427.120. Collateral protection coverage, requirements.
Collateral protection coverage, requirements.
427.120. For protection under sections 427.110 to 427.190, a creditormay place collateral protection coverage provided the following conditionsare met:
(1) The debtor has entered into a credit transaction with thecreditor;
(2) The credit transaction has been reduced to a credit agreement,and the credit agreement requires the debtor to maintain insurance on thecollateral; and
(3) A notice substantially similar to the following has been includedin the credit agreement or on a separate document provided to the debtor atthe time the credit agreement is entered: "Unless you provide evidence ofthe insurance coverage required by your agreement with us, we may purchaseinsurance at your expense to protect our interests in your collateral.This insurance may, but need not, protect your interests. The coveragethat we purchase may not pay any claim that you make or any claim that ismade against you in connection with the collateral. You may later cancelany insurance purchased by us, but only after providing evidence that youhave obtained insurance as required by our agreement. If we purchaseinsurance for the collateral, you will be responsible for the costs of thatinsurance, including the insurance premium, interest and any other chargeswe may impose in connection with the placement of the insurance, until theeffective date of the cancellation or expiration of the insurance. Thecosts of the insurance may be added to your total outstanding balance orobligation. The costs of the insurance may be more than the cost ofinsurance you may be able to obtain on your own."
(L. 1997 H.B. 257)