As used in this chapter, unless the
context otherwise requires, the words and terms defined in NRS 691C.020
to 691C.230 , inclusive, have the meanings ascribed to
them in those sections.
(Added to NRS by 2005, 2105 )
“Closed-end credit”
means a credit transaction that is not open-end credit.
(Added to NRS by 2005, 2105 )
“Collateral” means personal
property in which a purchase money security interest is retained or
personal property that is pledged as security for the satisfaction of a
debt.
(Added to NRS by 2005, 2105 )
“Compensation” means any
valuable consideration, direct or indirect, paid by or on behalf of the
insurer, or by any subsidiary or parent, or subsidiary of the parent of
the insurer, or by any other person to or on behalf of any group
policyholder or producer or withheld from an insurer by any group
policyholder or producer, and includes:
1. Paid or credited commissions or contingent commissions.
2. Fees for services, consulting fees or any other fee paid or
credited within or outside this State in direct relation to the volume of
premiums produced or written in this State.
3. The use of electronic data processing equipment or services,
except for devices provided in lieu of books and charts of rates and
refunds usable only for that purpose.
4. The furnishing of supplies, except forms approved by the
Commissioner, the usual forms for claims and reports, envelopes for
transmitting claims and brochures, and books and charts of rates and
refunds.
5. Providing rental equipment of any type.
6. Advertising.
7. Providing telephone service without charge or at a charge less
than the usual cost.
8. Participation in a profit-sharing plan.
9. Dividends and refunds or credits based on experience ratings.
10. An allowance for expenses.
11. Participation in stock plans or bonuses.
12. Any form of credit, including the use of money.
13. Commissions for reinsurance, ceded or assumed.
14. Reinsurance with a nonauthorized insurer owned or controlled
by a creditor or producer or with a nonauthorized insurer in which a
creditor or producer is a stockholder.
15. Any commission or fee, inducement or intention to induce, or
any other consideration arising from the sale of insurance or other
product or service, except credit personal property insurance as part of
the transaction in which the indebtedness is arranged or the application
for the credit personal property insurance is made.
(Added to NRS by 2005, 2105 )
“Credit agreement” means
the written document that sets forth the terms of the credit transaction
and includes the security agreement.
(Added to NRS by 2005, 2106 )
“Credit personal property insurance” means a policy, endorsement, rider,
binder, certificate or other instrument or evidence of insurance written
in connection with a credit transaction that:
1. Covers perils to the goods purchased through a credit
transaction or used as collateral for a credit transaction and that
concerns the interest of a creditor in the purchased goods or pledged
collateral either in whole or in part; or
2. Covers perils to goods purchased in connection with an open-end
credit transaction.
(Added to NRS by 2005, 2106 )
“Credit transaction”
means any transaction for which the terms of repayment of money loaned or
loan commitment made, or payment of goods, services or properties sold or
leased, is to be made at a future date.
(Added to NRS by 2005, 2106 )
“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,
and includes:
1. The successor to the right, title or interest of;
2. An affiliate, associate or subsidiary of;
3. Any director, officer or employee of; or
4. Any other person in any way associated with,
Ê any such lender, vendor or lessor.
(Added to NRS by 2005, 2106 )
“Creditor-placed insurance” means single-interest insurance or
dual-interest insurance that is purchased by the creditor, as the named
insured, after a credit transaction:
1. According to the terms of the credit agreement as a result of
the debtor’s failing to provide required insurance, the cost for which is
charged to the debtor; and
2. For coverage against loss, expense or damage to personal
property used as collateral as a result of fire, theft, collision or
other risk of loss that would impair the interest of the creditor or
adversely affect the value of the collateral.
(Added to NRS by 2005, 2106 )
“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.
(Added to NRS by 2005, 2106 )
“Dual-interest
insurance” means credit personal property insurance covering the interest
of the creditor or seller and any portion of the interest of the borrower
in goods purchased through the credit transaction or pledged as
collateral for the credit transaction.
