Code Section Group

Insurance Code - INS

DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8]

  ( Division 1 enacted by Stats. 1935, Ch. 145. )

PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8]

  ( Part 2 enacted by Stats. 1935, Ch. 145. )

CHAPTER 5. Production Agencies [1621 - 1758.993]

  ( Chapter 5 repealed and added by Stats. 1959, Ch. 4. )

ARTICLE 16.7. Credit Insurance Agents [1758.9 - 1758.993]
  ( Article 16.7 added by Stats. 2000, Ch. 321, Sec. 7. )

1758.9.
  

No person shall sell or solicit any form of credit insurance in this state, and receive a commission for their efforts, unless that person is licensed as an insurance agent or broker pursuant to Article 3 (commencing with Section 1631) or is licensed as a credit insurance agent or endorsee under this article.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

1758.91.
  

The commissioner may issue to an applicant that has complied with the requirements of this article, a credit insurance agent license to offer or sell those types of insurance specified in Section 1758.96 in connection with, and incidental to, a loan or extension of credit, on behalf of any insurer authorized to write those types of insurance in this state.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

1758.92.
  

(a) An applicant for a credit insurance agent license under this article shall submit each of the following to the commissioner:

(1) A written application for licensure signed by the applicant or an officer of the applicant, in the form prescribed by the commissioner.

(2) A certificate by the insurer that is to be named in the credit insurance agent license, stating that the insurer has satisfied itself that the named applicant is trustworthy and competent to act as its insurance agent limited to this purpose and that the insurer will appoint the applicant to act as its agent in reference to selling or soliciting the kind or kinds of insurance that are permitted by this article, if the credit insurance agent license applied for is issued by the commissioner. The certification shall be subscribed by an officer or managing agent of the insurer on a form prescribed by the commissioner.

(3) An application fee, and, for each license period thereafter, a renewal fee, of four hundred eight dollars ($408).

(b) Notwithstanding any other law to the contrary, the provisions set forth in Sections 1667, 1668, 1668.5, 1669, 1670, 1720, 1738, and 1739 apply to any application for or issuance of a license, or any application for or approval of an endorsee, pursuant to this article.

(c) (1) Not less than 60 days before a permanent license will expire, the commissioner may use an electronic delivery method, including email or other similar electronic method of delivery, to deliver, or may mail, to the latest email or mailing address appearing on his or her records, an application to the licensee to renew the license for the appropriate succeeding license period. It is the licensee’s responsibility to renew whether or not a renewal application is received. The commissioner may accept a late renewal without penalty, provided the licensee’s failure to comply is due to a clerical error or inadvertence on the part of the department.

(2) An application for renewal shall be filed on or before the expiration date.

(3) The application for renewal of an expired license may be filed after the expiration date and until that same month and date of the next succeeding year. A licensee who files a renewal application after the license has expired shall be charged, in addition to the renewal fee, a penalty of 50 percent of the renewal fee for the credit insurance agent license and all endorsees.

(d) Costs associated with any enforcement action or investigation shall be paid for by the person or organization licensed pursuant to this article.

(Amended by Stats. 2017, Ch. 534, Sec. 45. (AB 1699) Effective January 1, 2018.)

1758.93.
  

(a) An employee of an organization that has been issued a credit insurance agent license pursuant to this article may be an endorsee on the license if all of the following conditions have been met:

(1) The employee is 18 years of age or older.

(2) The employee submits an application to the department that includes a signed affidavit, in a form prescribed by the commissioner, stating the applicant has read the credit insurance training material submitted to the commissioner and that the applicant has received from the organization training in, and is knowledgeable about, the credit insurance products to be sold, ethics, and market practices.

(3) The employee submits an application fee, and each year thereafter, a renewal fee, in an amount or amounts determined by the department as sufficient to defray the department’s actual costs of processing the application or renewal and implementing this article.

(b) Prior to allowing any endorsee to offer or sell credit-related insurance, the licensed organization shall provide training to each endorsee about the credit insurance products to be sold, and shall submit annually to the department the names of endorsees and a statement of compliance with this article. Training materials used by the organization to train endorsees shall be submitted to the department at the time the organization applies for its credit insurance agent license, and each year thereafter when that license is renewed. Any changes to previously submitted training materials shall be submitted to the department with the changes highlighted 30 days prior to their use by the licensee. Training materials and changes to those materials submitted to the department pursuant to this subdivision shall be deemed approved for use by the company unless it is notified by the department to the contrary. Failure by a credit insurance licensee to submit training materials or changes for departmental review or use of unapproved or disapproved training materials shall constitute grounds for denial of an application for a license, nonrenewal of a license, or suspension of a license, as appropriate.

