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2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.4 - Managing General Agents › Section 769.81.

769.81. As used in this article:
(a) “Actuary” means a person who is a member in good standing of the American Academy of Actuaries, the Casualty Actuarial Society, or the Society of Actuaries, and is qualified to sign a statement of actuarial opinion on loss reserves.
(b) “Insurer” means any person, firm, association, or corporation duly licensed as an insurer and operating under a certificate of authority in this state.
(c) “Managing General Agent” (MGA) means any person, firm, association, partnership, or corporation who negotiates and binds ceding reinsurance contracts on behalf of an insurer or manages all or part of the insurance business of an insurer (including the management of a separate division, department or underwriting office) and acts as an agent for that insurer whether known as an MGA, manager, or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross direct written premium equal to or more than 5 percent of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with one or more of the following: (1) adjusts or pays claims in excess of an amount determined by the commissioner, or (2) negotiates reinsurance on behalf of the insurer.
Notwithstanding the above, the following persons shall not be considered as MGAs for the purposes of this act:
(1) An employee of the insurer.
(2) A United States manager of the United States branch of an alien insurer.
(3) An underwriting manager which, pursuant to contract, manages the insurance operations of the insurer, is under common control with the insurer, subject to the holding company regulatory act, and whose compensation is not based on the volume of premiums written.
(4) The attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or interinsurance exchange under powers of attorney.
(d) “Underwrite” means the authority to accept or reject risk on behalf of the insurer.
(Added by Stats. 1991, Ch. 686, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.4 - Managing General Agents › Section 769.82.

769.82. (a) No producer shall act in the capacity of an MGA with respect to risks located in this state for an insurer that holds a certificate of authority unless that producer is licensed as a property broker-agent and casualty broker-agent, or as a life agent in this state.
(b) No producer shall act in the capacity of an MGA representing an insurer domiciled in this state with respect to risks located outside this state unless that producer is licensed as a property broker-agent and casualty broker-agent, or as a life agent in this state.
(c) The commissioner may require a fidelity bond in an amount acceptable to him or her for the protection of the insurer.
(d) The commissioner may require the MGA to maintain an errors and omissions policy. If a policy is not generally available at a reasonable cost, the commissioner may, by rule, suspend the requirement of this subdivision until that coverage becomes generally available at a reasonable cost.
(Amended by Stats. 2011, Ch. 411, Sec. 5. (AB 1416) Effective January 1, 2012.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.4 - Managing General Agents › Section 769.84.

769.84. (a) The insurer shall have on file an independent financial examination, in a form acceptable to the commissioner, of each MGA with which it has done business.
(b) If an MGA establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the MGA. This is in addition to any other required loss reserve certification.
(c) The insurer shall periodically (at least semiannually) conduct an onsite review of the underwriting and claims processing operations of the MGA.
(d) Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer, who shall not be affiliated with the MGA.
(e) Within 30 days of entering into or termination of a contract with an MGA, the insurer shall provide written notification of such appointment or termination to the commissioner. Notices of appointment of an MGA shall include a statement of duties which the applicant is expected to perform on behalf of the insurer, the lines of insurance for which the applicant is to be authorized to act, and any other information the commissioner may request.
(f) An insurer shall review its books and records each quarter to determine if any producer has become, by operation of Section 769.81, an MGA as defined in that section. If the insurer determines that a producer has become an MGA pursuant to the above, the insurer shall promptly notify the producer and the commissioner of that determination and the insurer and the producer shall fully comply with this article within 30 days.
(g) An insurer shall not appoint to its board of directors an officer, director, employee, any agent appointed pursuant to paragraph (3) of subdivision (j) of Section 769.83, or controlling shareholder of its MGAs. This subdivision shall not apply to relationships governed by Article 4.7 (commencing with Section 1215) of Chapter 2 of Part 2 of Division 1.
(Added by Stats. 1991, Ch. 686, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.4 - Managing General Agents › Section 769.85.

769.85. The acts of the MGA are considered to be the acts of the insurer on whose behalf it is acting. An MGA may be examined as if it were the insurer.
(Added by Stats. 1991, Ch. 686, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.4 - Managing General Agents › Section 769.86.

