New York Banking Law
Article12-B
Insurance Premium Finance Agencies
Section 554. Definitions.
555. License.
555-a. Changes in control.
556. Action by superintendent on application.
557. License provisions and posting.
558. Change of location.
559. Grounds for revocation of license; procedure.
560. Investigations and examinations.
561. Regulations and rulings.
562. Hearings and investigations; subpoena.
563. Violations and penalties.
565. Licensee`s books and records; reports.
566. Insurance agents and brokers; acquisition by premium
finance agencies of premium finance agreements.
567. Form and content of premium finance agreements.
568. Limitation on service and other charges.
569. Delinquency, collection and cancellation charges;
attorney`s fees.
570. Restrictions on premium finance agreements.
571. Delivery of copy of premium finance agreement.
572. Notice of assignment; payments.
573. Statement of account; receipts.
574. Credit upon anticipation of payments.
575. Refinancing.
576. Cancellation of insurance contract upon default.
577. Interpretation of article.
577-a. Premium finance agreements.
578. Severability.
S 554. Definitions. In this article, unless the context otherwise
requires:
1. "Authorized insurer" and "insurance contract" have the respective
meanings assigned to them by the insurance law.
2. "Bank" means a bank, trust company, private banker, or investment
company, or a national bank having a principal, branch or trust office
in this state.
3. "Insurance agent" and "insurance broker" means, respectively, an
insurance agent or insurance broker duly licensed as such under the
insurance law.
4. "Insured" means a person who enters into a premium finance
agreement with a premium finance agency or makes and delivers a premium
finance agreement to, or to the order of, an insurance agent or broker,
whether or not he is insured under an insurance contract, premiums for
which are advanced or to be advanced under the premium finance
agreement.
5. "Lending institution" means a bank, licensed lender or credit
union.
6. "Person" means an individual, corporation, business trust, estate,
trust, partnership or association, two or more persons having a joint or
common interest, or any other legal or commercial entity.
7. "Premium finance agency" means:
(a) a person engaged, in whole or in part, in the business of entering
into premium finance agreements with insureds, including a bank if so
engaged; or
(b) a person engaged, in whole or in part, in the business of
acquiring premium finance agreements from insurance agents or brokers or
other premium finance agencies, including a bank if so engaged and an
insurance agent or broker who is licensed as a premium finance agency
and who holds premium finance agreements made and delivered by insureds
to him or his order.
8. "Premium finance agreement" means a promissory note or other
written agreement by which an insured promises or agrees to pay to, or
to the order of, either a premium finance agency or an insurance agent
or broker the amount advanced or to be advanced under the agreement to
an authorized insurer or to an insurance agent or broker in payment of
premiums on an insurance contract, together with a service charge as
authorized and limited by law. If the premium finance agreement is
payable to, or to the order of, an insurance agent or broker not
licensed as a premium finance agency, payments under the agreement must
be payable at the office of a premium finance agency named in the
agreement, to whom the agreement is by its terms to be and is
subsequently assigned. The term "premium finance agreement" does not
include a retail instalment credit agreement which complies with the
provisions of paragraph (b) of subdivision eleven of section four
hundred thirteen of the personal property law.
9. "Superintendent" means the superintendent of banks.
S 555. License. 1. No person except a bank, state or federally
chartered savings bank or savings and loan association, an authorized
insurer or a lender licensed pursuant to article nine of this chapter
shall engage in the business of a premium finance agency without a
license therefor obtained from the superintendent, as provided in this
article.
2. Application for license required under this article shall be in
writing, and in the form prescribed by the superintendent.
3. When an applicant has more than one office, separate applications
for license shall be made for each such office.
4. At the time of filing an application for a license, the applicant
shall pay to the superintendent the license fee and, upon original
application or upon application subsequent to denial of application, or
revocation, suspension or surrender of a license, an investigation fee.
(a) The license fee for each calendar year or part thereof shall be
three hundred dollars for each office where the business of a premium
finance agency is conducted, payable on or before the fifteenth day of
December for the next succeeding year, except that if the license is
issued after June thirtieth in any year such fee shall be one hundred
fifty dollars for that year.
(b) The investigation fee, when required by this section, shall be one
hundred fifty dollars, except that, when an applicant files applications
for licenses for three or more offices at the same time, the total
investigation fee for all the applications shall be four hundred fifty
dollars.
