By: Harris of Tarrant S.B. No. 417 A BILL TO BE ENTITLED AN ACT 1-1 relating to creditor-required or creditor-arranged insurance on 1-2 certain loans and credit transactions. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Chapter 2, Title 79, Revised Statutes (Article 1-5 5069-2.01 et seq., Vernon's Texas Civil Statutes), is amended by 1-6 adding Article 2.09 to read as follows: 1-7 Art. 2.09. COLLATERAL PROTECTION INSURANCE. (1) In this 1-8 article: 1-9 (a) "Creditor" means a lender or other person 1-10 extending or collecting a loan or other credit transaction for 1-11 personal, family, or household use. 1-12 (b) "Collateral protection insurance" means any 1-13 insurance required and arranged by or for a creditor in connection 1-14 with and subsequent to the inception of a loan or other credit 1-15 transaction for personal, family, or household use. 1-16 (2) Any creditor who causes the initiation of collateral 1-17 protection insurance must comply with this article as well as other 1-18 applicable law. 1-19 (3) This article shall apply only to insurance for which the 1-20 premium is required to be paid by the debtor, either directly or 1-21 indirectly. 1-22 (4) When collateral protection insurance is procured, the 1-23 creditor arranging such transaction shall give written notice to 1-24 the debtor at the debtor's last known address that: 2-1 (a) describes the type of insurance procured, the 2-2 extent of coverage, and whom it is designed to protect; 2-3 (b) defines the policy period by beginning and ending 2-4 dates; 2-5 (c) discloses the total cost to the borrower of the 2-6 policy; 2-7 (d) discloses the annual rate of interest to be 2-8 charged on the insurance premium if different from the rate charged 2-9 in the related loan or credit transaction; 2-10 (e) discloses the manner in which the premium and 2-11 interest or other financing charge is to be paid; and 2-12 (f) at the option of the creditor, notifies the debtor 2-13 of other repayment options to which the debtor may agree or has 2-14 previously agreed to in the original loan or credit transaction 2-15 agreement. 2-16 (5) The creditor may collect the premium and any authorized 2-17 interest or other financing charge during the policy period in 2-18 addition to and simultaneously with any scheduled payment or 2-19 payments of principal or charges or in such other manner as may be 2-20 provided for in the loan or credit transaction agreement. If there 2-21 are no payments scheduled on the debt during the policy period, 2-22 then collection shall be in substantially equal successive monthly 2-23 installments. 2-24 (6) A creditor is authorized to charge the debtor the actual 2-25 postage and fees paid to the United States Postal Service for 2-26 mailing the required notice. If the notice is returned to the 2-27 creditor undelivered, the creditor shall use its normal procedures 3-1 for locating debtors and mail a second notice when the debtor is 3-2 located. 3-3 SECTION 2. Article 2.09, Title 79, Revised Statutes (Article 3-4 5069-2.09, Vernon's Texas Civil Statutes), as added by this Act, is 3-5 cumulative of and in addition to any other statutory provisions, 3-6 and in case of any conflict or inconsistency with any provision 3-7 less favorable to a debtor, Article 2.09, Title 79, Revised 3-8 Statutes (Article 5069-2.09, Vernon's Texas Civil Statutes), as 3-9 added by this Act shall prevail and control. Notwithstanding 3-10 Article 1.10, Title 79, Revised Statutes (Article 5069-1.10, 3-11 Vernon's Texas Civil Statutes), or other law, a credit union is 3-12 subject to Article 2.09, Title 79, Revised Statutes (Article 3-13 5069-2.09, Vernon's Texas Civil Statutes), as added by this Act. 3-14 SECTION 3. This Act takes effect September 1, 1993. 3-15 SECTION 4. The importance of this legislation and the 3-16 crowded condition of the calendars in both houses create an 3-17 emergency and an imperative public necessity that the 3-18 constitutional rule requiring bills to be read on three several 3-19 days in each house be suspended, and this rule is hereby suspended.