N.J. Admin. Code § 11:17A-2.5
Current through Register Vol. 56, No. 24, December 18, 2024
Section 11:17A-2.5 - Tie-ins; coercion(a) No financial institution licensed as an insurance producer shall, as a condition precedent, concurrent or subsequent to the lending of money or the extension of credit, or the renewal of the loan or extension of credit, require that the borrower acquire, finance or negotiate a policy or contract of insurance through any particular insurer or insurance producer, or cancel insurance with another insurance producer or insurer. 1. A financial institution licensed as an insurance producer shall accept the insurance policy provided by a borrower unless a reasonable basis exists to disapprove the insurance policy. For the purpose of this paragraph, disapproval shall be deemed unreasonable if it is not based solely on reasonable standards as determined by the Commissioner, uniformly applied, relating to the extent of coverage required and the financial soundness and services of an insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for the disapproval of an insurance policy because such policy contains coverage in addition to that required. If a financial institution rejects the insurance furnished by the borrower, it shall provide the borrower with a clear and complete written statement of reasons for the rejection.2. Pursuant to and consistent with (a) and (a)1 above, all financial institutions licensed as insurance producers shall issue a written disclosure to prospective insureds which shall inform them of their right to acquire insurance coverage from and through sources independent of the financial institution and its subsidiaries when such insurance coverage is required to secure a loan, credit or mortgage, or any renewal thereof. The written disclosure required by this paragraph shall be worded as follows, and printed in a type size not less than 10 point type, and shall be maintained by the insurance producer for at least five years. A copy of this disclosure shall be given to the borrower at the time the issue of insurance first arises. | The Insurance Laws of New Jersey provide that the lender may not require the |
| borrower to take insurance through any particular insurer or insurance |
| producer (for example, agent or broker). |
| The borrower has the right to have the insurance placed with or through an |
| insurance producer and insurer of his or her choice, provided that they meet |
| the reasonable requirements of the lender. Subject to the rules adopted by |
| the Commissioner, the lender has the right to designate reasonable |
| requirements as to the insurer and the insurance producer and as to the |
| adequacy of the coverage. The lender cannot require the borrower to cancel |
| insurance with another insurance producer and insurer unless the continuation |
| of such coverage and relationship would be unreasonable within the meaning of |
| this notice and N.J.A.C. 11:17A-2.5. |
| I have read the foregoing statement and understand my rights and privileges |
| and those of the lender relative to the placing of insurance. |
| I have selected ...... (insert name) as the Insurance Company/ |
| Agency/Insurance Producer to provide the required ...... (insert type) |
| insurance. |
| ........................................................... |
| Name of Borrower |
| ........................................................... |
| Name of Borrower |
| ........................................................... |
| Date |
(b) No financial institution licensed as an insurance producer shall require, directly or indirectly, that any borrower, mortgagor, purchaser, insurer or other insurance producer pay a separate charge in connection with the handling of any insurance policy required as security for a loan or the extension of credit, or pay a separate charge to substitute the insurance policy of one insurer for that of another.(c) No financial institution licensed as an insurance producer shall require any procedure or condition of an insurer or insurance producer not customarily required of insurers or insurance producer that are affiliated or connected with the financial institution.(d) No insurance producer shall engage in any conduct which reasonably could result in or results in: 1. Leading a person to believe that his or her credit-worthiness, or that the extension of credit, is conditioned upon the purchase of insurance through a particular insurance producer or insurer; or2. An unlicensed financial institution either soliciting, negotiating, or selling insurance business acting on behalf of the insurance producer.(e) No insurance producer shall require an applicant or policyholder, or a member of the applicant's or policyholder's family, to purchase from him or her a collateral policy of insurance as a condition precedent to securing or renewing a policy of insurance. Nothing in this subsection shall prevent an insurance producer from requiring the purchase of a collateral insurance policy from a source other than the insurance producer, including a person or entity with whom he or she is associated, if such a condition precedent is based upon appropriate underwriting guidelines of the insurer.(f) No insurance producer engaged in a business other than the business of insurance shall engage in any conduct which reasonably could result in or which results in coercing an applicant or policyholder into purchasing insurance as a condition precedent, concurrent or subsequent to securing any other good or service.(g) No insurance producer shall restrict the sale or issuance of an insurance policy, or participate in the restriction of the sale or issuance of an insurance policy, to persons who enter into, or agree to enter into, premium financing agreements with any particular premium finance service company.(h) No insurance producer acting as a motor club representative or who receives any compensation, directly or indirectly, for or on account of the sale of a motor club service contract, shall require the purchase of a motor club contract as a condition to securing an insurance contract and/or premium finance agreement.N.J. Admin. Code § 11:17A-2.5
Amended by R.2000 d.44, effective 2/7/2000.
See: 31 New Jersey Register 3583(a), 32 New Jersey Register 499(a).
Amended by R.2002 d.354, effective 11/4/2002.
See: 34 New Jersey Register 2286(a), 34 New Jersey Register 2549(b), 34 New Jersey Register 3839(a).
In (a)2, inserted "or her" preceding "choice," in the Disclosure Notice; in (d)2, substituted "selling" for "effecting" preceding "insurance business"; deleted references to limited insurance representatives throughout.