S 555-a. Changes in control. 1. It shall be unlawful except with the
prior approval of the superintendent for any action to be taken which
results in a change of control of the business of a licensee. Prior to
any change of control, the person desirous of acquiring control of the
business of a licensee shall make written application to the
superintendent and pay an investigation fee of one hundred fifty dollars
to the superintendent. The application shall contain such information as
the superintendent, by rule or regulation, may prescribe as necessary or
appropriate for the purpose of making the determination required by
subdivision two of this section.
2. The superintendent shall approve or disapprove the proposed change
of control of a licensee in accordance with the provisions of
subdivision one of section five hundred fifty-six of this article. The
superintendent shall approve or disapprove the application in writing
within ninety days after the date the application is filed with the
superintendent.
3. For a period of six months from the date of qualification thereof
and for such additional period of time as the superintendent may
prescribe, in writing, the provisions of subdivisions one and two of
this section shall not apply to a transfer of control by operation of
law to the legal representative, as hereinafter defined, of one who has
control of a licensee. Thereafter, such legal representative shall
comply with the provisions of subdivisions one and two of this section.
The provisions of subdivisions one and two of this section shall be
applicable to an application made under such section by a legal
representative.
The term "legal representative", for the purposes of this section,
shall mean one duly appointed by a court of competent jurisdiction to
act as executor, administrator, trustee, committee, conservator or
receiver, including one who succeeds a legal representative and one
acting in an ancillary capacity thereto in accordance with the
provisions of such court appointment.
4. As used in this section: (a) the term "person" includes an
individual, partnership, corporation, association or any other
organization, and (b) the term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of a licensee, whether through the ownership of
voting stock of such licensee, the ownership of voting stock of any
person which possesses such power or otherwise. Control shall be
presumed to exist if any person, directly or indirectly, owns, controls
or holds with power to vote ten per centum or more of the voting stock
of any licensee or of any person which owns, controls or holds with
power to vote ten per centum or more of the voting stock of any
licensee, but no person shall be deemed to control a licensee solely by
reason of being an officer or director of such licensee or person. The
superintendent may in his discretion, upon the application of a licensee
or any person who, directly or indirectly, owns, controls or holds with
power to vote or seeks to own, control or hold with power to vote any
voting stock of such licensee, determine whether or not the ownership,
control or holding of such voting stock constitutes or would constitute
control of such licensee for purposes of this section.
S 556. Action by superintendent on application. 1. Within ninety days
after the filing of an application for a license accompanied by payment
of the fees for license and investigation, the superintendent shall
issue the license, or the superintendent may refuse to issue the license
if he shall find that the financial responsibility, experience,
character and general fitness of the applicant or any person associated
with the applicant are not such as to command the confidence of the
community and to warrant the belief that the business will be conducted
honestly, fairly and efficiently within the purposes and intent of this
article. For the purpose of this subdivision, the applicant shall be
deemed to include all the members of the applicant if it is a
partnership or unincorporated association, and all the stockholders,
officers and directors of the applicant if it is a corporation. Such
license to engage in business in accordance with the provisions of this
article at the location specified in the application shall be executed
in triplicate by the superintendent and he shall transmit one copy
thereof to the applicant, file a copy in the office of the banking
department, and file a copy in the office of the clerk of the county in
which is located the place designated in such license.
2. If the superintendent refuses to issue a license, he shall notify
the applicant of the denial, return to the applicant the sum paid as a
license fee, but retain the investigation fee to cover the costs of
investigating the applicant.
3. Each license issued hereunder shall remain in full force and effect
until it is surrendered by the licensee or revoked or suspended as
provided in this article.
4. Only one office may be maintained under each license, but more than
one license may be issued to the same licensee pursuant to this article.
5. Any person engaged in the business of a premium finance agency on
the date this act takes effect may continue in operation in accordance
with the provisions of this article but must obtain a license for each
office at which he engages in the business of a premium finance agency
by January first, nineteen hundred sixty-one.
S 557. License provisions and posting. Such license shall state the
name and address of the licensee, and if the licensee be a
co-partnership or association, the names of the members thereof, and if
a corporation the date and place of its incorporation. Such license
shall be kept conspicuously posted in the office of the licensee and
shall not be transferable or assignable.
S 558. Change of location. Before any licensee changes any office of
his to another location, he shall give written notice thereof to the
superintendent, who shall without charge issue an endorsement indicating
the change and the date thereof, which endorsement shall be attached to
the license for such office and be authority for the operation of the
business under such license at such new location.
