New Jersey Administrative Code › Title 11 - INSURANCE › Chapter 17A - INSURANCE PRODUCER STANDARDS OF CONDUCT; MARKETING › Subchapter 2 - UNFAIR TRADE PRACTICES › Section 11:17A-2.5 - Tie-ins; coercion

Current through Register Vol. 56, No. 14, July 15, 2024
(a) No financial institution licensed as an insurance producer shall, as a condition precedent, concurrent or subsequent to the lending of money or the extension of credit, or the renewal of the loan or extension of credit, require that the borrower acquire, finance or negotiate a policy or contract of insurance through any particular insurer or insurance producer, or cancel insurance with another insurance producer or insurer.
1. A financial institution licensed as an insurance producer shall accept the insurance policy provided by a borrower unless a reasonable basis exists to disapprove the insurance policy. For the purpose of this paragraph, disapproval shall be deemed unreasonable if it is not based solely on reasonable standards as determined by the Commissioner, uniformly applied, relating to the extent of coverage required and the financial soundness and services of an insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for the disapproval of an insurance policy because such policy contains coverage in addition to that required. If a financial institution rejects the insurance furnished by the borrower, it shall provide the borrower with a clear and complete written statement of reasons for the rejection.
2. Pursuant to and consistent with (a) and (a)1 above, all financial institutions licensed as insurance producers shall issue a written disclosure to prospective insureds which shall inform them of their right to acquire insurance coverage from and through sources independent of the financial institution and its subsidiaries when such insurance coverage is required to secure a loan, credit or mortgage, or any renewal thereof. The written disclosure required by this paragraph shall be worded as follows, and printed in a type size not less than 10 point type, and shall be maintained by the insurance producer for at least five years. A copy of this disclosure shall be given to the borrower at the time the issue of insurance first arises.
DISCLOSURE NOTICE
The Insurance Laws of New Jersey provide that the lender may not require the
borrower to take insurance through any particular insurer or insurance
producer (for example, agent or broker).
The borrower has the right to have the insurance placed with or through an
insurance producer and insurer of his or her choice, provided that they meet
the reasonable requirements of the lender. Subject to the rules adopted by
the Commissioner, the lender has the right to designate reasonable
requirements as to the insurer and the insurance producer and as to the
adequacy of the coverage. The lender cannot require the borrower to cancel
insurance with another insurance producer and insurer unless the continuation
of such coverage and relationship would be unreasonable within the meaning of
this notice and 11:17A-2.5.
I have read the foregoing statement and understand my rights and privileges
and those of the lender relative to the placing of insurance.
I have selected ...... (insert name) as the Insurance Company/
Agency/Insurance Producer to provide the required ...... (insert type)
insurance.
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Name of Borrower
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Name of Borrower
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Date