769.86. (a) If the commissioner finds after hearing that any person has violated any provision of this article he or she may order any of the following:
(1) For each separate violation, a penalty in an amount not to exceed twenty-five thousand dollars ($25,000).
(2) Revocation or suspension of the producer’s license.
(b) Hearings held pursuant to subdivision (a) shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, except that the hearings shall be conducted by administrative law judges chosen under Section 11502 or appointed by the commissioner.
(c) The decision, determination, or order of the commissioner pursuant to subdivision (a) shall be subject to judicial review.
(d) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided for in this code, nor limit any other authority required or authorized by this code to be exercised by the commissioner.
(e) Nothing contained in this article is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, and auditors.
(Added by Stats. 1991, Ch. 686, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.4 - Managing General Agents › Section 769.87.

769.87. The commissioner may adopt reasonable rules and regulations for the implementation and administration of this article.
(Added by Stats. 1991, Ch. 686, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 770.

770. No person engaged in the business of financing the purchase of real or personal property or of lending money on the security of real or personal property and no trustee, director, officer, agent or other employee, or affiliate of, any such person shall require, as a condition precedent to financing the purchase of such property or to loaning money upon the security thereof, or as a condition prerequisite for the renewal or extension of any such loan or for the performance of any other act in connection therewith, that the person for whom such purchase is to be financed or to whom the money is to be loaned or for whom such extension, renewal or other act is to be granted or performed negotiate any insurance or renewal thereof covering such property through a particular insurance agent or broker.
(Added by Stats. 1951, Ch. 224.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 770.1.

770.1. No person making a loan of money on the security of real property shall use or make available to any person information contained in a policy of fire or casualty insurance for the purpose of soliciting either type of insurance coverage if the borrower has filed with the lender a statement signed by the borrower that the policy information shall not be so used or made available. The statement may be included by the borrower in his or her letter of authorization designating an insurance agent or broker to the lender. The statement or letter of authorization shall be effective until superseded or revoked by the borrower. This section shall not apply to any person authorized or licensed to make loans pursuant to Division 7 (commencing with Section 18000), Division 9 (commencing with Section 22000), Division 10 (commencing with Section 24000), or Division 11 (commencing with Section 26000) of the Financial Code.
(Amended by Stats. 1986, Ch. 1229, Sec. 9.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 770.3.

770.3. No state department or agency shall negotiate any life or disability insurance or require the placing of that insurance through particular agents, brokers, or companies, except to the extent that the state has a direct financial interest in the subject of the insurance. The state has no financial interest in an annuity purchased for an employee if the premium therefor is paid from a deduction from or reduction in the employee’s salary, and any annuity paid for through a deduction or reduction shall not be deemed to have been provided by the state for its employees for purposes of this section, and the state shall not negotiate or require the placing of the annuity through particular agents, brokers, or companies. Nothing contained in this section shall affect the program of life and disability insurance in connection with veterans’ farm and home purchases through the Department of Veterans Affairs except that the total life insurance benefit under that program shall in no event exceed 120 percent of the unpaid contract balance. Except in those cases where the premium for an annuity is paid entirely from a deduction from or reduction in an employee’s salary, nothing contained in this section shall affect life or disability insurance programs which may be provided by the state for its employees.
Notwithstanding anything in this section to the contrary, in any case in which a tax-sheltered annuity under an annuity plan which meets the requirements of Section 403(b) of the Internal Revenue Code of 1954 is to be placed or purchased for an employee, the employee shall have the right to designate the licensed agent, broker, or company through whom the employee’s employer shall arrange for the placement or purchase of the tax-sheltered annuity. In any case in which the employee has designated an agent, broker, or company, the employer shall comply with that designation, except in the case of a designation subject to Section 1153 or Section 12420.2 of the Government Code, or Section 24950 of the Education Code.
As used in this section, “state department or agency” shall include, but not be limited to, school districts.
This section shall apply to all local governmental agencies, as well as state departments and agencies.
(Amended by Stats. 2008, Ch. 230, Sec. 11. Effective January 1, 2009.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 771.01.

771.01. No person making a loan of money on the security of residential real property shall reject or refuse to accept a policy of fire and casualty insurance underwritten by an insurer chosen by the borrower for any reason that the lender would not impose on an insurer chosen by the lender when the borrower requests the lender to obtain the insurance. This section applies to a lender’s rejection or refusal to accept a policy of fire and casualty insurance due to, but not limited to, terms of coverage, conditions of payment, or financial rating of the insurer.
(Added by Stats. 1995, Ch. 857, Sec. 1. Effective January 1, 1996.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 771.02.

