Oregon

The relevant statute is Insurance, Or. Rev. Stat. §§743.375 through 743.377, 746.180 through 746.220 (“OR-INS”).

A. Actions lender may take: OR-INS §746.201(1) - A lender may place insurance on real or personal property in which such lender has a security interest when the borrower fails to provide required insurance under the terms of the loan document.

B. Notices required: OR-INS §746.201(2) – Loan agreement, or other separate accompanying document signed by the borrower, must authorize the lender to place insurance on the borrower’s real or personal property which is security for the loan when the borrower fails to maintain required insurance, and must contain substantially the following, in at least 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.”

C. Coverage required:

(1) OR-INS §746.201(2) - The insurance placed may, but need not, protect the borrower’s interest.

(2) OR-INS §746.201(4) - The lender is not liable to the borrower for the failure to place or maintain insurance.

D. Charges permitted: OR-INS §746.195(3) - A lender may not 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.

E. Finance charge allowed on lender's payment: OR-INS §746.195(3) - Notwithstanding D. above, lender may charge interest on premium loan or premium advancement under the terms of the loan document.

Click here to view relevant Oregon Code and Regulations.