Enrolled Bill Summary

            Senate Bill 707 amends Finance Code provisions relating to collateral protection insurance. The bill repeals a section of the Finance Code that regulated notice and payment procedures for collateral protection insurance that is required by a creditor and paid by the debtor and replaces it with a more detailed chapter that regulates the coverage, terms, conditions of purchase, liability, cancellation, and other aspects of collateral protection insurance.

            The bill defines "collateral protection insurance" as insurance purchased by a creditor and payable by a debtor under the terms of a credit agreement to provide the creditor with monetary protection against loss of, damage to, or liability arising out of ownership of the collateral involved in the credit agreement. The insurance may be purchased by the creditor from any authorized insurer on behalf of the debtor at the debtor's expense when the debtor fails to obtain or maintain insurance covering that collateral. The bill sets forth the specific circumstances under which a creditor may place collateral protection insurance pursuant to a credit agreement; the content, timing, format, and method of delivery of notices that the creditor must provide to the debtor relating to the policy purchase; and certain terms for payment that must be included in the agreement. A debtor may cause the cancellation of the policy at any time by providing evidence to the creditor that the debtor has obtained a policy as required by the credit agreement. In the event the creditor's policy is canceled or expires, the bill requires the creditor to refund unearned premiums to the debtor and sets forth the method and timing of such a refund.