By Carona S.B. No. 1940 75R13218 CLG-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a charge for certain types of noncredit insurance and 1-3 products. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Chapter 3, Title 79, Revised Statutes (Article 1-6 5069-3.01 et seq., Vernon's Texas Civil Statutes), is amended by 1-7 adding Article 3.18A to read as follows: 1-8 Art. 3.18A. NONCREDIT INSURANCE AND PRODUCTS. (a) In 1-9 connection with a loan made under this chapter, an authorized 1-10 lender may charge and collect a charge for the following types of 1-11 noncredit insurance or products if agent licensing requirements and 1-12 policy forms comply with the applicable provisions of the Insurance 1-13 Code and other insurance laws of this state: 1-14 (1) life insurance; 1-15 (2) disability insurance; 1-16 (3) accident insurance; 1-17 (4) home security plans and club memberships; and 1-18 (5) auto security plans and club memberships. 1-19 (b) A borrower of a loan made under this chapter has the 1-20 option of including in the amount financed the cost of noncredit 1-21 insurance or products purchased by the borrower under this article 1-22 if: 1-23 (1) the purchase of the noncredit insurance or product 1-24 is not a factor in the approval of the loan and this fact is 2-1 clearly disclosed in writing to the borrower; 2-2 (2) the borrower gives specific, express written 2-3 indication of the borrower's desire to purchase the noncredit 2-4 insurance or product; 2-5 (3) the borrower has 30 days to cancel the transaction 2-6 and receive a full refund of the purchase price; and 2-7 (4) any benefit payable as a result of the ownership 2-8 of the noncredit insurance or product will be paid directly to the 2-9 borrower or the borrower's designated representative and not to the 2-10 lender. 2-11 (c) An authorized lender may not charge or collect a charge 2-12 for a type of noncredit insurance or product that is not specified 2-13 in Subsection (a) of this article unless the commissioner 2-14 authorizes the charge or collection. 2-15 (d) Notwithstanding Article 3.15 of this chapter, the cost 2-16 of noncredit insurance or products purchased under this article, 2-17 and any gain or advantage received by an authorized lender or an 2-18 employee, officer, director, general or other agent, affiliate, or 2-19 associate of the lender as a result of a charge for noncredit 2-20 insurance or products imposed under this article, is not considered 2-21 a further or other charge or amount received in connection with a 2-22 loan made under this chapter. 2-23 SECTION 2. This Act takes effect September 1, 1997, and 2-24 applies only to a loan contract made on or after that date. A loan 2-25 contract made before the effective date of this Act is governed by 2-26 the law in effect on the date on which the loan contract was made, 2-27 and the former law is continued in effect for that purpose. 3-1 SECTION 3. The importance of this legislation and the 3-2 crowded condition of the calendars in both houses create an 3-3 emergency and an imperative public necessity that the 3-4 constitutional rule requiring bills to be read on three several 3-5 days in each house be suspended, and this rule is hereby suspended.