771.02. (a) When a lender or purchaser of a mortgage on real property has required and obtained a copy of the insurance policy covering that real property, it shall be responsible for providing a copy of that insurance policy or other evidence of insurance acceptable to the purchaser to a subsequent purchaser of the mortgage, servicing agent, or insurance tracking service with whom the lender or purchaser of the mortgage subsequently contracts. A copy of the policy or other evidence of insurance shall be provided so that the subsequent purchaser, servicing agent, or insurance tracking service may verify that the borrower has obtained or is maintaining insurance required by the mortgage. This section does not abrogate the responsibility of an insurer, agent, or broker to provide annually, if requested, a copy of the insurance policy directly to the lender or purchaser of the mortgage named as an additional loss payee or lienholder at an address provided by the lender or purchaser of the mortgage.
(b) A copy of the insurance policy or other evidence of insurance acceptable to the purchaser may be provided electronically to the subsequent purchaser of the mortgage, servicing agent, or insurance tracking service with whom the lender or purchaser of the mortgage subsequently contracts, if that party agrees to electronic service.
(Amended by Stats. 2009, Ch. 433, Sec. 10. (AB 328) Effective January 1, 2010.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 771.1.

771.1. Nothing in this article shall prevent any person licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code from recommending, soliciting, negotiating or effecting home protection contracts issued by a company qualified under Part 7 (commencing with Section 12740) of Division 2, in connection with his or her licensed function authorized by Sections 10131 or 10131.6 of the Business and Professions Code, notwithstanding that such person is not a fire and casualty licensee as defined in Section 1625.
(Added by Stats. 1978, Ch. 1203.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 772.

772. In any trial, hearing or proceeding to determine a violation of this article a written statement signed by the person for whom any purchase is financed, to whom any money is loaned or for whom any extension, renewal or other act in connection with a loan is to be granted or performed, declaring that such person voluntarily chooses the insurance agent or broker through whom the insurance or its renewal was transacted, and that the choice of such insurance agent, or broker was not made a condition precedent to such purchase, loan, extension, renewal or other act shall be prima facie evidence that no violation of Section 770 has occurred, if the borrower or purchaser in his own handwriting shall have written the name of his chosen insurance agent or broker into an authorization of such insurance agent or broker.
(Added by Stats. 1951, Ch. 224.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 773.

773. The commissioner may suspend or revoke any license held by any person who violates Section 770, pursuant to Article 13 of Chapter 5 of this part.
(Amended by Stats. 1959, Ch. 4.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 774.

774. The commissioner, after hearing upon notice, may issue a cease and desist order to any person if he finds that such person has, in more than one transaction, violated Section 770. The violation of such a cease and desist order is a misdemeanor.
(Added by Stats. 1951, Ch. 224.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 775.

775. The commissioner may investigate any person, whether licensed or not, for the purpose of determining if there has been any violation of this article, however, if such investigation be upon a complaint, the complainant must be a party to the contract of sale, trust deed, or loan agreement and must make such complaint within three months of the execution or any modification thereof.
(Added by Stats. 1951, Ch. 224.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.5 - Insurance in Connection With Sales and Loans › Section 776.

776. No person who sells real property shall require, as a condition precedent to the sale of such real property, that the person buying the real property negotiate any insurance or renewal thereof covering such property through a particular insurance agent, insurance broker, or insurance solicitor.
(Added by Stats. 1969, Ch. 302.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.7 - Free Insurance › Section 777.1.