(c) The credit insurance agent shall periodically retrain its endorsees.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

1758.94.
  

(a) The manager at each business location of an organization licensed as a credit insurance agent, shall be listed as an endorsee on the organization’s license and shall be responsible for the training and supervision of each additional endorsee at that location. Each licensee shall identify the endorsee who is the manager at each location for the purposes of this article.

(b) An employee of a credit insurance agent who complies with the requirements of Section 1758.93, and is endorsed on the license of the credit insurance agent, may act on behalf of, and under the supervision of, the credit insurance agent in matters relating to transacting insurance under that agent’s license. The conduct of an endorsee of a credit insurance agent acting within the scope of employment or agency shall be deemed the conduct of the credit insurance agent for purposes of this article.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

1758.95.
  

(a) If a licensee or endorsee violates any provision of this article or any other provision of this code, the commissioner may do either of the following:

(1) After notice and hearing, suspend or revoke the license of the credit insurance agent.

(2) After notice and hearing, impose other penalties that the commissioner deems necessary and convenient to carry out the purposes of this code, including suspending the privilege of transacting credit insurance pursuant to this article at specific business locations where violations have occurred, imposing fines on the credit insurance agent, individual endorsees or endorsee managers, and suspending or revoking the endorsement of a named endorsee or endorsee manager.

(b) If any person sells insurance in connection with or incidental to a loan or other extension of credit or holds himself or herself or an organization out as a credit insurance agent without obtaining the license required by this article, as being an endorsee when that person is not an endorsee, or as being licensed pursuant to Chapter 5 (commencing with Section 1631) without obtaining that license, the commissioner may issue a cease and desist order pursuant to Section 12921.8.

(c) Notwithstanding any other provision of law to the contrary, the provisions of Section 1748.5 are applicable to both the organization issued a license pursuant to this article and any endorsee to that license.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

1758.96.
  

A person licensed pursuant to this article may act as a credit insurance agent for an authorized insurer only with respect to the kinds of insurance specified in this section sold in connection with and incidental to a loan or other extension of credit other than a loan in excess of sixty thousand dollars ($60,000) relating to or secured by real property where the repayment period does not exceed 10 years. The sale of credit insurance products as specified in this section in excess of sixty thousand dollars ($60,000) relating to or secured by real property where any compensation, fee, or commission is paid dependent on the placement of credit insurance, requires a license to act as an insurance agent or life agent pursuant to Section 1621 or 1622.

(a) Credit life insurance.

(b) Credit disability insurance.

(c) Credit involuntary unemployment insurance or credit loss-of-income insurance.

(d) Credit property insurance.

(e) Guaranteed asset protection (GAP) insurance.

(f) Any other form of insurance declared by the commissioner to be subject to this section pursuant to subdivision (d) of Section 1758.992.

(Amended by Stats. 2011, Ch. 24, Sec. 1. (AB 125) Effective May 10, 2011.)

1758.97.
  

A credit insurance agent shall not sell or offer to sell insurance pursuant to this article unless all of the following conditions are satisfied:

(a) The credit insurance agent provides brochures or other written materials to the prospective purchaser that do all of the following:

(1) Summarize the material terms and conditions of coverage offered, including the identity of the insurer.

(2) Describe the process for filing a claim, including a toll-free telephone number to report a claim.

(3) Disclose any additional information on the price, benefits, exclusions, conditions, or other limitations of those policies that the commissioner may by rule prescribe.

(b) The credit insurance agent makes all of the following disclosures, either with or as part of each individual policy or group certificate, or with a notice of proposed insurance, or, if the insurance is sold at the same time and place as the related credit transaction, in a statement acknowledged by the purchaser in writing on a separate form, electronically, digitally, or by audio recording:

(1) That the purchase of the kinds of insurance prescribed in this article is not required in order to secure the loan or an extension of credit.

(2) That the insurance coverage offered by the credit insurance agent may provide a duplication of coverage already provided by a purchaser’s other personal insurance policies or by another source of coverage.