(Added to NRS by 2005, 2106 )
“Experience” means earned
premiums and incurred losses during the experience period.
(Added to NRS by 2005, 2106 )
“Experience period”
means the most recent period of time that is not more than 3 years and
for which earned premiums and incurred losses are reported.
(Added to NRS by 2005, 2106 )
“Finance charge” means any
charge payable directly or indirectly as an incident to or condition of
an extension of credit, including, without limitation, interest,
time-price differentials, amounts payable under a discount system of
additional charges, service, transaction or carrying charges, loan fees,
points or similar charges, appraisal fees or charges incurred for
investigating the creditworthiness of the consumer. The term does not
include charges as a result of default, taxes, license fees, delinquency
charges or filing fees.
(Added to NRS by 2005, 2106 )
“Gross debt” means the sum of
the remaining payments owed to a creditor by a debtor.
(Added to NRS by 2005, 2107 )
“Identifiable charge”
means a charge for credit personal property insurance that is made to
debtors who have that insurance and not made to debtors who do not have
that insurance. The term includes a charge for insurance that is
disclosed in the credit agreement or other instrument furnished to the
debtor which sets forth the financial elements of the credit transaction
and any difference in the finance, interest, service or other similar
charge made to debtors who are in similar circumstances except for the
insured or noninsured status of the debtor.
(Added to NRS by 2005, 2107 )
“Incurred losses” means
total claims and claim adjustment expenses paid during the experience
period plus any change in claim and claim adjustment expense reserves.
(Added to NRS by 2005, 2107 )
“Loss ratio” means incurred
losses divided by the sum of earned premiums.
(Added to NRS by 2005, 2107 )
“Net debt” means the amount
required to liquidate the remaining debt in a single lump-sum payment,
excluding all unearned interest and other unearned finance charges.
(Added to NRS by 2005, 2107 )
“Nonfiling insurance”
means insurance that indemnifies the creditor for loss of its interest in
the collateral due to failure to perfect a security interest in the
collateral.
(Added to NRS by 2005, 2107 )
“Open-end credit” means
credit extended by a creditor under an agreement in which:
1. The creditor reasonably contemplates repeated transactions;
2. The creditor periodically imposes a finance charge on any
outstanding unpaid balance; and
3. The amount of credit that may be extended to the debtor during
the term of the agreement up to any limit set by the creditor is
generally made available to the extent that any outstanding balance is
repaid.
(Added to NRS by 2005, 2107 )
“Reverse competition”
means competition among insurers that regularly takes the form of
insurers competing for the favor of a person who controls or may control
the placement of insurance with insurers that tends to increase insurance
premiums or prevents a decrease in insurance premiums in order to give
greater compensation to a person who controls or may control the
placement of insurance with insurers.
(Added to NRS by 2005, 2107 )
“Single-interest insurance” means credit personal property insurance
covering only the interest of the seller or creditor in goods purchased
through a credit transaction or pledged as collateral in a credit
transaction.
(Added to NRS by 2005, 2107 )
All credit personal property insurance,
including guaranteed asset protection insurance, written in connection
with credit transactions for personal, family or household purposes is
subject to the provisions of this chapter, except:
1. Credit transactions involving extensions of credit primarily
for business or commercial purposes;
2. Insurance written in connection with a credit transaction that
is secured by a real estate mortgage or deed of trust;
3. Creditor-placed insurance;
4. Title insurance;
5. Nonfiling insurance;
6. Insurance purchased by a creditor after repossession or a
similar event in which the creditor acquired possession of the property;
and
7. Insurance for which an identifiable charge is not made to or
collected from the debtor.