777.1. No insurer shall participate in any plan to offer or effect any kind or kinds of insurance or annuities in this state as an inducement to the purchase or rental by the public of any property, real or personal or mixed, or services, without any separate charge to the insured for such insurance, nor shall any agent, broker, or solicitor arrange the sale of any such insurance. The provisions of this article shall not be applicable to insurance written in connection with subscriptions to newspapers of general circulation; nor shall it apply to insurance issued to credit unions or to members of credit unions in connection with the purchase of shares in such a credit union; nor shall it apply to insurance offered as a guarantee of the performance of goods, which insurance is designed to protect the purchasers or users of such goods; nor shall it be applicable to any title insurance or life or disability insurance written in connection with an indebtedness, the purpose of which insurance is to pay the balance of the indebtedness in the event of the death or disability of the person insured; nor shall it be applicable to any of the provisions of Part 5 (commencing at Section 12140), Division 2 of this code; nor shall it be applicable to insurance provided incidentally to the sale of services if the cost of the insurance to the seller of the services does not exceed the sum of one dollar ($1) per annum for each purchaser of those services.
(Amended by Stats. 1985, Ch. 334, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.7 - Free Insurance › Section 777.2.

777.2. If any insurer, agent, broker or solicitor wilfully violates the provisions of this article, the Insurance Commissioner may suspend or revoke his certificate or license or other authority to do business or engage in his occupation for a period not exceeding one year. The proceedings shall be conducted in accordance with Chapter 5 of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted therein.
(Added by Stats. 1957, Ch. 520.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.7 - Free Insurance › Section 777.3.

777.3. As used in this article “insurer” includes any person or organization to which Article 4 (commencing with Section 730), Chapter 1, Part 2, Division 1 is applicable.
(Amended by Stats. 1965, Ch. 265.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.8 - Premium Financing › Section 778.

778. As used in this article, “premium financing” means engaging in the business of advancing money, directly or indirectly, to an insurer or producer at the request of an insured pursuant to the terms of a premium finance agreement, wherein the insured has assigned the unearned premiums, accrued dividends, or loss payments as security for such advancement in payment of premiums on insurance contracts only, and does not include the financing of insurance contract premiums purchased in connection with the financing of goods and services.
(Added by Stats. 1971, Ch. 1103.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.8 - Premium Financing › Section 778.1.

778.1. As used in this article, “premium finance agreement” means a loan contract, note, agreement, or obligation by which an insured agrees to pay to a lender in installments the principal amount advanced by the lender to an insurer or producer in payment of premium on an insurance contract or contracts, plus charges, with the assignment, as security therefor, of the unearned premiums, accrued dividends, or loss payments.
(Added by Stats. 1971, Ch. 1103.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.8 - Premium Financing › Section 778.2.

778.2. (a) Any person engaged in business as an insurance agent or broker and who participates in the arrangement of a premium financing agreement shall, if he accepts compensation for arranging, directing, or performing services in connection with the premium financing agreement, disclose to the insured, in a manner and form established by the commissioner, the amount of compensation he is to receive from the premium financer and maintain for three years and make available to the commissioner a list of accounts in connection with which he has accepted compensation for premium financing services showing the amount of such compensation with respect to each premium financing agreement and with respect to each financing schedule used by the agent or broker. The requirements of this subdivision shall not apply with respect to interest paid to the broker or agent by the premium financer based upon delay in payment of the premium due the insurer as permitted under subdivision (a) or (b) of Section 18628 of the Financial Code.
(b) The commissoner shall hold a hearing and adopt by regulation a standard procedure and form for making the disclosure to the insured required by subdivision (a).
(Amended by Stats. 1983, Ch. 356, Sec. 5.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.8 - Premium Financing › Section 778.3.

778.3. The amount of the periodic finance charges, if any, imposed for the premium financing purchased and the annual percentage rate associated with those charges shall be disclosed in the policy itself, or if arranged pursuant to a separate premium financing agreement in the premium financing agreement itself, and in the premium finance billings. If the finance charge is a fixed fee, regardless of the amount of the loan or the balance due, the disclosure is not required to include the annual percentage rate associated with those charges. This section shall not apply to any insurance policy or premium finance billing if the same information is otherwise disclosed to the insured as required by any other provision of state or federal law.
(Added by Stats. 1999, Ch. 388, Sec. 1. Effective January 1, 2000.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.8 - Premium Financing › Section 778.4.

