificate, each policy or certificate shall be deemed to be primary coverage for the purpose of paying claims.(g) Each policy or certificate shall be written for a dollar amount and specific term, each of which shall be stated therein.Tenn. Comp. R. & Regs. 0780-01-18-.02
Original rule certified June 10, 1974. Amended: Filed August 5, 1974; Effective September 4, 1974.Authority: T.C.A. §45-2011.