S 559. Grounds for revocation of license; procedure. 1. The
superintendent may forthwith revoke or suspend any license issued
hereunder if he shall find that:
(a) The licensee has failed to pay the annual license fee or any sum
of money lawfully demanded, or to comply with any demand, ruling, or
requirement of the superintendent lawfully made pursuant to and within
the authority of this article;
(b) The licensee has violated any provision of this article, the act
of congress entitled "Truth in Lending Act" and the regulations
thereunder, as such act and regulations may from time to time be amended
or any rule or regulation lawfully made by the superintendent under and
within the authority of this article;
(c) Any fact or condition exists which, if it had existed at the time
of the original application for such license, clearly would have
warranted the superintendent in refusing originally to issue such
license.
2. The superintendent may revoke or suspend only the particular
license with respect to which grounds for revocation or suspension may
occur or exist, or, if he shall find that such grounds for revocation or
suspension are of general application to all offices, or to more than
one office, operated by such licensee, he shall revoke or suspend all of
the licenses issued to such licensee or such number of licenses as such
grounds apply to, as the case may be.
3. Any licensee may surrender any license by delivering to the
superintendent written notice that he thereby surrenders such license,
but such surrender shall not affect such licensee`s civil or criminal
liability for acts committed prior to such surrender.
4. No revocation or suspension or surrender of any license shall
impair or affect the obligation of an insured under any lawful premium
finance agreement previously acquired or held by the licensee.
5. Every license issued hereunder shall remain in force and effect
until the same shall have been surrendered, revoked, or suspended in
accordance with the provisions of this article, but the superintendent
shall have authority to reinstate suspended licenses or to issue new
licenses to a licensee whose license or licenses shall have been revoked
if no fact or condition then exists which clearly would have warranted
the superintendent in refusing originally to issue such license under
this article.
6. Whenever the superintendent shall revoke or suspend a license
issued pursuant to this article, he shall forthwith execute in
triplicate a written order to that effect. The superintendent shall file
one copy of such order in the office of the department, file another in
the office of the clerk of the county in which is located the place
designated in such license and forthwith serve the third copy upon the
licensee, which order may be reviewed in the manner provided by article
seventy-eight of the civil practice law and rules. Such special
proceeding for review as authorized by this section must be commenced
within thirty days from the date of such order of suspension or
revocation.
7. The superintendent may, on good cause shown, or where there is a
substantial risk of public harm, suspend any license issued pursuant to
this article for a period not exceeding thirty days, pending
investigation. "Good cause", as used in this subdivision, shall exist
only when the licensee has defaulted or is likely to default in
performing its financial engagements or engages in dishonest or
inequitable practices which may cause substantial harm to the persons
afforded the protection of this article.
S 560. Investigations and examinations. 1. The superintendent shall
have the power to make such investigations as he shall deem necessary to
determine whether any licensee or any other person has violated any of
the provisions of this article, or whether any licensee has conducted
himself in such manner as would justify the revocation of his license,
and to the extent necessary therefor, he may require the attendance of
and examine any person under oath, and shall have the power to compel
the production of all relevant books, records, accounts, and documents.
2. The superintendent shall have the power to make such examinations
of the books, records, accounts and documents used in the business of
any licensee as he shall deem necessary to determine whether any such
licensee has violated any of the provisions of this article.
3. The expenses incurred in making any examination pursuant to
subdivision two of this section five hundred sixty shall be assessed
against and paid by the licensee so examined, except that traveling and
subsistence expenses so incurred shall be charged against and paid by
licensees in such proportions as the superintendent shall deem just and
reasonable, and such proportionate charges shall be added to the
assessment of the other expenses incurred upon each examination. Upon
written notice by the superintendent of the total amount of such
assessment, the licensee shall become liable for and shall pay such
assessment to the superintendent.
4. All reports of examinations and investigations, and all
correspondence and memoranda concerning or arising out of such
examinations or investigations, including any duly authenticated copy or
copies thereof in the possession of any licensee or the banking
department, shall be confidential communications, shall not be subject
to subpoena and shall not be made public unless, in the judgment of the
superintendent, the ends of justice and the public advantage will be
subserved by the publication thereof, in which event he may publish or
authorize the publication of a copy of any such report or other material
referred to in this subdivision four, or any part thereof, in such
manner as he may deem proper.
S 561. Regulations and rulings. The superintendent is hereby
authorized and empowered to make such general rules and regulations,
conduct hearings and make such specific rulings, orders, demands and
findings as may be necessary for the proper conduct of the business
authorized and licensed under and for the enforcement of this article.