778.4. (a) Every property broker-agent and every casualty broker-agent shall, prior to arranging premium financing for any new or renewal policy of insurance specified in Section 660, do all of the following:
(1) Provide the applicant or prospective insured with any information that is required by the federal Truth in Lending Act (15 U.S.C. Sec. 1601 et seq.).
(2) Obtain the signature of the applicant or prospective insured on the following disclosure, which shall be in 10-point boldface type on a separate form or sheet of paper:
Some insurance companies and the California Automobile Assigned Risk Plan (CAARP) provide the opportunity to make payments on insurance premiums. Your agent or broker is required to disclose these options, if any are available for the insurance you are purchasing. If you choose to enter into a contract that provides for premium financing, your agent is required by law to make certain disclosures concerning interest, fees, or other charges. If your insurance has been financed by any person or business other than your insurance company, and your insurance is canceled for any reason, your loan may be subject to continued interest charges, or other charges that may result from delays by your insurance company in repaying the premium finance company. You should understand all of the charges associated with your financing plan. If you are uncertain about how the financing plan works, you should ask your insurance agent or broker.
(b) Every property broker-agent and every casualty broker-agent shall comply with the requirements of the Consumer Contract Awareness Act of 1990 (Title 1.86 (commencing with Section 1799.200) of Part 4 of Division 3 of the Civil Code) to the extent that its provisions are applicable to any transaction subject to this section.
(c) If a transaction subject to subdivision (a) is conducted over the telephone, the property broker-agent and the casualty broker-agent shall be deemed to have complied with the requirements of subdivision (a) if, within 72 hours after transacting the contract or agreement, the disclosure form and other information required by subdivision (a) is mailed to the applicant or insured at the address provided by the applicant or insured. Proof of mailing shall be established by the method described in Section 38.
(Amended by Stats. 2011, Ch. 411, Sec. 6. (AB 1416) Effective January 1, 2012.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.1.

779.1. The purpose of this article is to promote the public welfare by regulating credit life insurance and credit disability insurance. Nothing in this article is intended to prohibit or discourage reasonable competition.
(Amended by Stats. 1985, Ch. 1316, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.2.

779.2. All life insurance and all disability insurance sold in connection with loans or other credit transactions shall be subject to the provisions of this article, except (a) such insurance sold in connection with a loan or other credit transaction of more than 10 years duration, and (b) such insurance where its issuance is an isolated transaction on the part of the insurer not related to an agreement or a plan or regular course of conduct for insuring debtors of the creditor. Nothing in this article shall be construed to relieve any person from compliance with any other applicable law of this state, including, but not limited to, Article 6.5 (commencing with Section 790), nor shall anything in this article be construed so as to alter, amend, or otherwise affect existing case law.
For the purpose of this article:
(1) “Credit life insurance” means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction, exclusive of any such insurance procured at no expense to the debtor. Insurance shall be deemed procured at no expense to the debtor unless the cost of the credit transaction to the debtor varies depending on whether or not the insurance is procured.
(2) “Credit disability insurance” means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy, exclusive of any insurance procured at no expense to the debtor. Insurance shall be deemed to have been procured at no expense to the debtor unless the cost of the credit transaction to the debtor varies depending on whether or not the insurance is procured.
(3) “Creditor” means the lender of money or vendor or lessor of goods, services, property, rights or privileges, for which payment is arranged through a credit transaction or any successor to the right, title or interest of any such lender, vendor or lessor, and an affiliate, associate or subsidiary of any of them or any director, officer or employee of any of them or any other person in any way associated with any of them.
(4) “Debtor” means a borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction.
(5) “Indebtedness” means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction.
(Amended by Stats. 1986, Ch. 1145, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.3.

779.3. Credit life insurance and credit disability insurance shall be issued only in the following forms:
(a) Individual policies of life insurance issued to debtors on the term plan;
(b) Individual policies of disability insurance issued to debtors on a term plan or disability benefit provisions in individual policies of credit life insurance;
(c) Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on the term plan;
(d) Group policies of disability insurance issued to creditors on a term plan insuring debtors or disability benefit provisions in group credit life insurance policies to provide such coverage.
(Added by Stats. 1959, Ch. 1667.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.4.

