                                 CODE OF VIRGINIA

CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE; CREDIT PROPERTY INSURANCE; DISCLOSURE
AND READABILITY (§ 38.2-233)

A. If a creditor makes available to the debtors more than one plan of credit
involuntary unemployment insurance as defined in &#xA7; 38.2-122.1, or more than
one plan of credit property insurance as defined in &#xA7; 38.2-122.2, all
debtors must be informed of all such plans for which they are eligible.

B. When elective credit property insurance or elective credit involuntary
unemployment insurance is offered, the borrower shall be given written
disclosure that purchase of such insurance is not required and is not a factor
in granting credit. The disclosure shall also include notice that the borrower
has the right to use alternative coverage or to buy insurance elsewhere.

C. If the debtor is given a contract which includes a single premium payment to
be charged for elective credit property insurance or elective credit involuntary
unemployment insurance, the debtor shall be given:

   1. A contract which does not include the elective insurance premiums; or

   2. A disclosure form which shall clearly disclose the difference in premiums
   charged for a contract with the elective insurance and one without the
   elective insurance. This disclosure shall include the difference between the
   amount financed, the monthly payment and the charge for insurance. The form
   shall be signed and dated by the debtor and the agent, if any, soliciting the
   application or the creditor&#8217;s representative, if any, soliciting the
   enrollment request. A copy of this disclosure shall be given to the debtor and
   a copy shall be made a part of the creditor&#8217;s loan file.
   				Nothing contained in this subsection shall be construed to prohibit the
   creditor from combining such disclosure, in order to avoid redundancy, with
   other forms of disclosure required under state or federal law.

D. If a creditor offers credit property insurance and requires evidence of
insurance coverage on personal household property used as security for an
indebtedness or credit involuntary unemployment insurance is required as
security for any indebtedness, the debtor shall have the option of (i)
furnishing the required amount of insurance through existing policies of
insurance owned or controlled by him or (ii) procuring and furnishing the
required coverage through any insurer authorized to transact insurance in this
Commonwealth. The creditor shall inform the debtor of this option in writing and
shall obtain the debtor&#8217;s signature acknowledging that he understands this
option. Nothing contained in this subsection shall be construed to prohibit the
creditor from combining such disclosure, in order to avoid redundancy, with
other forms of disclosure required under state or federal law.

E. No contract of insurance upon a debtor paid by a single premium shall be made
or effectuated unless, at the time of the contract, the debtor is provided with
a notice prominently disclosing the right to a refund of premium in the event
the insurance is terminated prior to its scheduled maturity date or the insured
indebtedness is terminated or paid off early, and of the obligation of the
debtor to provide notification to the insurer under subsection G. This notice
shall be signed and dated by the debtor and the agent, if any, soliciting the
application or the creditor&#8217;s representative, if any, soliciting the
enrollment request. A copy of the signed notice shall be given to the debtor and
a copy shall be made part of the insurer&#8217;s file.

F. The disclosure requirements set forth in subsections A, B, C, D, and E shall
be disclosed separately from the loan or credit transaction papers in a form or
forms approved by the Commission. When credit property insurance or credit
involuntary unemployment insurance is offered with credit life insurance or
credit accident and sickness insurance, the disclosure requirements set forth in
subsections A, B, C, D, and E of &#xA7; 38.2-233 and the disclosure requirements
set forth in subsections A, B, C, D, and E of &#xA7; 38.2-3735 may be disclosed
together in a form which shall be approved by the Commission.

G. The Commission shall not approve any form providing credit property insurance
or credit involuntary unemployment insurance unless the policy or certificate is
written in nontechnical, readily understandable language, using words of common
everyday usage. A form shall be deemed acceptable under this section if the
insurer certifies that the form achieves a Flesch Readability Score of forty or
more, using the Flesch Readability Formula as set forth in Rudolf Flesch, The
Art of Readable Writing (1949, as revised 1974), and certifies compliance with
the guidelines set forth in this section.
			The Commission shall not approve any form providing credit property or credit
involuntary unemployment insurance paid by single premium unless the form
includes a provision, separately and prominently captioned, stating in substance
the following:
			&#8220;REFUND OF PREMIUM IN THE EVENT OF EARLY TERMINATION&#8221;
			&#8220;In the event this insurance policy or certificate is terminated prior
to its originally scheduled maturity date, or the insured indebtedness is
terminated or paid off earlier than scheduled, the insurer shall, within 30 days
of receipt of notification from the debtor of such termination or early payoff,
refund or credit any amount paid by the debtor for the insurance beyond the
actual date of termination or payoff. Early termination of debt includes
termination by renewal or refinancing. The debtor&#8217;s notification to the
insurer shall include proof of termination or early payoff of the insured
indebtedness.&#8221;
			The Commission shall not approve any form providing credit property or credit
involuntary unemployment insurance unless the insurance policy or certificate
states that the unearned premium refund will be calculated on a pro rata basis.
No refund of five dollars or less need be made.
			The Commission shall not approve any form providing credit property or credit
involuntary unemployment insurance unless the form has printed on it a notice
stating in substance that if, during a period of at least ten days from the date
the policy or certificate is delivered to the policy owner or certificate holder
the policy or certificate is surrendered to the insurer or its agent with a
written request for cancellation, the policy or certificate shall be void from
the beginning and the insurer shall refund any premium paid for the policy or
certificate.

