Missouri

The relevant statute is the Collateral Protection Act, Mo. Rev. Stat. §§427.110 through 427.190 (“MO-CPI”).

A. Actions creditor may take:

(1) MO-CPI §§427.115(2)(a), 427.120 - Creditor may place collateral protection coverage if: buyer and creditor have entered into a credit transaction; the credit agreement requires buyer to maintain insurance on the vehicle; and a notice substantially similar to that set forth below, has been included in the contract or provided on a separate paper at the time the contract is entered. Collateral protection coverage is insurance purchased by creditor after the date of the agreement, to provide protection against loss or damage to the vehicle, in a situation where buyer has failed to provide adequate protection. The costs of insurance, including interest and other charges imposed by creditor in connection with placing such insurance are payable by buyer. The notice must read as follows:

“Unless you provide evidence of the insurance coverage required by your agreement with us, we may purchase insurance at your expense to protect our interests in your collateral. This insurance may, but need not, protect your interests. The coverage that we purchase may not pay any claim that you make or any claim that is made against you in connection with the collateral. You may later cancel any insurance purchased by us, but only after providing evidence that you have obtained insurance as required by our agreement. If we purchase insurance for the collateral, you will be responsible for the costs of that insurance, including the insurance premium, interest and any other charges we may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to your total outstanding balance or obligation. The costs of the insurance may be more than the cost of insurance you may be able to obtain on your own.”

(2) MO-CPI §427.135 - Collateral protection coverage must be cancelled when buyer has in place substitute insurance of at least the level required by the agreement and buyer has proper evidence of such insurance. If within 30 days after Notice of Placement of Insurance is sent and buyer provides proper evidence of insurance, in full force as required, creditor must cancel the coverage and may not charge any costs to buyer.

B. Notices required:

(1) MO-CPI §427.125(1) - Within 30 calendar days of placing collateral protection coverage, creditor must mail to buyer, by first class, postage prepaid at buyer's last known address, a “Notice of Placement of Insurance” substantially similar to the following:

“NOTICE OF PLACEMENT OF INSURANCE

Your credit agreement with us requires you to maintain adequate insurance on your collateral until you pay off your credit agreement. You have not given us proof that you have adequate insurance on your collateral. Under the terms of your credit agreement, we have purchased insurance at your expense to protect our interests in your collateral.

The insurance we purchased will pay claims made by us as the creditor. The insurance we purchased may not pay any claims made by you or against you in connection with your collateral.

You are responsible for the costs of this insurance, including the insurance premium, interest and any other charges we may impose in connection with the purchase of this insurance. The costs of this insurance may be more than insurance you can buy on your own.

You still may obtain insurance of your own choosing on the collateral. If you provide us with proof that you have obtained adequate insurance on your collateral, we will cancel the insurance that we purchased and refund or credit any unearned premiums to you. If, within 30 days after the date this notice was sent to you, you provide us with proof that you had adequate insurance on your collateral as of the date we purchased or placed insurance on this debt and that you continue to have the insurance that you purchased yourself, we will cancel the insurance that we purchased without charging you any costs, interest, or other charges in connection with the insurance that we purchased.”

(2) MO-CPI §427.125(2) - The 30 day period provided in the Notice of Placement of Insurance for buyer to provide proof of insurance, may be extended for 60 days from the date debtor defaults on providing proof of insurance, provided creditor has complied the requirements for notice see B.(1), above. If insurance is placed at the end of the 60 days, the charges buyer is liable for may include a premium charge for coverage retroactive to the date buyer failed to provide proof of insurance.

C. Charges permitted: MO-CPI §§427.125(3), 427.130 - The costs of collateral protection coverage may be repaid by:

(1) Full payment within 30 days of the Notice of Placement of Insurance;

(2) A final balloon payment within 30 days of the final scheduled installment; or

(3) Full amortization over the term of the contract, the term of the insurance policy, or the term for which amortization is used by the creditor. If amortization is used and a coupon book was sent to buyer at the beginning of the transaction, creditor must send debtor either: a reprinted coupon book with revised calculations to include the insurance; a supplemental coupon book to be used in addition to the original one; or, a letter with both the amortized cost of the collateral protection insurance and a calculation of debtor's new payments with the letter containing a statement in bold letters that the new payment obligation replaces the payments indicated in the coupon book.

D. Finance charge allowed on creditor's payment: Yes. MO-CPI §427.125(3).

Click here to view relevant Missouri Code and Regulations.