Section 110.170  Insurance and Other Products

a)         Licensees may provide insurances to the obligor provided the obligor has indicated in a specific, dated and separately signed statement that the obligor desires the insurance coverage.  The purchase of any policy of insurance from or through the licensee shall not be a condition precedent to a loan.  The insurance shall comply with the Illinois Insurance Code and all lawful requirements of the Director of the Department of Insurance related to that insurance.

b)         The licensee may provide joint credit life or joint credit accident and health insurance if both insureds are obligated for the loan; however, this coverage shall not be a requirement precedent to the extension of credit.

c)         When a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, the licensee shall, not later than the 60^th day after a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, refund or credit the unearned insurance premium or provide written instruction to the person able to refund or credit the unearned insurance premium.  The licensee shall make all reasonable efforts to ensure that the person able to refund or credit the unearned insurance premium completes the refund or credit within 60 days of sending of the written instruction.  The required refund or credit shall be computed according to a method at least as favorable to the obligor as the actuarial method.  When the refund of any insurance premium is less than $1.00, no refund is required.  The licensee shall maintain records to demonstrate their compliance with this Section for at least two years from the date of refund, credit, or written instruction.

d)         It shall be the licensee's responsibility to explain clearly to the obligor the benefits and limitations of any insurance requested in connection with any loan or loan extensions.

e)         The licensee shall also deliver or cause to be delivered to the obligor a copy of the policy, or policies, certificate, or other evidence at the time the loan is made, and all obligors shall sign and receive a copy of a separate agreement clearly and conspicuously disclosing the limits of coverage.

f)         No obligor shall be required to purchase any policy of insurance from any certain company, agent, broker, or person as a condition precedent to a loan.  No licensee shall decline new or existing insurance that is approved by the Director of the Department of Insurance or prevent any obligor from obtaining the insurance from any other source.

g)         When the loan is made, the insurance charges shall be computed for no more than the term of the loan contract on an amount that does not exceed the total amount required to pay the combined total of principal and interest charges.

h)         The obligor's estate shall be paid the amount due between the unpaid balance and the insurance benefit paid. Evidence of this payment shall be maintained by the licensee.

i)          In the case of a precomputed contract, the amount of the net unpaid balance shall be the unpaid balance of the note less any required rebate for prepayment in full on the date of the borrower's death, plus accrued but unpaid delinquency charges.  In the case of an interest-bearing contract, the amount of the net unpaid balance shall be the principal balance plus accrued interest to the date of the borrower's death.

j)          Account records shall indicate the date of death and the refunds of interest or loan charges and unearned insurance premiums paid to the estate.  The refund check or voucher shall be available on demand.

k)         Property damage insurance against loss or damage to real or personal property given as security for a loan or liability arising out of ownership may be required of an obligor. No licensee may require an obligor to purchase more than one form of property damage insurance against loss or damage to real or personal property.  The purchase of such insurance through the licensee or from an agent, broker or insurer specified by the licensee shall not be a condition precedent to the granting of the loan.  No licensee may require an obligor to purchase property damage insurance that the obligor cannot reasonably purchase from an agent, broker or insurer unrelated to and not specified by the licensee.

l)          Property insurance provided by a licensee shall be consistent with the amount and term of the loan and shall not extend beyond the maturity of the loan unless the loan is delinquent when it may be extended 30 days beyond the original expiration date without charge to the obligor.

m)        Upon cancellation of the loan by prepayment or refinancing, the obligor shall be entitled to a refund not less than the unearned insurance premium in any amount exceeding $1.00.

n)         The licensee or affiliate may receive compensation for the sale of any insurance or debt cancellation contract or other such product purchased pursuant to the loan made or held by the licensee, provided the licensee discloses to the obligor that either the licensee or an affiliate may receive something of value in connection with the purchase by the obligor.  This must be prominently disclosed in the loan contract.

o)         In the event of a judgment prior to maturity, the judgment shall be decreased by the amount equal to any unearned insurance premium.  Evidence of this decrease shall be maintained by the licensee.

p)         If the Director has authorized a licensee to offer debt cancellation products or other credit-related ancillary products, and an obligor has purchased a debt cancellation product or other credit-related ancillary product, when a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, the licensee shall, not later than the 60^th day after a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, refund or credit the unearned debt cancellation charge or other unearned credit-related ancillary product charge, as applicable, or provide written instruction to the person able to refund the unearned debt cancellation charge or other unearned credit-related ancillary product charge, as applicable.  The licensee shall make all reasonable efforts to ensure that the person able to refund the unearned debt cancellation charge or credit-related ancillary product charge completes the refund or credit within 60 days of sending of a written instruction.  The refund or credit shall be calculated according to a method at least as favorable to the obligor as the actuarial method.  The licensee shall maintain records to demonstrate their compliance with this Section for at least two years from the date of refund, credit, or written instruction.

q)         Vehicle service contracts as defined in 215 ILCS 152/5, and vehicle protection products or warranties as defined in 215 ILCS 5/155.39(a) are not subject to subsection (p) of this Section.

(Source:  Amended at 49 Ill. Reg. 3924, effective March 21, 2025)