A premium finance agency shall not, except as otherwise provided by law, impose, take, receive, reserve or charge a finance charge which in the aggregate is greater than that which is permitted by this article.
Insurance Premium FinancingLimitation on Finance Charges
Section § 18625
This law means that a premium finance agency cannot charge more in finance charges than what is allowed by this specific article. Basically, they have a limit on how much they can charge, unless another law says differently.
premium finance agency finance charge limit aggregate charge
Section § 18626
This law allows premium finance agencies to charge interest on premium finance agreements, which are loans to pay for insurance premiums. The maximum interest rate is 2% per month on loans up to $1,000, and 1% per month on balances over $1,000.
Alternatively, agencies can charge a flat rate of up to 1.6% per month. The term 'consumer insurance premium finance loan' refers to loans for insurance policies used for personal, family, or household purposes.
A premium finance agency may, in a premium finance agreement, contract for, charge, receive, and collect a finance charge which shall not exceed in the aggregate:
(a)CA Financial Code § 18626(a) Two percent per month on that part of the unpaid principal balance of any loan up to, including, but not in excess of, one thousand dollars ($1,000).
(b)CA Financial Code § 18626(b) One percent per month on any remainder of such unpaid principal balance in excess of one thousand dollars ($1,000).
As used in this article “consumer insurance premium
finance loan” shall mean an insurance premium finance loan where the insurance policies which are security for the loan are for personal, family or household use.
(c)CA Financial Code § 18626(c) As an alternative to the charges authorized by subdivisions (a) and (b), a premium finance agency may contract for and receive charges at a rate not exceeding 1.6 percent per month on the unpaid principal balance.
premium finance agreement finance charge interest rates
Section § 18627
If the calculated finance charge is less than $25, then a minimum finance charge of $25 can be applied instead.
If the finance charge computed under Section 18626 is less than twenty-five dollars ($25), a minimum finance charge of twenty-five dollars ($25) may be imposed.
finance charge minimum finance charge Section 18626
Section § 18628
This law explains when a finance company can start charging interest on a loan used to pay for an insurance premium. Usually, the interest can start from the day the insurance starts, if the company pays the insurance premium to the insurer within set deadlines. These deadlines are 30 days from the insurance start date, 30 days after the company gets a correct finance agreement, or 15 days after mailing a revised agreement, whichever is latest. If these deadlines aren't met, the interest starts when the loan money is sent to the insurer. Also, if the agreement arrives more than 60 days after the insurance start date, the finance charge will be adjusted accordingly.
The finance charge may be computed from the effective date of the insurance coverage, provided that the company shall pay the premium due the insurer, either:
(a)CA Financial Code § 18628(a) Within 30 days from the effective date of the insurance coverage; or
(b)CA Financial Code § 18628(b) Within 30 days after the receipt by the company of a proper premium finance agreement; or
(c)CA Financial Code § 18628(c) Within 15 days after the company has mailed to the insured, notice of a revised finance agreement pursuant to Section 18606 whichever is later.
If the conditions of subdivision (a), (b), or (c) are not met the finance charge shall be computed from the date the proceeds of the loan are forwarded to the insurer. In the event the company receives a proper premium finance agreement later than 60 days from the effective date of the policy financed, a proportioned adjustment of the finance charge shall be made after such 60-day period.
finance charge insurance coverage premium payment deadline
Section § 18629
This law states that if you have a premium finance agreement, you can pay off your full debt at any time before the last payment is due. When you do this, you should get a refund for any finance charges you haven't used, calculated based on specific rules. However, if the refund is less than $1, you won't get any refund. Also, if the finance charge you've already paid is less than the smallest allowed by law, the company can keep the amount at the legal minimum or the maximum, depending on which one applies.
Notwithstanding the provisions of any premium finance agreement to the contrary, any insured may pay the obligation in full at any time before maturity of the final installment. If he does so, he shall receive a refund credit of the unearned finance charge computed in accordance with Section 18635 or 18637, except where the amount of the refund credit is less than one dollar ($1) no refund need be made, and except that where the earned finance charge amounts to less than the minimum finance charge permitted by Section 18627, the company may retain as an earned finance charge a sum equal to the minimum permitted by Section 18627 or the maximum prescribed by Section 18627,
whichever is applicable.
premium finance agreement pay off debt early refund credit
Section § 18630
If an insurance policy covered by a premium finance agreement is canceled, either by the insured or the insurer, for any reason, the insured is entitled to a refund of the unearned finance charge. This refund must be calculated according to specific rules and given back within a reasonable time.
In the event that the insurance policy or policies which are the subject of a premium finance agreement are canceled by the insured or by the insurer, for any cause, the insured shall be entitled to receive a refund credit of the unearned finance charge. This refund credit shall be calculated in the same manner as prescribed in Section 18629, and shall be paid to the insured within a reasonable time.
insurance policy cancellation premium finance agreement refund credit
Section § 18631
This California law explains terms for premium finance agreements. If a payment is over 10 days late, the agreement can charge a default fee of $1 or up to 5% of the late payment. However, this charge can't be applied more than once for the same late payment.
If a late fee is subtracted from a payment, causing another delayed payment, no additional late fee can be charged for the new delay. The agreement can also charge a fee of up to $15 if a check bounces, to cover any real costs from processing it.
(a)CA Financial Code § 18631(a) A premium finance agreement may provide for the payment of a default charge of one dollar ($1) to a maximum of 5 percent of the delinquent installment, in the event of a default for a period of not less than 10 days in the payment of any scheduled installment under the terms of a premium finance agreement. That charge may not be collected more than once for the same default and may be collected at the time of the default or at any time thereafter. If the default charge is deducted from any payment received after default occurs, and the
deduction results in the default of a subsequent installment, no charge may be made for the resulting default.
(b)CA Financial Code § 18631(b) A premium finance agreement may provide for the payment of a dishonored check fee not to exceed fifteen dollars ($15) for actual expenses incurred in the processing of a dishonored check.
premium finance agreement default charge late payment fee