(3) That the endorsee is not qualified or authorized to evaluate the adequacy of the purchaser’s existing coverages, unless the individual is licensed pursuant to Article 3 (commencing with Section 1631).

(4) That the customer may cancel the insurance at any time. If the customer cancels within 30 days from the delivery of the insurance policy, certificate, or notice of proposed insurance, the premium will be refunded in full. If the customer cancels at any time thereafter, any unearned premium will be refunded in accordance with applicable law.

(c) Evidence of coverage is provided to every person who elects to purchase that coverage.

(d) Costs for the insurance are separately itemized in any loan, credit, or retail agreement.

(e) The insurance is provided under an individual policy issued to the purchaser or under a group or master policy issued to the organization licensed as a credit insurance agent by an insurer authorized to transact the applicable kinds or types of insurance in this state. Any of the conditions and disclosures specified in this section shall be deemed satisfied if the consumer is otherwise provided with the information required in this section by any other disclosures required by existing federal or state law or regulations.

No statement, disclosure, or notice made for the purpose of compliance with this section shall be construed to cause the policy form, certificate of insurance, or notice of proposed insurance, by themselves, to be considered nonstandard forms, as described in Article 6.9 (commencing with Section 2249) of Subchapter 2 of Chapter 5 of Title 10 of the California Code of Regulations.

(Amended by Stats. 2009, Ch. 88, Sec. 69. (AB 176) Effective January 1, 2010.)

1758.98.
  

Under the authority of the credit insurance agent license, a credit insurance agent shall not do any of the following:

(a) Offer to sell insurance except in conjunction with, and incidental to, a loan or extension of credit.

(b) Advertise, represent, or otherwise portray itself or its employees, agents, or endorsees as licensed insurers, life agents, property broker-agents, or casualty broker-agents.

(c) Pay any unlicensed person any compensation, fee, or commission dependent on the placement of insurance under the agent’s license. Nothing in this subdivision shall prohibit production payments or incentive payments to an endorsee.

(Amended by Stats. 2011, Ch. 411, Sec. 51. (AB 1416) Effective January 1, 2012.)

1758.99.
  

An organization licensed as a credit insurance agent shall prominently display its license number and the department’s toll free consumer hot line telephone number on brochures and information sheets required by this article and on any evidence of insurance.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

1758.991.
  

Any insurer that provides insurance to be sold by an organization licensed as a credit insurance agent shall file a copy of any individual policy issued to a purchaser, or any policy or certificate issued under a group or master policy to an organization licensed as a credit agent, with the commissioner, who shall make that policy available to the public.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

1758.992.
  

As used in this article, the following definitions have the following meanings:

(a) “Enrollment” means the process of soliciting or accepting enrollments or applications from a debtor under a credit insurance policy, which includes informing the debtor of the availability of coverage, calculating the insurance charge, preparing and delivering the certificate of insurance or notice of proposed insurance, answering questions regarding the coverage, or otherwise assisting the debtor in making an informed decision whether or not to elect to purchase credit insurance.

(b) “Creditor” means a lender of money or a vendor or lessor of goods, services, property, rights, or privileges, for which payment is arranged through a credit transaction, or any successor to the right, title, or interest of that lender, vendor, or lessor, and any affiliate, associate, subsidiary, subcontractor, director, officer, or employee of any of them or any other person in any way associated with any of them.

(c) “Credit insurance agent license” means an agent license issued to an individual or organization for the enrollment and sale of credit insurance.

(d) (1) “Credit insurance” includes credit life insurance, credit disability insurance, credit involuntary unemployment insurance, credit loss-of-income insurance, credit property insurance, or guaranteed asset protection (GAP) insurance.

(2) Credit insurance also includes any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the commissioner determines should be designated a form of credit insurance.

(3) The commissioner may adopt, pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, reasonable rules and regulations necessary to carry out this subdivision.

(e) (1) “Credit life insurance” means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction, exclusive of any insurance procured at no expense to the debtor. Insurance shall be deemed procured at no expense to the debtor unless the cost of the credit transaction to the debtor varies depending on whether or not the insurance is procured.

(2) “Credit disability insurance” means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled, as defined in the policy, exclusive of any insurance procured at no expense to the debtor. Insurance shall be deemed to have been procured at no expense to the debtor unless the cost of the credit transaction to the debtor varies depending on whether or not the insurance is procured.