779.4. (a) The amount of credit life insurance and credit disability insurance shall not exceed, but, except as provided in subdivision (b), may be less than, the following:
(1) Credit Life Insurance. The initial amount of credit life insurance shall at no time exceed the unpaid amount financed plus earned interest. Where an indebtedness is repayable in substantially equal installments, the amount of insurance shall at no time exceed the greater of the scheduled or the actual unpaid amount financed plus earned interest. In the case of revolving loan or revolving charge accounts the insurance shall not at any time exceed the unpaid amount financed plus earned interest.
Notwithstanding the provisions of the above paragraph, the amount of insurance on agricultural or horticultural loan commitments may be equal to the amount of the loan commitment.
(2) Credit Disability Insurance. The total amount of periodic indemnity payable by credit disability insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of indebtedness, and the amount of each periodic indemnity shall not exceed the original indebtedness divided by the number of periodic installments.
(b) The amount of credit life and credit disability insurance may be less than the amounts specified in subdivision (a) except as provided by subdivision (a) of Section 18291, subdivision (e) of Section 22458.1, or subdivision (e) of Section 24458.1 of the Financial Code, or by any other provision of law specifically prohibiting credit life or credit disability insurance in some lesser amount.
(Amended by Stats. 1992, Ch. 32, Sec. 1. Effective January 1, 1993.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.5.

779.5. The term of any credit life insurance or credit disability insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor or the date the debtor applies for such insurance, whichever is later, except that, where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to such indebtedness shall commence on the effective date of the policy. Where evidence of insurability is required and such evidence is furnished more than thirty (30) days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurance company determines the evidence to be satisfactory, and in such event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance. The term of such insurance shall not extend more than 15 days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor. If the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness. In all cases of termination prior to scheduled maturity, a refund shall be paid or credited as provided in Section 779.14.
(Amended by Stats. 1961, Ch. 1947.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.6.

779.6. Notwithstanding the provisions of Section 10203.5, all credit life insurance and credit disability insurance subject to this article shall be evidenced by an individual policy, or in the case of group insurance by a certificate of insurance, which individual policy or group certificate of insurance shall be delivered to the debtor.
Each individual policy or group certificate of credit life insurance or of credit disability insurance or any combination thereof shall, in addition to other requirements of law, set forth the name and home office address of the insurer, the identity by name or otherwise of the person or persons insured the premium or amount of payment, if any, by the debtor separately for credit life insurance and credit disability insurance, a description of the coverage including the amount and term thereof, and any exceptions, limitations or restrictions, and shall state that the benefits shall be paid to the creditor holding the indebtedness to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate. Said individual policy or group certificate of insurance shall be delivered to the insured debtor at the time the insurance commences except as hereinafter provided.
Notwithstanding the provisions of the above paragraph, a certificate issued under a group policy in cases where the debtor obligates himself to pay the insurance premium or payment periodically with the debt payments on the decreasing amount of the insurance or where the indebtedness is a revolving loan or revolving charge account the rate of insurance premium or payment per unit of coverage may be set forth in lieu of “the premium or amount of payment, if any, by the debtor”.
(Amended by Stats. 1963, Ch. 1836.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.7.

779.7. If a creditor requires a debtor to make any payment for credit life insurance or credit disability insurance, and an individual policy or group certificate of insurance is not delivered to the debtor at the time the insurance commences, a copy of the application for such policy or a notice of proposed insurance, signed by the debtor and setting forth the name and home office address of the insurer, the name or names of the debtor, the premium or amount of payment by the debtor separately for credit life insurance and credit disability insurance, the amount, term and a brief description of the coverage provided, shall be delivered to the debtor at the time such indebtedness is incurred, or at the time the debtor applies for such insurance, whichever is later. The copy of the application for, or notice of proposed insurance shall refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required by this subsection is prominently set forth therein. Upon acceptance of the insurance by the insurer and within thirty (30) days of the date upon which (1) the indebtedness is incurred, (2) the application for such insurance is received by the insurer, or (3) the insurer determines the evidence of insurability, if required, to be satisfactory, the insurer shall cause the individual policy or group certificate of insurance to be delivered to the debtor. Said application or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance shall become effective either as of the date the indebtedness is incurred or the date of application for such insurance, whichever is applicable; provided that where evidence of insurability is required and such evidence is furnished more than thirty (30) days after either the date when the debtor becomes obligated to the creditor or the date the debtor applies for such insurance, which ever is applicable, the term of the insurance shall commence on the date on which the insurance company determines the evidence to be satisfactory, and in such event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance. A debtor shall not be deemed to be required to make any payment for credit life insurance or credit disability insurance unless the cost of the credit transaction to the debtor varies depending upon whether or not such insurance is procured.
(Amended by Stats. 1961, Ch. 1947.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.8.