(Added to NRS by 2005, 2107 )
For credit personal property
insurance sold in conjunction with a closed-end credit transaction, an
insurer shall not:
1. Issue credit personal property insurance unless the amount
financed exceeds $300;
2. Issue credit personal property insurance in an amount that
exceeds the amount of the underlying credit transaction; and
3. Sell credit personal property insurance with a term that
exceeds the scheduled term of the underlying credit transaction.
(Added to NRS by 2005, 2108 )
Credit personal property insurance must:
1. At a minimum, include the coverage in the standard fire policy
with coverage attachment and extended coverage endorsement; and
2. Cover a substantial risk of loss of or damage to the property
related to the credit transaction.
(Added to NRS by 2005, 2108 )
1. An insurer shall not:
(a) Require the bundling of other credit insurance coverage with
the purchase of credit personal property insurance; and
(b) Use gross debt in any manner to determine the premiums for
credit personal property insurance.
2. A debtor must have a choice to purchase credit personal
property insurance separately from other credit insurance coverage.
(Added to NRS by 2005, 2108 )
1. Before a debtor elects to purchase credit personal property
insurance in connection with a credit transaction, the following
information must be disclosed to the debtor in writing:
(a) That the purchase of credit personal property insurance from
the creditor is not mandatory and is not a condition for obtaining credit
approval;
(b) If more than one type of credit insurance is made available to
the debtor, whether the debtor may purchase credit personal property
insurance separately from any other credit insurance;
(c) The conditions of eligibility;
(d) That if the debtor has other insurance that covers the risk,
the debtor may not want or need credit personal property insurance;
(e) That the debtor may cancel the insurance at any time, or if
evidence of insurance is required for the extension of credit, upon proof
of insurance that is acceptable to the creditor, and obtain a refund of
or credit for:
(1) If the cancellation is not more than 30 days after the
debtor receives the individual policy or certificate of insurance, any
premium paid by the debtor; or
(2) If the cancellation is more than 30 days after the
debtor receives the individual policy or certificate of insurance, any
unearned premium paid by the debtor;
(f) A brief description of the coverage, including a description of
the amount, term, extensions, limitations, perils and exclusions, the
insured event, any waiting or elimination period, any deductible, any
applicable waiver of premium, the person who would receive any benefits,
and the premium or premium rate for the credit personal property
insurance; and
(g) If the premium or charge for the insurance is financed, it will
be subject to finance charges at the rate applicable to the credit
transaction.
2. The disclosures required pursuant to subsection 1:
(a) If made in connection with credit personal property insurance
offered at the same time as the extension of credit or offered through
direct mail advertisements, must be made in writing and presented to the
customer in a clear and conspicuous manner; or
(b) If made in connection with credit personal property insurance
offered after the extension of credit other than through direct mail
advertisements, may be provided orally or electronically if written
disclosures are provided not later than the earlier of:
(1) Ten days after the debtor elects to accept the coverage;
or
(2) The date any other written material is provided by the
creditor to the debtor.
(Added to NRS by 2005, 2108 )
An offer to extend
coverage for an open-end credit transaction must include, at the time of
the invitation to contract, a written disclosure or, if the solicitation
is made by telephone and the written disclosure is mailed to the debtor
not later than 10 days after enrollment, an oral summary of the written
disclosure. The written disclosure must be in not smaller than 12-point
type and be in substantially the following form:
This coverage may duplicate existing coverage if you have a
residential property insurance policy. It applies to any item of covered
property on which you owe a debt. This coverage is primary, so it is the
first source to be used in the event of a loss on property it covers. You
may cancel this coverage at any time by calling the insurer during
business hours at the telephone number provided to you or by writing to
the insurer. We are charging you a premium that may be based on subjects
for which a claim cannot be made, such as services, meals or other
consumables, entertainment, finance or service fees, loan interest,
delivery charges or other insurance premiums.
(Added to NRS by 2005, 2109 )
1. All credit personal property insurance must be evidenced by an
individual policy or a certificate of insurance that is delivered to the
debtor.