(f) “Credit involuntary unemployment insurance” or “credit loss-of-income insurance” means insurance issued to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is involuntarily unemployed, as defined in the policy.

(g) “Credit property insurance” means insurance that provides coverage (1) on personal property pledged or offered as collateral for securing a personal or consumer loan, or (2) on personal property purchased under an installment sales agreement or through a consumer credit transaction, but does not include any insurance that provides theft, collision, liability, property damage, or comprehensive insurance coverage in any automobile or any other self-propelled vehicle that is designed primarily for operation in the air or on the highways, waterways, or sea, and its operating equipment, or that is necessitated by reason of the liability imposed by law for damages arising out of the ownership, operation, maintenance, or use of those vehicles. However, that excluded insurance does include single interest coverage on any of those vehicles that insures the interest of the creditor in the same manner as collateral secures a loan.

(h) (1) “Guaranteed asset protection” (GAP) insurance means insurance in which a person agrees to indemnify a vehicle purchaser or lessee for some or all of the amount owed on the vehicle at the time of an unrecovered theft or total loss, after credit for money received from the purchaser’s or lessee’s physical damage insurer, pursuant to the terms of a loan, lease agreement, or conditional sales contract used to purchase or lease the vehicle. GAP insurance, whether sold by a credit insurance agent or another type of licensee authorized to sell GAP insurance, may also include a promise to pay up to five thousand dollars ($5,000) to an insured, in addition to the sum needed to indemnify the insured for the amount owed, to purchase or lease another vehicle.

(2) GAP insurance does not include, and no insurance license of any type under this code is required to offer, any of the following:

(A) A debt cancellation agreement contained in a conditional sales contract for the sale of a vehicle by a licensed motor vehicle dealer, or a debt cancellation agreement contained in a lease agreement for the lease of a vehicle by a licensed motor vehicle dealer or leasing company, to waive some or all of either of the following:

(i) The difference between the actual cash value of the purchaser’s or lessee’s vehicle at the time of an unrecovered theft or total loss and the amount owed on the vehicle pursuant to the terms of a lease agreement or conditional sales contract used to purchase or lease the vehicle.

(ii) The amount owed on the vehicle at the time of an unrecovered theft or total loss, after credit for money received from the purchaser’s or lessee’s physical damage insurer or from a third-party liability insurer. Such a promise may also include a promise to waive some or all of the amount of the purchaser’s or lessee’s deductible.

(B) A promise by a lender as part of a debt obligation to purchase or lease a vehicle in which the lender agrees to waive some or all of either of the following:

(i) The difference between the actual cash value of the purchaser’s or lessee’s vehicle at the time of an unrecovered theft or total loss and the amount owed on the vehicle pursuant to the terms of the debt obligation used to purchase or lease the vehicle.

(ii) The amount owed on the vehicle at the time of an unrecovered theft or total loss, after credit for money received from the purchaser’s or lessee’s physical damage insurer or from a third-party liability insurer. Such a promise may also include a promise to waive some or all of the amount of the purchaser’s or lessee’s deductible.

(C) Coverage under subparagraphs (A) and (B) may not result in a credit balance in favor of the vehicle purchaser or lessee or include a promise to pay money to a vehicle purchaser or lessee in addition to waiving some or all of the amount owed, including some or all of the amount of the purchaser’s or lessee’s deductible. For purposes of this paragraph, a promise to pay money does not include, and a dealer, creditor, or lender shall be allowed to offer, a discount or credit to a purchaser or lessee as an incentive for purchasing, leasing, or financing a replacement vehicle. However, the dealer, creditor, or lender shall require the purchaser or lessee to use the discount or credit on a purchase or lease from the dealer or lessor that sold or leased the original vehicle to the purchaser or lessee, or with the creditor or lender that financed the purchase or lease of the original vehicle.

(Amended by Stats. 2011, Ch. 24, Sec. 2. (AB 125) Effective May 10, 2011.)

1758.993.
  

Nothing in this article regulating the sale of credit insurance shall be construed to impair or impede the application of any other law regulating the sale of credit insurance, including, but not limited to, the California Finance Lenders Law, Division 9 (commencing with Section 22000) of the Financial Code.

(Added by Stats. 2000, Ch. 321, Sec. 7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

INSInsurance Code - INS16.7