779.8. All policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders delivered or issued for delivery in this state and the schedules of premium rates pertaining thereto shall be filed with the commissioner.
(Amended by Stats. 1981, Ch. 714, Sec. 260.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.9.

779.9. The commissioner shall within 30 days after the filing of any such policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders, disapprove any such form if the benefits provided therein are not reasonable in relation to the premium charge, or if it contains provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of the coverage, or are contrary to any provision of the Insurance Code or of any rule or regulation promulgated thereunder.
(Amended by Stats. 1971, Ch. 683.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.10.

779.10. The provisions of Sections 10290 and 10291 relating to the filing, approval and disapproval of disability policy forms shall be applicable to forms, whether of life or disability insurance, required by this article to be filed with or approved by the commissioner.
(Added by Stats. 1959, Ch. 1667.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.11.

779.11. The provisions of subdivisions (f) and (g) of Section 10291.5 shall be applicable to the withdrawal of the approval of forms, whether of life or disability insurance, required by this article to be filed with or approved by the commissioner.
(Amended by Stats. 2009, Ch. 140, Sec. 125. (AB 1164) Effective January 1, 2010.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.12.

779.12. Any order or final determination of the commissioner under the provisions of Sections 779.8 to 779.11, both inclusive, shall be subject to judicial review.
(Added by Stats. 1959, Ch. 1667.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.12a.

779.12a. If a group policy of credit life insurance or credit disability insurance (1) has been delivered in this State before September 18, 1959, or (2) has been or is delivered in another state before or after such date, the insurer shall be required to file only the group certificate and notice of proposed insurance delivered or issued for delivery in this State as specified in Sections 779.6 and 779.7 of this article, and such forms shall be approved by the commissioner if, (a) they conform with the requirements specified in said Sections 779.6 and 779.7; (b) they are accompanied by a certification in a form satisfactory to the commissioner that the substance of such forms are in substantial conformity with the master policy; and (c) the schedules of premium rates applicable to the insurance evidenced by any such certificate or notice are not in excess of the insurer’s schedules of premium rates filed with the commissioner; provided, however, the premium rate in effect on existing group policies may be continued until the first policy anniversary date following October 1, 1963.
(Added by Stats. 1963, Ch. 1836.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.13.

779.13. Any insurer may revise its schedules of premium rates from time to time, and shall file such revised schedules with the commissioner. No insurer shall issue any credit life insurance policy or credit disability insurance policy for which the premium rate exceeds that determined by the schedules of such insurer as then on file with the commissioner.
(Amended by Stats. 1963, Ch. 1836.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 1 - General Regulations › ARTICLE 5.9 - Credit Life and Disability Insurance › Section 779.14.

779.14. (a) Each individual policy, group certificate, or notice of proposed insurance shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid promptly to the person entitled thereto or credited to the next payment or payments due on the indebtedness. However, the commissioner shall prescribe a minimum refund and no refund that would be less than that minimum need be made. The formula to be used in computing that refund shall be filed with and approved by the commissioner.
(b) An individual policy or group certificate of credit life insurance or of credit disability insurance or a combination thereof, or a notice of proposed insurance, shall allow an insured to rescind the insurance within 30 days of receipt of the policy or certificate or notice of proposed insurance issued pursuant to Section 779.7 and to receive a full refund, or credit if financed, of any premium that has been paid. The right to rescind shall be disclosed on the face of the individual policy, group certificate, or notice of proposed insurance in at least 14-point type and shall include the disclosure of the department’s toll-free telephone number and other disclosures set forth in Section 510.
(c) No statement, disclosure, or notice made in accordance with Section 779.14 or 779.35 shall be construed to cause the policy forms, certificates of insurance, or notices of proposed insurance, by themselves, to be considered as nonstandard forms as described in Article 6.9 (commencing with Section 2249) of Subchapter 2 of Chapter 5 of Title 10 of the California Code of Regulations.
(d) This section applies to all policies issued or delivered in this state on or after January 1, 1999. All policies subject to this section that are in effect on January 1, 1999, shall be construed to be in compliance with this section, and any provision in any policy which is in conflict with this section shall be of no force or effect.
(Amended by Stats. 1998, Ch. 585, Sec. 1. Effective January 1, 1999.)