S 562. Hearings and investigations; subpoena. In conducting any
hearing or investigation pursuant to the provisions of this article, the
superintendent, or any person duly designated by him, shall have the
power at all times to subpoena witnesses; to take depositions of
witnesses residing without the state, in the manner provided for in
civil actions in courts of record; to pay such witnesses the fees and
mileage for their attendance provided for witnesses in civil actions in
courts of record; and to administer oaths. He shall also have the power
to compel by order or subpoena the production of and to examine all
relevant books, records, accounts and other documents. Any person who
fails to obey the command of the subpoena without reasonable excuse, or
refuses without reasonable cause, to be served or to be examined or to
answer a question or to produce a book or paper when ordered so to do,
or fails to perform any act required hereunder to be performed, shall be
guilty of a misdemeanor and shall also be subject to the compulsions
provided by the civil practice law and rules and, if the person be
licensed hereunder, the superintendent shall have the right to revoke or
suspend his license.
S 563. Violations and penalties. 1. Any person, including any member,
officer, director or employee of a licensee, who violates or
participates in the violation of any provision of this article, or who
knowingly makes any incorrect statement of a material fact in any
application, report or statement filed pursuant to this article, or who
knowingly omits to state any material fact necessary to give the
superintendent any information lawfully required by him or refuses to
permit any lawful investigation or examination, shall be guilty of a
misdemeanor and, upon conviction, shall be fined not more than five
hundred dollars or imprisoned for not more than six months or both, in
the discretion of the court.
2. A premium finance agency`s knowingly taking or receiving from or
charging an insured a greater charge than authorized in this article
shall be held and adjudged a forfeiture of all charges which the premium
finance agreement carries with it or which have been agreed to be paid
thereon, and if a greater charge has been paid by an insured, the person
paying the same or his legal representative may recover from the premium
finance agency twice the entire amount of the charges thus paid if
action is brought within two years from the time of such payment.
3. No licensee shall make, directly or indirectly, orally or in
writing, or by any method, practice or device, a representation that he
is licensed under the banking law except that a licensee may make a
representation that he is licensed as a premium finance agency under the
banking law and is licensed to finance insurance premiums.
S 565. Licensee`s books and records; reports. 1. The licensee shall
keep and use in his business such books, accounts and records as will
enable the superintendent to determine whether such licensee is
complying with the provisions of this article and with the rules and
regulations lawfully made by the superintendent hereunder. Every
licensee shall preserve such books, accounts and records, including
cards used in a card system, if any, for at least six years after making
the final entry in respect to any premium finance agreement recorded
therein; provided, however, the preservation of photographic
reproductions thereof or records in photographic form shall constitute
compliance with this requirement.
2. Each licensee shall annually on or before the first day of February
file a report with the superintendent giving such information as the
superintendent may require concerning the business and operations during
the preceding calendar year of each licensed place of business conducted
by the licensee within the state under the authority of this article.
Upon good cause shown by a licensee, the superintendent may extend the
time for filing such report for a period not in excess of sixty days.
Such report shall be subscribed and affirmed as true by the licensee
under the penalties of perjury and be in the form prescribed by the
superintendent who may make and publish annually an analysis and
recapitulation of such reports. In addition to such annual reports, the
superintendent may require of licensees such additional regular or
special reports as he may deem necessary to the proper supervision of
licensees under this article. Such additional reports shall be in the
form prescribed by the superintendent and shall be subscribed and
affirmed as true under the penalties of perjury.
S 566. Insurance agents and brokers; acquisition by premium finance
agencies of premium finance agreements. 1. An insurance agent or broker
may be licensed as a premium finance agency in accordance with this
article. However, if the application for a license states that the
aggregate unpaid balances of all premium finance agreements to be held
by the insurance agent or broker will not exceed fifteen thousand
dollars at any one time, exclusive of any premium finance agreement
reacquired by the agent or broker from a premium finance agency under an
agreement, entered into as an incident to the bona fide sale or pledge
thereof to the premium finance agency, to reacquire it in case of
default by the insured, the license fee for each calendar year or part
thereof shall not exceed twenty dollars for each licensed office and no
investigation fee shall be required.
