1995 OREGON REVISED STATUTES
TITLE 56. INSURANCE
CHAPTER 746. TRADE PRACTICES
GENERAL PROVISIONS
§ 746.195 Insurance on property securing loan or credit; certain practices by lending institutions prohibited
A lending institution shall not:
(1) Solicit the sale of insurance for the protection of real or personal property after a person indicates interest in securing a loan or credit extension, until the lending institution has agreed to make the loan or credit extension;
(2) Unreasonably reject an insurance policy furnished by the borrower for the protection of the property securing the loan or credit. A rejection shall not be considered unreasonable when it is based on reasonable standards, uniformly applied, relating to the extent of coverage required and the financial soundness and the services of an insurer. The standards shall not discriminate against any particular type of insurer, nor shall the standards call for rejection of an insurance policy because the policy contains coverage in addition to that required in the credit transaction;
(3) Require that any borrower, mortgagor, purchaser, insurer or agent pay a separate charge in connection with the handling of any insurance policy required as security for a loan or credit extension, or pay a separate charge to substitute the insurance policy of one insurer for that of another. This subsection does not apply to the interest that may be charged on premium loans or premium advancements under the terms of the loan or credit document;
(4) Require any procedures or conditions of an insurer or agent not customarily required of insurers or agents that are affiliated or in any other way connected with the lending institution;
(5) Refuse to accept a written binder issued by an agent as proof that temporary insurance exists covering the real or personal property that is the subject matter of, or security for, a loan or extension of credit, and that a policy of insurance will be issued covering that property. A written binder issued by an agent or insurer covering real or personal property that is the subject matter of, or security for, a loan or extension of credit shall be effective until a policy of insurance is issued in lieu thereof, including within its terms the identical insurance bound under the binder and the premium therefor, or until notice of the cancellation of the binder is received by the borrower and the lending institution extending credit or offering the loan. When a lending institution closes on a binder under ORS 742.043, the agent or insurer issuing the binder shall be bound to provide a policy of insurance, equivalent in coverage to the coverage set forth in the binder, within 60 days from the date of the binder. The provisions of this subsection do not apply when prohibited by federal or state statute or regulations; or
(6) Use or disclose to any other insurance agent, other than the original agent, the information relating to a policy of insurance furnished by a borrower unless the original agent fails to deliver a policy of insurance within 60 days prior to expiration to the lending institution without first procuring the written consent of the borrower.
1995 OREGON REVISED STATUTES
TITLE 56. INSURANCE
CHAPTER 746. TRADE PRACTICES
GENERAL PROVISIONS
§ 746.201 Lending institution to obtain required property insurance when borrower does not; notice required
(1) Nothing contained in ORS 746.185 to 746.205 shall prevent a lending institution or other lender or seller from placing insurance on real or personal property in which the financial institution or other lender or seller has a security interest when the mortgagor, borrower or purchaser fails to provide required insurance under the terms of the loan or credit document.
(2) In a contract or loan agreement, or in a separate document accompanying the contract or loan agreement and signed by the mortgagor, borrower or purchaser, that provides for a loan or other financing secured by the mortgagor's, borrower's or purchaser's real or personal property and that authorizes the secured party to place insurance on the property when the mortgagor, borrower or purchaser fails to maintain the insurance as required by the contract or loan agreement or the separate document, a warning in substantially the following form shall be set forth in 10-point type:
WARNING
Unless you provide us with evidence of the insurance coverage as required by our contract or loan agreement, we may 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 property coverage elsewhere.
You are responsible for the cost of any insurance purchased by us. The cost of this insurance may be added to your contract or loan balance. If the cost is added to your contract or loan balance, the interest rate on the underlying contract or loan will apply to this added amount. The effective date of coverage may be the date your prior coverage lapsed or the date you failed to provide proof of coverage.
The coverage we purchase may be considerably more expensive than insurance you can obtain on your own and may not satisfy any need for property damage coverage or any mandatory liability insurance requirements imposed by applicable law.
(3) Substantial compliance by a secured party with subsection (2) of this section constitutes a complete defense to any claim arising under the laws of this state challenging the secured party's placement of insurance on the real or personal property in which the secured party has a security interest, for the protection of the secured party's interest in the property.
(4) Nothing contained in this section shall be construed to require any secured party to place or maintain insurance on real or personal property in which the secured party has a security interest, and the secured party shall not be liable to the mortgagor, borrower or purchaser or to any other party as a result of the failure of the secured party to place or maintain such insurance.
(5) The failure of a secured party prior to January 1, 1996, to include in a contract or loan agreement, or in a separate document accompanying the contract or loan agreement, the notice set forth in subsection (2) of this section shall not be admissible in any court or arbitration proceeding or otherwise used to prove that a secured party's actions with respect to the placement or maintenance of insurance on real or personal property in which the secured party has a security interest are or were unlawful or otherwise improper. A secured party shall not be liable to the mortgagor, borrower or purchaser or to any other party for placing such insurance in accordance with the terms of an otherwise legal contract or loan agreement with the mortgagor, borrower or purchaser entered into prior to January 1, 1996.
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