Bill Text: NJ S2998 | 2018-2019 | Regular Session | Introduced
Bill Title: Requires creditors to make certain disclosures regarding collateral protection insurance to consumer debtors.*
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2020-01-13 - Approved P.L.2019, c.312. [S2998 Detail]
Download: New_Jersey-2018-S2998-Introduced.html
Sponsored by:
Senator M. TERESA RUIZ
District 29 (Essex)
SYNOPSIS
Requires consumer lenders to disclose motor vehicle insurance products to borrowers.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning lender-placed motor vehicle insurance and supplementing P.L.1996, c.157 (C.17:11C-1 et al).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. No consumer lender shall enter into a contract or loan agreement that includes charges on the borrower for lender-placed motor vehicle insurance coverage, unless the following or substantially similar warning is provided on a separate document accompanying the contract or loan agreement and signed by the borrower:
WARNING
UNLESS YOU PROVIDE US WITH EVIDENCE OF THE INSURANCE COVERAGE AS REQUIRED BY OUR LOAN AGREEMENT, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT YOUR INTEREST. IF THE COLLATERAL BECOMES DAMAGED, THE COVERAGE WE PURCHASE MAY NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM MADE AGAINST YOU. YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT YOU HAVE OBTAINED PROPER COVERAGE ELSEWHERE.
YOU ARE RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED BY US. THE COST OF THIS INSURANCE MAY BE ADDED TO YOUR LOAN BALANCE. IF THE COST IS ADDED TO THE LOAN BALANCE, THE INTEREST RATE ON THE UNDERLYING LOAN WILL APPLY TO THIS ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE YOUR PRIOR COVERAGE LAPSED OR THE DATE YOU FAILED TO PROVIDE PROOF OF COVERAGE.
THE COVERAGE WE PURCHASE MAY BE CONSIDERABLY MORE EXPENSIVE THAN INSURANCE YOU CAN OBTAIN ON YOUR OWN AND MAY NOT SATISFY NEW JERSEY'S MANDATORY LIABILITY INSURANCE LAWS.
b. A consumer lender that enters into a contract or loan agreement that includes charges on the borrower for lender-placed motor vehicle insurance shall send the borrower a notice by mail within 30 days of the beginning of the loan agreement that discloses the insurance product that is being added, the insurer, the premium, an estimate of the total amount to be paid for the coverage over the duration of the loan, and the fact that the policy can be terminated if the borrower purchases insurance independently.
c. A consumer lender that fails to meet the requirements of subsections a. and b. of this section shall be in violation of the "New Jersey Consumer Finance Licensing Act," sections 1 through 49 of P.L.1996, c.157 (C.17:11C-1 through C.17:11C-49). In addition, if a consumer lender is found to have charged a borrower for insurance coverage on a motor vehicle that was already insured by the borrower, the borrower shall have a civil cause of action in any court of competent jurisdiction for the premium, interest, and all related fees paid by the borrower, including attorney's fees. If the duplicative charges resulted in the loan being placed in delinquency or the motor vehicle being repossessed, the borrower shall be entitled to treble damages.
2. This act shall take effect 90 days after the date of enactment and shall apply to any contract entered into on or after the effective date.
STATEMENT
This bill requires consumer lenders to disclose motor vehicle insurance products to borrowers.
Under the bill, consumer lenders providing motor vehicle loans that include lender-placed insurance must disclose this fact in the loan agreement. Consumer lenders must also send a second written disclosure in the mail within 30 days of the start of the loan agreement.
Consumer lenders that fail to provide these disclosures will face fines of up to $25,000. Furthermore, if a consumer lender is found to have included lender-placed insurance unnecessarily (because the borrower already had motor vehicle insurance), the borrower will be entitled to a full refund. If the duplicative charges result in default of the loan or the car being repossessed, the borrower will be entitled to treble damages.