2. Notwithstanding any contrary provisions of the personal property
law, banking law or other law:
(a) No premium finance agency, and no employee of such an agency shall
pay, allow or offer to pay or allow in any manner whatsoever to an
insurance agent or broker or any employee of an insurance agent or
broker, or to any other person, either as an inducement to the financing
of any insurance policy with the premium finance agency or after any
such policy has been financed, any rebate whatsoever, either from the
service charge for financing specified in the premium finance agreement
or otherwise, or shall give or offer to give any valuable consideration
or inducement of any kind directly or indirectly, other than an article
of merchandise not exceeding one dollar in value which shall have
thereon the advertisement of the premium finance agency, but a premium
finance agency may purchase or otherwise acquire a premium finance
agreement, provided that it conforms to this article in all respects,
from an insurance agent or broker or another premium finance agency with
recourse against the agent, broker or agency on such terms and
conditions as may be mutually agreed upon; and
(b) No filing of the assignment or notice thereof to the insured shall
be necessary to the validity of the written assignment of a premium
finance agreement as against creditors or subsequent purchasers,
pledgees or encumbrances of the assignor.
S 567. Form and content of premium finance agreements. 1. A premium
finance agreement shall be in writing and dated on the date of its
signature by the insured; the printed portion thereof shall be in at
least eight point type.
2. It shall contain the entire agreement of the parties with respect
to the insurance contract, the premiums for which are advanced or to be
advanced under it, and:
(a) At its top, the words PREMIUM FINANCE AGREEMENT in at least ten
point bold type; and
(b) A notice in at least eight point bold type, reading as follows:
NOTICE: 1. Do not sign this agreement before you read it or if it
contains any blank space. 2. You are entitled to a completely filled in
copy of this agreement. 3. Under the law, you have the right to pay off
in advance the full amount due and under certain conditions to obtain a
partial refund of the service charge.
3. A premium finance agreement shall:
(a) Contain the name and place of business of the insurance agent or
broker, if any, negotiating the related insurance contract, the name and
residence or the place of business of the insured as specified by him,
the name and place of business of the premium finance agency which is to
hold or acquire the agreement and to which instalment or other payments
are to be made, a description of the insurance contract, the premiums
for which are advanced or to be advanced under the agreement, and the
amount of the premiums for such insurance contract; and
(b) Set forth the items required to be disclosed by the act of
congress entitled "Truth in Lending Act" and the regulations thereunder,
as such act and regulations may from time to time be amended.
4. No premium finance agreement shall be signed by an insured when it
contains any blank space to be filled in after it has been signed;
however, if any insurance contract, the premiums for which are advanced
or to be advanced under the agreement, has not been issued at the time
of its signature by the insured and it so provides, the name of the
authorized insurer by whom such insurance contract is issued and the
policy number and the due date of the first instalment may be left blank
and later inserted in the original of the agreement after it has been
signed by the insured.
S 568. Limitation on service and other charges. 1. A premium finance
agency shall not, except as otherwise provided by law, impose, take,
receive from, reserve or charge an insured greater charges than are
permitted by this article.
2. A premium finance agency, including an insurance agent or broker
licensed as such, may, in a premium finance agreement, contract for, and
if so contracted for, the holder of the agreement may charge, receive
and collect a service charge, for financing or arranging the financing
of premiums under the agreement, computed as provided in subdivision
four.
3. An insurance agent or broker not licensed as a premium finance
agency may, in a premium finance agreement which is payable to the agent
or broker or his order at the office of a premium finance agency and
which is endorsed or otherwise transferred or assigned to such a premium
finance agency, contract for and, if so contracted for, the premium
finance agency holding the agreement may charge, receive and collect
charges for financing or arranging the financing of premiums under the
agreement, computed as provided in subdivision four.
4. (a) The service charge provided for in this section shall be
computed on the principal balance of the premium finance agreement from
the inception date of the insurance contract, the premiums for which are
advanced or to be advanced under the agreement, or from the due date of
such premiums, disregarding any period of grace or credit allowed for
payment thereof, to and including the date when the final instalment of
the premium finance agreement is payable, at not exceeding fourteen
dollars per one hundred dollars per annum, plus an additional charge of
ten dollars per premium finance agreement, which additional charge need
not be refunded upon cancellation or prepayment, provided, however, that
no insurance agent or broker or premium finance agency shall induce an
insured to become obligated under more than one premium finance
agreement for the purpose of obtaining more than one additional charge.
