Bill Text: NJ S165 | 2010-2011 | Regular Session | Introduced
Bill Title: Limits finance charge for personal lines insurance premium finance agreements to 14%.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-01-12 - Introduced in the Senate, Referred to Senate Commerce Committee [S165 Detail]
Download: New_Jersey-2010-S165-Introduced.html
STATE OF NEW JERSEY
214th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION
Sponsored by:
Senator NIA H. GILL
District 34 (Essex and Passaic)
SYNOPSIS
Limits finance charge for personal lines insurance premium finance agreements to 14%.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act concerning finance charges for certain insurance premium finance agreements and amending P.L.1968, c.221.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 10 of P.L.1968, c.221 (C.17:16D-10) is amended to read as follows:
10. Maximum finance charge. A premium finance company shall not charge, contract for, receive, or collect a finance charge other than as permitted by this act.
The finance charge shall be computed, using the actuarial method on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the premium finance agreement) from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.
Notwithstanding the provisions of R.S.31:1-1 or any other law to the contrary, the finance charge shall be computed at a rate or rates agreed to by the premium finance company and the insured, except that with respect to an insurance policy or contract issued for personal, family or household purposes, the finance charge shall not be computed in excess of a maximum rate of 14% per annum, plus an additional charge of $12.00 per premium finance agreement which additional charge need not be refunded upon prepayment. However, any insured may prepay his premium finance agreement in full at any time before the due date of the final installment and in such event the unearned finance charge shall be refunded.
Effective on the first day of the twelfth month following the effective date of this act, when the unpaid balance of a premium finance agreement is paid in full, or the maturity of the unpaid balance of each agreement is accelerated before the date scheduled for the payment of the final installment, the holder of the agreement shall allow a credit on account of the finance charge, calculated according to the actuarial refund method, as if all payments were made as scheduled, or if deferred, as deferred; provided, however, that if the contract is prepaid within 12 months after the first payment is due, a holder may charge a prepayment penalty of not more than (a) $20.00 on any contract up to and including $2,000.00; (b) an amount equal to 1% of the loan on any contract greater than $2,000.00 and up to and including $5,000.00; and (c) $100.00 on any contract exceeding $5,000.00.
(cf: P.L.1981, c.103, s.16)
2. This act shall take effect immediately and apply to an insurance premium finance agreement for an insurance policy or contract issued for personal, family or household purposes, entered into or renewed on or after that date.
STATEMENT
This bill limits the finance charge on insurance premium finance agreements for personal lines insurance policies to 14% per annum. Personal lines policies are those issued for personal, family, or household purposes.
An insurance premium finance agreement is an agreement whereby a licensed insurance premium finance company agrees to pay the premium on an insurance contract that is issued to a third party. The third party, referred to as the insured or prospective insured, agrees to pay the finance company the amount of the premium plus a finance charge and a flat fee of $12 per annum per agreement. Currently, the finance charge must be computed at a rate or rates agreed to by the finance company and the insured, with no distinction made between agreements involving personal or commercial insurance policies or contracts.
