N.Y. ISC Law § 2502 — New York Code / Act ISC / Article 25 / Section 2502
Designation of particular insurer, agent or broker in property financing transactions and other unfair practices
Status: in_force

* § 2502. Designation of particular insurer, agent or broker in\nproperty financing transactions and other unfair practices. (a)(1) No\nperson, firm, or corporation engaged in the business of financing the\npurchase of real or personal property, lending money on the security\nthereof, or servicing a mortgage thereon, and none of its trustees,\ndirectors, officers, agents or other employees, shall require, as a\ncondition precedent to financing any such purchase or making any such\nloan or renewing or extending any such loan or mortgage or performing\nany other act in connection therewith, that the person, firm or\ncorporation for whom the transaction is undertaken negotiate any policy\nof insurance or renewal thereof covering such property through a\nparticular insurance company, agent or broker.\n  (2) State chartered banking institutions and federally chartered\nbanking institutions shall not extend credit, lease or sell property of\nany kind, or furnish any services, or fix or vary the consideration for\nany of the foregoing, on the condition or requirement that the customer\nobtain insurance from such institution, its affiliate or subsidiary, or\na particular insurer, agent or broker, provided, however, that this\nprohibition shall not prevent such institution from engaging in any\nactivity described in this subdivision that would not violate section\n106 of the Bank Holding Company Act Amendments of 1970, as interpreted\nby the Board of Governors of the Federal Reserve System. This\nprohibition shall not prevent a state chartered banking institution or\nfederally chartered banking institution from informing a customer that\ninsurance is required in order to obtain a loan or credit, that loan or\ncredit approval is contingent upon the customer's procurement of\nacceptable insurance, or that insurance is available from such\ninstitution; provided, however, that the state chartered banking\ninstitution or the federally chartered banking institution shall also\ninform the customer in writing that his or her choice of insurance\nprovider shall not affect the institution's credit decision or credit\nterms in any way. Such disclosure shall be given prior to or at the time\nthat any such institution or person selling insurance on the premises\nthereof solicits the purchase of any insurance from a customer who has\napplied for a loan or extension of credit.\n  (b) This section shall not prevent the exercise of any right to\napprove or disapprove of the insurance company selected to underwrite\nthe insurance, except that in exercising such right, whether pursuant to\nthis section or any other law, such person, firm, or corporation and its\ntrustees, directors, officers, agents and employees shall not:\n  (1) discriminate against an insurance company which issues a policy of\ninsurance that is non-assessable as to any designated mortgagee or any\nsecured creditor designated as a loss payee because of the insurer's\ntype of organization, or\n  (2) refuse to accept an insurance policy because it was not negotiated\nthrough a particular insurance company, agent or broker.\n  (c) No such person, firm or corporation shall, in connection with\ncompliance with a covenant to insure, require that the person, firm or\ncorporation for whom the purchase of the property is financed or to whom\na mortgage loan is made or who owns the property shall pay a fee or\nother charge as a condition to accepting, during the unexpired term of a\npolicy then held, another policy of insurance in substitution therefor.\nNo state chartered banking institution or federally chartered banking\ninstitution shall require a debtor, insurer, or insurance agent or\nbroker to pay a separate charge in connection with the handling of\ninsurance that is required in connection with a loan or other extension\nof credit or the provision of another traditional banking product solely\nbecause the insurance is being provided by an insurance agent or broker\nwhich is not the state chartered banking institution or federally\nchartered banking institution or any subsidiary or affiliate thereof.\n  (d) Except with respect to a flood insurance policy or a credit\nunemployment insurance policy, group credit life insurance policy, a\ngroup credit health, group credit accident or group credit health and\naccident policy, or similar group credit insurance covering the person\nof the insured, when a customer obtains insurance and credit from a\nstate chartered banking institution or federally chartered banking\ninstitution, then the credit and insurance transactions shall be\ncompleted through separate documents. The expense of insurance premiums\nmay not be included in the primary credit transaction without the\nexpress written consent of the customer.\n  (e) Any state chartered banking institution or federally chartered\nbanking institution and any subsidiary or affiliate thereof which is\nlicensed to sell insurance in this state shall maintain separate and\ndistinct books and records relating to its insurance transactions,\nincluding all files relating to and reflecting consumer complaints, and\nsuch insurance books and records shall be made available to the\nsuperintendent for inspection upon reasonable notice.\n  (f) For the purposes of this section, the terms "state chartered\nbanking institution" and "federally chartered banking institution" shall\nhave the same meanings as set forth in subdivision one of section\ntwelve-a of the banking law.\n  * NB Effective until September 10, 2029\n  * § 2502. Designation of particular insurer, agent or broker in\nproperty financing transactions. (a) No person, firm or corporation\nengaged in the business of financing the purchase of real or personal\nproperty, lending money on the security thereof, or servicing a mortgage\nthereon, and none of its trustees, directors, officers, agents or other\nemployees, shall require, as a condition precedent to financing any such\npurchase or making any such loan or renewing or extending any such loan\nor mortgage or performing any other act in connection therewith, that\nthe person, firm or corporation for whom the transaction is undertaken\nnegotiate any policy of insurance or renewal thereof covering such\nproperty through a particular insurance company, agent or broker.\n  (b) This section shall not prevent the exercise of any right to\napprove or disapprove of the insurance company selected to underwrite\nthe insurance, except that in exercising such right, whether pursuant to\nthis section or any other law, such person, firm, or corporation and its\ntrustees, directors, officers, agents and employees shall not:\n  (1) discriminate against an insurance company which issues a policy of\ninsurance that is non-assessable as to any designated mortgagee or any\nsecured creditor designated as a loss payee because of the insurer's\ntype of organization, or\n  (2) refuse to accept an insurance policy because it was not negotiated\nthrough a particular insurance company, agent or broker.\n  (c) No such person, firm or corporation shall, in connection with\ncompliance with a covenant to insure, require that the person, firm or\ncorporation for whom the purchase of the property is financed or to whom\na mortgage loan is made or who owns the property shall pay a fee or\nother charge as a condition to accepting, during the unexpired term of a\npolicy then held, another policy of insurance in substitution therefor.\n  * NB Effective September 10, 2029\n