AZ Rev Stat § 6-636 (2021)
2021 Arizona Revised Statutes|Title 6 - Banks and Financial Institutions|§ 6-636 - Insurance securing loan; cancellation; notice

6-636.  Insurance securing loan;  cancellation;  notice A. The following types of insurance may be sold to the consumer in connection with a consumer lender loan and the consumer may contract for: 1. Property insurance covering any property securing a consumer lender loan. 2. Life insurance insuring the life of one or more consumers obligated on a consumer lender loan. 3. Credit disability insurance that provides indemnity for payments due on a consumer lender loan while any covered consumer has a disability. 4. Credit involuntary unemployment insurance that provides indemnity for payments due on a consumer lender loan while one or more consumers are involuntarily unemployed. 5. Accidental death and dismemberment insurance providing a benefit if death occurs as a result of an accident or if dismemberment occurs. 6. Disability income protection insurance providing a benefit if a total disability occurs during the term of insurance. B. Any insurance purchased by a consumer from or through a licensee,  except insurance on property securing a consumer lender loan,  is optional,  and a licensee shall not refuse to make a consumer lender loan based on the consumer's refusal to purchase the insurance. The consumer may cancel any insurance purchased in connection with a consumer lender loan for any reason at any time within thirty days after the consumer lender loan is made and shall mail or deliver a written notice of the cancellation to the licensee's place of business. If the consumer cancels the insurance pursuant to this subsection,  the consumer is entitled to a full refund of any premiums paid for the insurance. Before executing the note or agreement evidencing a consumer lender loan that includes a premium for insurance,  the licensee shall give the consumer the disclosures required to exclude those insurance premiums from the finance charge in accordance with the truth in lending act. C. At the time the insurance is sold the licensee shall mail or deliver a written receipt or binder to the consumer. Within thirty days after mailing or delivering the written receipt or binder,  the licensee shall deliver to the consumer,  or if more than one,  to any one of them,  a policy or certificate of insurance covering any insurance purchased by or through the licensee or any employee or affiliate of the licensee in connection with the consumer lender loan that sets forth the amount of any premium that the consumer has paid or is obligated to pay,  the amount of insurance,  the term of insurance and a description of the coverage. The policy or certificate may contain a mortgagee clause or other appropriate provisions to protect the insurable interest of the licensee. D. All property insurance sold pursuant to this section shall bear a reasonable bona fide relation to the existing hazard or risk of loss and shall be written by an agent licensed in this state and by an insurance company authorized to conduct property insurance business in this state. A licensee shall not require the purchase of property insurance from the licensee or any employee,  affiliate or associate of the licensee as a condition precedent to the making of a consumer lender loan. The licensee may otherwise designate the company in which the insurance shall be placed as long as the insurance company is authorized to conduct business in this state. E. Property insurance,  if sold by a licensee in connection with a consumer loan,  is at the option of the consumer in an amount not exceeding the greater of the reasonable value of the property insured as designated in writing by the consumer or the approximate amount of the consumer loan and shall be for a term not exceeding the approximate term of the consumer loan. However,  the amount of this property insurance may not exceed the designated value of the property insured. F. If a licensee sells property insurance in connection with a consumer revolving loan or a home equity revolving loan,  the amount of the property insurance shall not exceed the greater of the reasonable value of the property insured as designated in writing by the consumer or the agreed on credit limit. However,  the amount of property insurance shall not exceed the designated value of the insured property. The licensee may sell property insurance for renewable terms of not more than two years. Alternatively,  the amount of property insurance may be equal to the balance outstanding on a consumer revolving loan or a home equity revolving loan from time to time with the premiums calculated on the basis of the actual daily unpaid balance or the average daily balance of the account during each billing cycle period. Premiums for property insurance may be charged as an advance on a consumer revolving loan or a home equity revolving loan. G. If the licensee sells the consumer property insurance for a renewable term,  the licensee shall mail a notice to the consumer at least thirty days before the renewal date that states all of the following: 1. The consumer's property insurance is about to expire. 2. The consumer may obtain property insurance from any source chosen by the consumer subject to the licensee's right to reasonably reject the insurer chosen by the consumer by providing written notice to the consumer of those reasons for rejection. 3. The term,  coverage and premium for the renewal of property insurance. 4. The property insurance will be renewed on expiration unless the consumer provides the licensee before the expiration date with evidence that the consumer has obtained other property insurance. H. Notwithstanding any other provision of this chapter,  any advantage,  commission,  dividend,  gain or identifiable charge for insurance authorized by this section,  or otherwise,  to the licensee or any employee or affiliate of the licensee from that insurance or its sale is not an additional finance charge or other allowed fee in connection with the consumer lender loan. If the licensee provides a new consumer lender loan or renews a contract of a consumer lender loan and the licensee sells the consumer new insurance,  the licensee shall apply the insurance provided for in this section to the new loan or renewal,  or the licensee shall cancel the prior insurance and provide the consumer with a refund or credit of the unearned premium or identifiable charge before selling the new insurance to the consumer. I. The licensee shall determine the refund of unearned premiums for credit life insurance and credit disability insurance on prepayment in full according to title 20,  chapter 6,  article 10. J. Except as otherwise specifically provided in this chapter,  insurance transactions pursuant to this chapter are subject in all respects to the applicable laws pertaining to that insurance pursuant to title 20 and to the applicable rules adopted pursuant to title 20.