2. The individual policy or certificate of insurance must, in
addition to other requirements of law, include:
(a) The name and address of the home office of the insurer;
(b) The name of each debtor or, on a certificate of insurance, the
identity by name or otherwise of each debtor;
(c) The amount of the premium or payment of the debtor or, for
open-end credit, the premium rate, basis of the calculation of premiums
and balance to which the premium rate applies;
(d) A complete description of the coverage or coverages, including
the amount, term and any exceptions, limitations and exclusions of
coverage;
(e) A statement that all benefits must be paid to the creditor to
reduce or extinguish the unpaid debt or to repair or replace the property
and that if the benefits exceed the unpaid debt, any excess benefit must
be paid to the debtor;
(f) If the scheduled term of the insurance is less than the
scheduled term of the credit transaction, a statement indicating that
fact set forth on the face of the individual policy or certificate of
insurance in not less than 10-point bold type; and
(g) If the policy is related to open-end credit, a statement that
the debtor will, at least once each year, receive the statement as
required pursuant to subsection 3.
3. For credit personal property insurance related to open-end
credit, the creditor must provide to the debtor at least once each year
with the account statement a statement in the following form in at least
12-point type:
You are paying a premium for credit personal property insurance
based on the outstanding balance of this account. You may cancel this
coverage at any time by calling the insurer during business hours at the
telephone number provided to you or by writing to the insurer. You are
being charged a premium that may be based on subjects for which a claim
cannot be made, such as services, meals or other consumables,
entertainment, finance or service fees, loan interest, delivery charges
or other insurance premiums.
(Added to NRS by 2005, 2109 )
1. Except as otherwise provided in subsection 2, the individual
policy or certificate of insurance must be delivered to the debtor upon
acceptance of the insurance by the insurer.
2. An individual policy or certificate of insurance made in
connection with an open-end credit agreement or any credit personal
property insurance requested by the debtor after the date the debt is
incurred must be delivered to the debtor not more than 30 days after the
debtor requested the insurance.
(Added to NRS by 2005, 2110 )
1. Except as otherwise provided in NRS 691C.330 and 691C.340 , all policies, certificates of insurance,
applications for insurance, enrollment forms, endorsements and riders
delivered or issued for delivery in this State and the schedules of
premium rates related thereto must be filed with the Commissioner.
2. An item filed with the Commissioner pursuant to subsection 1
may not be issued until 60 days after it is filed with the Commissioner
or until the written prior approval of the Commissioner is obtained.
3. The Commissioner shall, not more than 60 days after an item is
submitted to him pursuant to subsection 1, disapprove the item if the
benefits are not reasonable in relation to the premium charged or if the
item contains provisions that are unjust, unfair, inequitable, misleading
or deceptive or encourage misrepresentation of the coverage or are
contrary to any provision of the Code or any regulation adopted pursuant
to the Code. If the Commissioner does not disapprove an item filed
pursuant to subsection 1 in accordance with this subsection, the item
shall be deemed to be approved.
4. If the Commissioner notifies an insurer that an item is
disapproved pursuant to subsection 3, the insurer shall not use the item.
The notice must include the reason for the disapproval and state that a
hearing will be granted not more than 30 days after the insurer submits a
written request for a hearing to the Commissioner, unless postponed by
mutual consent or by order of the Commissioner.
5. The Commissioner may hold a hearing to withdraw approval of an
item submitted pursuant to subsection 1 not less than 20 days after
providing a written notice of the hearing to the insurer. The written
notice must include one of the reasons described in subsection 3 for the
proposed withdrawal of approval of the item. An insurer shall not use an
item if approval of the item is withdrawn pursuant to this subsection.
(Added to NRS by 2005, 2110 )
1. The Commissioner may adopt by regulation forms for use in the
issuance of credit personal property insurance, including applications,
policies, forms for claims and any other forms required for the sale,
issuance and administration of credit personal property insurance. An
insurer may elect to use those forms in lieu of any other forms.
