Mississippi

The relevant statute is the Creditor-Placed Insurance Act (“MS-CPI”).

A. Actions creditor may take:

(1) MS-CPI §11 — In order for a creditor to place insurance on the personal property pledged by the buyer and pass on the a cost of such insurance to the buyer the following requirements must be met:

(a) i) The creditor must have a security interest in the personal property;

ii) The credit agreement must require the buyer to maintain insurance on the personal property to protect the creditor's interest;

iii) The credit agreement must authorize the creditor to place the insurance if the buyer fails to provide evidence of the insurance; and

iv) The information set forth in MS-CPI §§11(a) through 11(c) must be clearly disclosed to the buyer at the inception of the credit transaction.

(b) The buyer always has the right to provide required insurance through existing policies of insurance owned or controlled by the buyer or of procuring and furnishing the required coverage through an insurer authorized to transact insurance within Mississippi. However, a lender may establish maximum acceptable deductibles, insurer solidity standards and other reasonable conditions with respect to the required insurance.

(2) MS-CPI §6 — Creditor-placed insurance coverage may not include:

(a) Coverage for the cost of repossession;

(b) Skip, confiscation and conversion coverage;

(c) Coverage for payment of mechanics' or other liens that do not arise from a covered loss occurrence;

(d) Coverage that requires a buyer's insurance deductible to be less than $200; or

(e) Coverage that is broader than the insurance coverages that meet the minimum insurance requirements of the credit agreement.

B. Notices required:

(1) MS-CPI §13 —

(a) A creditor may not impose charges, including premium costs and related interest and finance charges, on a buyer for creditor-placed insurance coverage unless adequate disclosure of the requirement to maintain insurance has been made to the buyer. Adequate disclosure is accomplished if the following occurs:

i) The credit agreement sets forth the requirement that the buyer must maintain insurance on the personal property as provided for in MS-CPI §11;

ii) The creditor makes reasonable efforts to notify the buyer of the requirement to maintain insurance and allows a reasonable time for compliance with this requirement;

iii) A Final Notice as required by MS-CPI §13 is sent to the buyer (see B.(1)(d), below); and

iv) If creditor-placed insurance coverage is issued, a copy of the policy or certificate, with disclosure of premium charged, is sent to the buyer as provided for in MS-CPI §7.

(b) After adequate disclosure of the request to maintain insurance has been made to the buyer as required by MS-CPI §13, a creditor may proceed to impose charges for creditor-placed insurance if the buyer fails to provide evidence of insurance. A creditor may impose charges no earlier than 10 calendar days after sending the final notice. However, the charges can be retroactive to the date of exposure to loss.

(c) Reasonable efforts to notify the buyer are accomplished if:

i) The creditor mails a notice by first-class mail to the buyer's last known address as contained in the creditor's records, stating that the creditor intends to charge the buyer for creditor-placed insurance coverage on the personal property if the buyer fails to provide evidence of the property insurance to the creditor;

ii) The creditor allows the buyer at least 20 calendar days to respond to the notice and provide evidence of acceptable insurance coverage before sending a final notice; and

iii) The creditor sends a final notice in compliance with MS-CPI §13 by first-class mail to the buyer's last known address as contained in the creditor's records at least 10 calendar days before the cost of insurance is charged to the buyer by the creditor. Proof of the mailing of the final notice shall be retained for at least 3 years following the expiration or termination of the coverage or as otherwise required by law. A register of letters will be deemed sufficient proof to satisfy this requirement.

(d) The initial notice must be in a form determined by the creditor to remind the buyer of the requirement to maintain insurance on the personal property. The Final Notice must be as complete as the following notice, printed in not less than 12 point type, and modified where necessary to fit the nature of the credit transaction:

"FINAL NOTICE

Your credit agreement with us requires you to have property insurance on the collateral until you pay off your loan. You have not given us proof you have insurance on the property. You can ask your insurance company or agent to give us proof of insurance or you can send us proof you have property insurance within ten (10) calendar days after the date this letter was postmarked. If you do not, we will charge you for the insurance we buy.

You must pay for the property insurance we buy. It may cost more than insurance you can buy on your own. The premium of the insurance we buy may be added to your loan balance and we may charge you interest on it. You will be charged interest on the premium at the rate of _________ per annum.

The insurance we buy will pay claims to us (the creditor) for physical damage to your property. It will not pay any claims made against you and it may not pay you for any claims you make. The insurance we buy will not give you any liability insurance coverage and will not meet any other requirements of state law.

We may receive compensation for placing this insurance, which is included in the cost of coverage charged to you.

The property coverage we buy will start on the date shown in the policy or certificate, which may go back to the date of the loan or the date your prior coverage stopped. We will cancel the insurance we bought for you and give you a refund or credit of unearned charges if you give us proof you have bought property insurance somewhere else or if you have paid off the loan."

(e) All creditor-placed insurance must be set forth in an individual policy or certificate of insurance. Not earlier than the sending of the final notice nor 15 days after a charge is made to the buyer for creditor-placed insurance coverage, the creditor will cause a copy of the individual policy, certificate or other evidence of insurance coverage evidencing the creditor- placed insurance coverage to be sent, first-class mail, to the buyer's last known address.

(2) MS-CPI §4(4) — If a charge is made to a buyer for creditor-placed insurance coverage that exceeds a term of 1 year, the buyer must be notified at least annually that the insurance will be canceled and a refund or credit of unearned charges made if evidence of acceptable insurance secured by the buyer is provided.

C. Charges permitted:

(1) MS-CPI §13 — A creditor may impose charges, including premium costs and interest and finance charges, on a buyer for creditor-placed insurance coverage if the disclosure requirements of MS-CPI §13 are followed. See B., above.

(2) MS-CPI §12 — A creditor must adhere to the following:

(a) The entire amount of the premium due from a creditor must be remitted to the insurer in accordance with the insurer's requirements. No commissions may be paid to, or retained by, a person or entity except a licensed and appointed insurance producer.

(b) The retention by the creditor of unearned premiums upon cancellation of the insurance without crediting to the buyer's account the amount of unearned insurance charges is prohibited.

(c) Rebates to the creditor of a portion of the premium charged to the buyer are prohibited as are other inducements provided to the creditor by an insurer or producer. The listing of the following activities as prohibited rebates or inducements is not intended to be restrictive, and the commissioner may identify an activity as prohibited by rule, regulation or order.

D. Finance charge allowed on creditor's payment: MS-CPI §13 — A creditor may impose charges, including premium costs and interest and finance charges, on a buyer for creditor-placed insurance coverage if the disclosure requirements of MS-CPI §13 are followed. See B., above.

Click here to view relevant Mississippi Code and Regulations.