(b) In computing the service charge permitted by this subdivision, if
the premium finance agreement is executed later than thirty days after
the inception date, there shall be deducted from the amount of such
service charge an amount which bears the same proportion to such service
charge, as (i) the number of days from the thirtieth day after the
inception date until the day of execution of the premium finance
agreement, bears to (ii) the number of days from the inception date to
the date when the final instalment of the premium finance agreement is
payable. No deduction shall be required under this paragraph, however,
if the amount thereof is less than one dollar. For purposes of this
paragraph the term "inception date" shall mean the inception date of the
insurance contract being financed, or the due date of the premium being
financed (disregarding any period of grace or credit allowed for payment
thereof), which ever shall be earlier.
(c) Such service charge shall be computed on the principal balance of
a premium finance agreement payable in successive monthly instalments
substantially equal in amount for a period of one year. On a premium
finance agreement providing for instalments extending for a period less
than or greater than one year, the service charge shall be computed
proportionately.
(d) When a premium finance agreement provides for unequal or irregular
instalments, the service charge shall be computed at the effective rate
provided for in paragraph (a), having due regard for the schedule of
instalments.
(e) The foregoing charges shall be inclusive of all charges incident
to the premium finance agreement and for the extension of credit
provided for therein.
(f) The foregoing paragraphs of this subdivision four apply if the
premiums under only one insurance contract are advanced or to be
advanced under a premium finance agreement; if premiums under more than
one insurance contract are advanced or are to be advanced under a
premium finance agreement, the service charge shall be computed as if
the premiums under each insurance contract were advanced or to be
advanced under separate premium finance agreements.
S 569. Delinquency, collection and cancellation charges; attorney`s
fees. 1. A premium finance agreement may provide for the payment by the
insured of a delinquency and collection charge on each instalment in
default for a period of not less than five days in an amount of one
dollar to a maximum not in excess of five per centum of such instalment,
provided however, that when any personal, household or domestic
insurance contract are listed in the agreement the charge shall not
exceed five dollars and, provided that only one such delinquency and
collection charge may be collected on any such instalment regardless of
the period during which it remains in default and, if the default
results in the cancellation of any personal, household or domestic
insurance contract listed in the agreement, the agreement may provide
for the payment by the insured of a cancellation charge equal to the
difference between any delinquency and collection charge imposed in
respect to the instalment in default and five dollars.
2. A premium finance agreement may also provide for the payment of
attorney`s fees not exceeding twenty per centum of the amount due and
payable under the agreement if it is referred for collection to an
attorney not a salaried employee of the premium finance agency holding
the agreement.
3. Notwithstanding the provisions of this section, a premium finance
agency shall not take or receive from or charge an insured any
cancellation charge or attorney`s fees unless, within ten days after
default in the payment of any instalment of a premium finance agreement,
the agency has mailed a notice of the default to the insured at his
address as shown on the agreement and to any insurance agent or broker
named therein at his place of business as shown therein.
S 570. Restrictions on premium finance agreements. 1. No premium
finance agreement shall contain any provision by which:
(a) In the absence of default of the insured, the premium finance
agency holding the agreement may, arbitrarily and without reasonable
cause, accelerate the maturity of any part or all of the amount owing
thereunder;
(b) A power of attorney is given to confess judgment in this state; or
(c) The insured relieves the insurance agent or broker or the premium
finance agency holding the agreement from liability for any legal rights
or remedies which the insured may otherwise have against him.
S 571. Delivery of copy of premium finance agreement. Before the due
date of the first instalment payable under a premium finance agreement,
the insurance agent or broker or the premium finance agency holding the
agreement shall deliver to the insured, or mail to him at his address as
shown in the agreement, a copy thereof or, if the agreement contained
any blank space when it was signed by the insured and such blank space
was subsequently filled in in accordance with subdivision four of
section five hundred sixty-seven, a copy of the agreement, as so filled
in.
S 572. Notice of assignment; payments. Unless the insured has notice
of actual or intended assignment of a premium finance agreement, payment
thereunder by him to the last known holder of the agreement shall be
binding upon all subsequent holders or assignees.
S 573. Statement of account; receipts. 1. At any time after its
execution, but not later than one year after the last payment
thereunder, a premium finance agency holding a premium finance agreement
shall, upon written request of the insured, give or mail to him a
written statement of the dates and amounts of payments and the total
amount, if any, unpaid thereunder. Such a statement shall be supplied
once each year without charge; if any additional statement is requested
the premium finance agency shall supply such statement at a charge not
exceeding one dollar for each additional statement so supplied. An
insured shall be given a receipt for a payment when made in cash.