2. If an officer of the insurer submits, in the manner prescribed
by the Commissioner, a written certification to the Commissioner that the
forms used by the insurer are identical to those adopted by the
Commissioner, the insurer is not required to file those forms with the
Commissioner for approval pursuant to NRS 691C.320 .
(Added to NRS by 2005, 2111 )
1. The Commissioner shall, by regulation, establish reasonable
rates as described in this chapter and in accordance with the standards
established in NRS 686B.050 and
686B.060 . The rates must be
reasonable in relation to the benefits provided and must not be
excessive, inadequate or unfairly discriminatory.
2. The Commissioner may, by regulation, establish rates that an
insurer may use without filing pursuant to NRS 691C.320 . In establishing such rates, the
Commissioner shall consider and apply the following factors:
(a) Actual and expected loss experience;
(b) General and administrative expenses;
(c) Loss settlement and adjustment expenses;
(d) Reasonable creditor compensation;
(e) The manner in which premiums are charged;
(f) Other acquisition costs;
(g) Reserves;
(h) Taxes;
(i) Regulatory license fees and fund assessments;
(j) Reasonable insurer profit; and
(k) Other relevant data consistent with generally accepted
actuarial standards.
(Added to NRS by 2005, 2111 )
Except as otherwise provided in NRS
691C.340 :
1. A rate that has been filed and approved pursuant to NRS
691C.320 is effective for a period
not to exceed 3 years after the date of approval. The insurer shall file
a rate for approval before the expiration of the 3-year period. The
insurer may file a rate for approval at any time before the expiration of
the 3-year period.
2. If an insurer revises its schedule of premium rates, the
insurer shall file the revised schedule with the Commissioner pursuant to
NRS 691C.320 . An insurer shall not
issue credit personal property insurance for which the premium rates
exceed the rates determined by the schedule approved by the Commissioner.
(Added to NRS by 2005, 2111 )
For open-end credit
transactions, the rating plan of the insurer must address, by the
grouping of similar accounts, the expected variance in the ratio of goods
purchased that are covered under the credit personal property insurance
and goods that are not covered by that insurance. Accounts must be
separated into groups that have or are expected to have a similar ratio
of goods purchased that are covered under the credit personal property
insurance and goods that are not covered by that insurance.
(Added to NRS by 2005, 2111 )
Each
year, not later than the date specified in the Instructions to the Annual
Statement published by the National Association of Insurance
Commissioners, an insurer doing business in this State shall file with
the Commissioner and the National Association of Insurance Commissioners
a report of credit personal property insurance written on the basis of a
calendar year. The report must be prepared using the Credit Insurance
Supplement-Annual Statement Blank approved by the National Association of
Insurance Commissioners and must contain separate data for each state.
(Added to NRS by 2005, 2112 )
1. Except as otherwise provided in subsection 2, an authorized
insurer issuing credit personal property insurance may not enter into any
agreement whereby the authorized insurer transfers, by reinsurance or
otherwise, to an unauthorized insurer, as they relate to credit personal
property insurance written or issued in this State:
(a) A substantial portion of the risk of loss under the credit
personal property insurance written by the authorized insurer in this
State;
(b) All of one or more kinds, lines, types or classes of credit
personal property insurance;
(c) All of the credit personal property insurance produced through
one or more agents, agencies or creditors;
(d) All of the credit personal property insurance written or issued
in a designated geographical area; or
(e) All of the credit personal property insurance under a policy of
group insurance.
2. An authorized insurer may make the transfers listed in
subsection 1 to an unauthorized insurer if the unauthorized insurer:
(a) Maintains security on deposit with the Commissioner in an
amount which when added to the actual capital and surplus of the insurer
is equal to the capital and surplus required of an authorized stock
insurer pursuant to NRS 680A.120 . The
security may consist only of the following:
(1) Cash.
