Washington

The relevant statute is the Casualty Insurance Act, Wash. Rev. Code Ann. §§48.22.110 through 48.22.135 (“WA-CPA”).

A. Actions creditor may take: WA-CPA §48.22.120 - If reasonable efforts to provide the borrower with the required “Final Notice and Warning” fail to produce evidence of the required insurance, the creditor may impose charges for vendor single interest or collateral protection coverage no sooner than eight days after giving notice as required under WA-CPA.

B. Notices required: WA-CPA §48.22.120 -

(1) Reasonable efforts to provide notice under this section means within 30 days before the creditor is required to send the “Final Notice and Warning”, the creditor must mail a notice by first class mail to the borrower's last known address as contained in the creditor's records. The notice must state that the creditor intends to charge the buyer for vendor single interest or collateral protection coverage on the collateral if the buyer fails to provide evidence of proper insurance to the creditor.

(2) A creditor may not impose charges, including interest, finance, and premium charges, on a buyer for vendor single interest or collateral protection coverage for the motor vehicle or vessel until the following or a substantially similar warning printed in ten-point type is sent by certified mail to the buyer’s last known address as contained in the creditor’s records at least 8 days before the insurance is charged to the buyer by the insurer:

“FINAL NOTICE AND WARNING

UNLESS YOU PROVIDE US WITH EVIDENCE OF THE INSURANCE COVERAGE AS REQUIRED BY OUR LOAN AGREEMENT WITHIN FIVE DAYS AFTER THE POSTMARK ON THIS LETTER, WE WILL PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT YOUR INTEREST. IF THE COLLATERAL BECOMES DAMAGED, THE COVERAGE WE PURCHASE MAY NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM MADE AGAINST YOU. YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT YOU HAVE OBTAINED PROPER COVERAGE ELSEWHERE OR HAVE PAID OFF THE LOAN ON THE COLLATERAL IN ITS ENTIRETY.

YOU ARE RESPONSIBLE FOR THE COST OF THE INSURANCE PURCHASED BY US. THE COST OF THIS INSURANCE MAY BE ADDED TO YOUR LOAN BALANCE. IF THE COST IS ADDED TO THE LOAN BALANCE, THE INTEREST RATE ON THE UNDERLYING LOAN WILL APPLY TO THIS ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE YOUR COVERAGE LAPSED OR THE DATE YOU FAILED TO PROVIDE PROOF OF COVERAGE.

THE COVERAGE WE PURCHASE WILL COST YOU A TOTAL OF APPROXIMATELY $.... (PLUS INTEREST) AND MAY BE CONSIDERABLY MORE EXPENSIVE THAN INSURANCE YOU CAN OBTAIN ON YOUR OWN.”

The “Final Notice and Warning” shall identify whether the coverage to be purchased is vendor single interest or collateral protection coverage and disclose the extent of the borrower's coverage, if any, including a statement of whether the coverage satisfies Washington's mandatory liability insurance laws.

C. Charges permitted: WA-CPA §48.22.120(1) - A creditor may not impose interest, finance or insurance premium charges until it has compiled with the WA-CPA notice requirements.

D. Finance charge allowed on creditor's payment: WA-CPA §48.22.120(1) - The interest rate for financing the cost of vendor's single interest or collateral protection coverage may not exceed the interest rate applied to the underlying obligation.

Click here to view relevant Washington Code and Regulations.