Section 20. Separation of lending and insurance sales

No loan or extension of credit by the consumer finance licensee, or any affiliate conducting business in the licensee's office, shall be conditioned upon the purchase of noncredit-related life insurance. If a person expresses an interest in obtaining a loan or extension of credit from the consumer finance licensee, or from any affiliate conducting business in the licensee's office, the sale of noncredit-related life insurance to such person shall not be solicited until a credit decision is made, the customer is informed of that decision, and an entry showing such decision is made in the lender's books. Interest rates and other charges may not be conditioned upon the purchase of such insurance. The customer shall be given the option of paying the premium for such insurance with his own funds, or with a portion of a loan or extension of credit made to the customer. Such insurance may not be solicited or sold unless the loan or extension of credit made contemporaneously therewith exceeds $1,000 exclusive of premiums for such insurance. The total of the premium for such insurance plus the premiums for all other insurance connected with the loan or credit transaction shall not exceed 45% of the principal amount of the loan or credit transaction excluding insurance purchased by the creditor after the loan or credit transaction is closed because of the customer's failure to maintain lawfully required insurance on collateral.

Historical Notes

Derived from VR225-01-0607 § 2, eff. July 1, 1995; amended, Volume 14, Issue 14, eff. March 10, 1998.

Statutory Authority

§ 6.2-1535 of the Code of Virginia.