2. After the payment of all sums for which an insured is obligated
under a premium finance agreement, and upon his written demand, the
premium finance agency holding the agreement shall deliver, or mail to
the insured at his last known address such one or more good and
sufficient instruments as may be necessary to acknowledge payment in
full and to release all interests in or rights to the insurance
contracts, the premiums for which are advanced or are to be advanced
under the agreement.
S 574. Credit upon anticipation of payments. 1. Notwithstanding the
provisions of any premium finance agreement to the contrary, any insured
may pay it in full at any time before the maturity of the final
instalment of the balance thereof and, if he does so and the agreement
included an amount for service charge, shall receive and be entitled to
receive for such anticipation a refund credit thereon.
2. The amount of any such refund credit shall represent at least as
great a proportion of the service charge, if any, as the sum of the
periodic balances after the month in which prepayment is made bears to
the sum of all periodic balances under the schedule of instalments in
the agreement. Such refund shall be computed in the service charge
exclusive of the additional charge. Where the amount of the refund
credit for anticipation of payment is less than one dollar, no refund
need be made.
S 575. Refinancing. A premium finance agency may, upon agreement with
the insured, extend the scheduled due date or defer the scheduled
payment of all or of any part of any instalment or instalments payable
thereunder. The agreement for such extension or deferment must be in
writing and signed by the parties thereto. The premium finance agency
may charge and contract for the payment of an extension or deferral
charge by the insured and collect and receive the same, but such charge
may not exceed an amount equal to one per centum per month simple
interest on the amount of the instalment or instalments, or part
thereof, extended or deferred for the period of extension or deferral.
Such period shall not exceed the period from the date when such extended
or deferred instalment or instalments, or part thereof, would have been
payable in the absence of such extension or deferral, to the date when
such instalment or instalments, or part thereof, are made payable under
the agreement of extension or deferment; except that a minimum charge of
one dollar for the period of extension or deferral may be made in any
case where the extension or deferral charge, when computed at such rate,
amounts to less than one dollar.
S 576. Cancellation of insurance contract upon default. 1. When a
premium finance agreement contains a power of attorney or other
authority enabling the premium finance agency to cancel any insurance
contract or contracts listed in the agreement, the insurance contract or
contracts shall not be cancelled unless such cancellation is effectuated
in accordance with the following provisions:
(a) Not less than ten days written notice shall be mailed to the
insured at his last known address as shown on the records of the premium
finance agency, of the intent of the premium finance agency to cancel
the insurance contract unless the default is cured within such ten day
period and that at least three days for mailing such notice is added to
the ten day notice. A copy of the notice of intent to cancel shall also
be mailed to the insurance agent or broker.
(b) Service of the notice of intent to cancel or notice of
cancellation by mail shall be effective provided that the notices are
mailed to the insured`s last known address as shown on the records of
the premium finance agency. The records of the premium finance agency
shall be presumptive evidence as to the correctness of such address.
(c) If the insurance contract or contracts provide motor vehicle
liability insurance, every such notice of cancellation shall include in
type or print, of which the face shall not be smaller than twelve point,
a statement that proof of financial security is required to be
maintained continuously throughout the registration period and a notice
prescribed by the commissioner of motor vehicles indicating the punitive
effects of failure to maintain continuous proof of financial security
and actions which may be taken by the insured to avoid punitive effects.
(d) After the notice in paragraph (a) above has expired, the premium
finance agency may thereafter, in the name of the insured, cancel such
insurance contract by mailing to the insurer a notice of cancellation
stating when thereafter the policy shall be cancelled, and the insurance
contract shall be cancelled as if such notice of cancellation had been
submitted by the insured himself, but without requiring the return of
the insurance contract. A copy of the notice of cancellation shall also
be mailed to the insured.
(e) All statutory, regulatory and contractual restrictions providing
that the insured may not cancel his insurance contract unless he or the
insurer first satisfies such restrictions by giving a prescribed notice
to a governmental agency, the insurance carrier or an individual or a
person designated to receive such notice for said governmental agency,
insurance carrier or individual, shall apply where cancellation is
effected under the provisions of this section. The insurer shall in
accordance with said prescribed notice where it is required to give such
notice in behalf of itself or the insured give notice to such
governmental agency, person or individual and it shall determine and
calculate the effective date of cancellation from the day it receives
the copy of the notice of cancellation from the premium finance agency;
provided (1) where the aforementioned prescribed notice requires that
more than ten days` notice be given, the prescribed time for such notice
shall control as to the effective date of cancellation, and (2) where
less than ten days` notice is required by the aforementioned prescribed
notice the effective date of cancellation shall not be prior to the date
contained in the copy of the cancellation notice sent by the premium
finance agency.