H. Premium calculations for credit property insurance involving closed end
credit transactions shall not be based on amounts paid for finance charges,
service fees, delivery charges, taxes, interest, or any other item not covered
under the credit property insurance form. If the premium calculations for credit
property insurance involving open end monthly outstanding balance credit
transactions are based on amounts paid for finance charges, service fees,
delivery charges, taxes, interest, meals, entertainment, or any other item not
covered under the credit property insurance form, then at least twice per year
the premium notice for such insurance shall be accompanied by a disclosure in no
smaller than eight-point boldface type substantially similar to the following:
			Your credit property insurance premium is based on the entire outstanding
balance of this account. However, your insurance coverage applies only to
certain tangible personal property. Finance charges, service fees, delivery
charges, taxes, interest, meals, and entertainment are not covered under your
policy. Therefore, you may be paying premiums on items not covered under your
policy.
			The disclosure described in this subsection, with the same type-size
requirements, shall also be included in any written materials provided at the
time of invitation to contract and in policies or certificates provided to
insureds.

I. A credit property insurance or credit involuntary unemployment insurance
policy or certificate which provides truncated or critical period coverage, or
any other type of similar coverage that does not provide benefits or coverage
for the entire term or amount of the indebtedness, shall be subject to the
following requirements:

   1. The policy or certificate shall include a statement printed on the face of
   the policy or first page of the certificate which clearly describes the
   limited nature of the insurance. The statement shall be printed in capital
   letters and in bold twelve-point or larger type; and

   2. The policy or certificate shall not include any benefits or coverage other
   than truncated or critical period coverage or any other type of similar
   coverage that does not provide benefits or coverage for the entire term or
   amount of the indebtedness.

J. A portion of the premium charged for credit property insurance or credit
involuntary unemployment insurance may be allowed by the insurer to the creditor
for providing and furnishing such insurance, and no such allowance shall be
deemed a rebate of premium or as interest charges or consideration or an amount
in excess of permitted charges in connection with the loan or other credit
transaction.

K. All of the acts necessary to provide and service credit property insurance
and credit involuntary unemployment insurance may be performed within the same
place of business in which is transacted the business giving rise to the loan or
other credit transaction.

L. Subsections A, B, C, D, F, and M shall not apply to credit property insurance
or credit involuntary unemployment insurance that will insure open end monthly
outstanding balance credit transactions if the following criteria are met:

   1. The insurance is offered to the debtor after the loan or credit transaction
   it will insure has been approved by the creditor and has been effective at
   least seven days;

   2. The solicitation for the insurance is by mail or telephone. The person
   making the solicitation shall not condition the future use or continuation of
   the open end credit upon the purchase of credit property insurance or credit
   involuntary unemployment insurance;

   3. The creditor makes available only one plan of credit property insurance and
   only one plan of credit involuntary unemployment insurance to the debtor;

   4. The debtor is provided written confirmation of the insurance coverage
   within thirty days of the effective date of such coverage. The effective date
   of such coverage shall begin on the date the solicitation is accepted; and

   5. The individual policy or certificate has printed on it a notice stating
   that if, during a period of at least thirty days from the date the policy or
   certificate is delivered to the policy owner or certificate holder, the policy
   or certificate is surrendered to the insurer or its agent with a written
   request for cancellation, the policy or certificate shall be void from the
   beginning and the insurer shall refund any premium paid for the policy or
   certificate. This statement shall be prominently located on the face page of
   the policy or certificate, and shall be printed in capital letters and in bold
   face twelve-point or larger type.

M. Subsections A, B, C, D, F, and L shall not apply to open end credit
transactions by mail, telephone, or brochure solicitations that are not excluded
from the requirements of subsections A, B, C, D, and F by subsection L where the
insurer is offering only one plan of credit property insurance and only one plan
of credit involuntary unemployment insurance and the following criteria are met:

   1. The following disclosures shall be included in solicitations, whether as
   part of the application or enrollment request or separately:
   				a. The name and address of the insurer(s) and creditor; and
   				b. A description of the coverage offered, including the amount of
   coverage, the premium rate for the insurance coverage offered, and a
   description of any exceptions, limitations or restrictions applicable to such
   coverage.

   2. The application or enrollment requests shall comply as follows:
   				a. Notwithstanding requirements set forth elsewhere, the application and
   enrollment request shall be printed in a type size of not less than
   eight-point type, one-point leaded;
   				b. The application or enrollment request shall contain a prominent
   statement that the insurance offered is optional, voluntary or not required;
   				c. The application or enrollment request shall contain no questions
   relating to insurability other than the debtor&#8217;s age or date of birth
   and, if applicable, active employment status; and
   				d. If the disclosures required by subdivision 1 of this subsection are not
   included in the application or enrollment request, the application and
   enrollment request shall make reference to such disclosures with sufficient
   information to assist the reader in locating such disclosures within separate
   solicitation material.

   3. Each insurer proposing to utilize an application or enrollment request in
   such transactions shall file such form for approval by the Commission. If the
   insurer anticipates utilizing such application or enrollment form in more than
   one solicitation, the insurer shall submit, as part of its filing of such
   form, a certification signed by an officer of the insurer, stating that any
   such subsequent use of the application or enrollment form will utilize the
   same form number and will not vary in substance from the wording and format in
   which the form is submitted for approval. Upon approval of such application or
   enrollment form by the Commission, the insurer shall be permitted to utilize
   such form in various solicitation materials provided that the application or
   enrollment form, when incorporated into such solicitation materials, has the
   same form number and wording substantially identical to that contained on the
   approved application or enrollment form. When credit property insurance or
   credit involuntary unemployment insurance is offered with credit life
   insurance or credit accident and sickness insurance, insurers may file one
   common form which shall be subject to prior approval by the Commission and
   shall incorporate the requirements of subsection M of this section and
   subsection F of &#xA7; 38.2-3737, according to the requirements stated in this
   paragraph and in subdivision F 3 of &#xA7; 38.2-3737.

HISTORY: 1993, c. 774; 1994, c. 306; 1995, c. 167; 1999, c. 586; 2000, c. 526;
2009, c. 643.