(2) General obligations of, or obligations guaranteed by,
the Federal Government, this State or any of its political subdivisions.
These obligations must be valued at the lower of market value or par
value.
(3) Any other type of security that would be acceptable if
posted by a domestic or foreign insurer.
(b) Files an annual statement with the Commissioner pursuant to NRS
680A.270 .
(c) Maintains reserves on its credit personal property insurance
business pursuant to NRS 681B.050 .
(d) Values its assets and liabilities pursuant to NRS 681B.010
to 681B.040 , inclusive.
(e) Agrees to examinations conducted by the Commissioner pursuant
to NRS 679B.230 .
(f) Complies with the standards adopted by the Commissioner
pursuant to NRS 679A.150 .
(g) Does not hold, issue or have an arrangement for holding or
issuing any of its stock for which dividends are paid based on:
(1) The experience of a specific risk of all of one or more
kinds, lines, types or classes of insurance;
(2) All of the business produced through one or more agents,
agencies or creditors;
(3) All of the business written in a designated geographical
area; or
(4) All of the business written for one or more forms of
insurance.
(Added to NRS by 2005, 2112 )
1. Each individual policy or certificate of insurance must provide
for a refund of unearned premiums if the credit personal property
insurance is cancelled before the scheduled date of termination of the
insurance.
2. Except as otherwise provided in this section, any refund must
be provided to the person to whom it is entitled as soon as practicable
after the date of cancellation of the insurance.
3. The Commissioner shall, by regulation, establish the minimum
amount of unearned premiums that must remain outstanding at the time of
cancellation in order for a person to be entitled to a refund. If the
amount of unearned premiums that remains outstanding at the time of
cancellation is less than the minimum amount established by regulation,
the person is not entitled to a refund.
4. The formula that an insurer uses to determine the amount of a
refund must be submitted to and approved by the Commissioner before it is
used.
(Added to NRS by 2005, 2113 )
1. All claims must be promptly reported to the insurer or its
designated claim representative, and the insurer shall maintain adequate
files on all reported claims. All claims must be settled as soon as
practicable and in accordance with the terms of the insurance contract.
2. All claims must be paid by draft drawn upon the insurer, by
electronic funds transfer or by check of the insurer to the order of:
(a) The claimant to whom payment of the claim is due pursuant to
the provisions of the policy; or
(b) Any other person designated by the claimant to whom payment is
due.
(Added to NRS by 2005, 2113 )
A plan or
arrangement may not be used whereby a person other than the insurer or
its designated claim representative is authorized to settle or adjust
claims. The creditor may not be designated as the representative for the
insurer in adjusting claims, except that a group policyholder may, by
arrangement with the group insurer, draw drafts or checks in payment of
claims due the group policyholder subject to the periodic audit by the
insurer.
(Added to NRS by 2005, 2113 )
A claim made
pursuant to credit personal property insurance must not be denied more
than 60 days after the initiation of coverage because the debtor was
ineligible for coverage unless the debtor misrepresented a material fact.
If a claim is denied within 60 days after the initiation of coverage
because the debtor was ineligible for coverage or because the debtor
misrepresented a material fact, the insurer shall refund to the debtor
any premium paid and the creditor shall refund to the debtor any finance
charge paid on the premium.
(Added to NRS by 2005, 2113 )
The Commissioner may adopt regulations
to carry out the provisions of this chapter.
(Added to NRS by 2005, 2113 )
In addition to any
other penalty provided by law, a person who violates a provision of this
chapter or a final order of or a regulation adopted by the Commissioner
pursuant to this chapter, after notice and a hearing, upon order of the
Commissioner is subject to:
1. The imposition of an administrative fine not to exceed $5,000
per violation, or $10,000 per violation if the Commissioner determines
that the violation was willful; and
2. Revocation, suspension or limitation of the license or
certificate of authority held by the person.
(Added to NRS by 2005, 2113 )
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