Notwithstanding that certain provisions of section ninety-three-c of
the vehicle and traffic law as added by chapter six hundred fifty-five
of the laws of nineteen hundred fifty-six and its successor statute,
section three hundred thirteen of the vehicle and traffic law, as
enacted by chapter seven hundred seventy-five of the laws of nineteen
hundred fifty-nine are consistent with certain of the provisions of this
article, those sections shall not be applicable to concellation of
insurance by a premium finance agency under the provisions of this
article.
(f) The insurer or insurers within a reasonable time not to exceed
sixty days after the effective date of cancellation, shall return
whatever gross unearned premiums are due under the insurance contract or
contracts on a pro rata basis to the premium finance agency for the
benefit of the insured or insureds. However, upon such cancellation the
insurer or insurers shall be entitled to retain a minimum earned premium
on the policy of ten percent of the gross premium or sixty dollars,
whichever is greater.
(g) Upon the cancellation of motor vehicle liability insurance by a
premium finance agency, unless a notice of such cancellation is not
required by the vehicle and traffic law or by the regulations of the
commissioner of motor vehicles, a notice of such cancellation under the
provisions of this article, shall be filed by the insurer or insurers
with the commissioner of motor vehicles not later than thirty days
following the effective date of such cancellation where such a filing is
required pursuant to section ninety-three-c of the vehicle and traffic
law, as added by chapter six hundred fifty-five of the laws of nineteen
hundred fifty-six or its successor statute, section three hundred
thirteen of the vehicle and traffic law as enacted by chapter seven
hundred seventy-five of the laws of nineteen hundred fifty-nine.
2. The provisions of subdivision one relating to cancellation by a
premium finance agency of an insurance contract and the return by an
insurer of unearned premiums to the premium finance agency also apply to
the surrender by a premium finance agency of an insurance contract
providing life insurance and the payment by the insurer of the cash
value of the contract to the premium finance agency, except that the
insurer may require the surrender of the insurance contract.
3. In this section, unless the context otherwise requires:
(a) "Premium finance agency" includes (1) a lending institution making
a loan for the purpose of financing insurance premiums in accordance
with the applicable provisions of other laws authorizing and regulating
the making of loans by the lending institution, and (2) a bank, or a
sales finance company licensed under article eleven-b of this chapter;
(b) "Premium finance agreement" includes (1) a promissory note or
other written agreement or obligation evidencing or securing such a loan
by a lending institution, and (2) a retail instalment contract or
obligation held by a bank, or a sales finance company so licensed; and
(c) "Insured" includes (1) each borrower or other obligor under or
upon a promissory note or other written agreement or obligation
evidencing or securing such a loan by a lending institution, and (2)
each buyer under a retail instalment contract or obligation held by a
bank, or a sales finance company so licensed.
S 577. Interpretation of article. This article does not affect: (1)
the inclusion of amounts for insurance in retail instalment contracts or
obligations in accordance with the motor vehicle retail instalment sales
act or the retail instalment sales act; (2) the inclusion of amounts for
insurance in retail lease agreements in accordance with the motor
vehicle retail leasing act; or (3) the making of loans for the purpose
of financing insurance premiums:
(a) By any person at a rate of interest not greater than the rate
prescribed by the banking board pursuant to section fourteen-a of this
chapter, or, if no rate has been so prescribed, six per centum per
annum; or
(b) By a lending institution in accordance with the applicable
provisions of other laws authorizing and regulating the making of loans
by the lending institution.
S 577-a. Premium finance agreements. Any amount advanced by a premium
finance agency, with regard to any insurance policy issued pursuant to
any plan established under article fifty-three of the insurance law
shall be paid either by check or draft made payable to the insurance
company, or, if the company is not known, by check or draft made payable
to the entity which pursuant to the plan established under article
fifty-three of the insurance law designates which insurer shall insure
or service the risk. The check or draft shall not be made payable to the
insurance agent or broker.
S 578. Severability. If any provision of this article or the
application thereof to any person or circumstances is held invalid, the
invalidity thereof shall not affect other provisions or applications of
the article which can be given effect without the invalid provision or
application, and to this end the provisions of this article are
severable.
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