424.208 Note
Legislative Council Note, 1973: [As to sub. (1) (intro.)] Clarifies the application of this subsection to open-end accounts. As the section reads prior to amendment, it could be construed to mean that maximum credit life insurance coverage would be determined by the account balance at the time the insurance was initially contracted for. However, the intent is that the amount of insurance fluctuate with, but never exceed, the account balance in open-end credit accounts. For verification, see s. 424.204 (2), which uses the current account balance to determine the premium charge. [Bill 432-A]
424.209
424.209
Filing and approval of rates and forms. 424.209(1)(1)
Notwithstanding s.
625.13 (1), no individual or group policy, certificate of insurance, notice of proposed insurance, application for insurance, endorsement or rider relating to credit life insurance or credit accident and sickness insurance delivered or issued for delivery in this state, or the schedule of premium rates or charges pertaining thereto, may be issued, delivered or used in this state until a copy of the form thereof has been filed with the commissioner of insurance, nor until the expiration of 30 days after it has been so filed unless the commissioner shall sooner give written approval thereto. Notwithstanding s.
625.22 (1), the commissioner, within 30 days after the filing of any such form, may disapprove such form or rate schedule if the benefits provided are unreasonable in relation to the premiums to be charged, or if the form contains a provision which is unjust, unfair, inequitable, misleading, deceptive or encourages misrepresentation of the policy, or is contrary to chs.
600 to
646 or any rule adopted thereunder. The benefits provided by any such policy shall be presumed reasonable in relation to the premium to be charged if the ratio of losses incurred to premiums earned is, or may reasonably be expected to be, 50 percent for credit life insurance and 60 percent for credit accident and sickness insurance, or such lower loss ratios as designated by the commissioner to afford reasonable allowance for expenses for a particular plan of coverage. If the ratio of losses incurred to premiums earned is less than or can reasonably be expected to be less than the prescribed standards, the benefits provided shall be presumed unreasonable in relation to the premiums charged. Determination of the reasonable relation of benefits to premiums shall be made by the commissioner for each policy form filed for such approval. Premium rate standards for other benefit plans shall be actuarially consistent with the prescribed rate standards. The commissioner may limit the use of any such form for those creditors or customers whose experience was the basis for approval and such other creditors or customers likely to experience similar mortality or morbidity.
424.209(2)
(2) Not later than 6 months after March 1, 1973, the commissioner of insurance, by rule, shall adopt premium rates for credit life and credit accident and sickness insurance based upon the loss ratio standards set forth in sub.
(1), which rates shall be acceptable without further justification. No charge may be made for credit life or credit accident and sickness insurance which exceeds such premium rates except as provided in this subsection. The commissioner of insurance from time to time shall raise or lower the acceptable premium charges permitted for such insurance for any particular creditor, class of creditor or class of transaction whenever the commissioner determines that the actual loss experience for that particular creditor, class of creditor or class of transactions produces a ratio of losses to premiums which differs substantially, based on credible data for a relevant period of time, from the loss ratio standards established by sub.
(1).
424.209(3)
(3) No individual policy of credit accident and sickness insurance or group policy of credit accident and sickness insurance may be delivered or issued for delivery in this state if the benefits are payable after a waiting period of less than 14 days, regardless of whether the payment of benefits is retroactive to the first day of disability.
424.209(4)
(4) If a group credit life insurance policy or group credit accident and sickness insurance policy is delivered to a policyholder which is not a Wisconsin corporation or other resident and does not have its principal office in Wisconsin, the forms to be filed by the insurer with the commissioner of insurance are the group certificates and notices of proposed insurance. The commissioner of insurance shall approve them if:
424.209(4)(a)
(a) They provide the information that would be required if the group policy were delivered in this state;
424.209(4)(b)
(b) The applicable premium rates or charges do not exceed those established by chs.
421 to
427 or by rules adopted thereunder; and
424.209(4)(c)
(c) They do not contain provisions which are unjust, unfair, inequitable or deceptive, or encourage misrepresentation of the coverages, or are contrary to chs.
600 to
646, or of any rule adopted thereunder.
PROPERTY INSURANCE
424.301
424.301
Restrictions on property insurance. 424.301(1)(1)
A creditor may not contract for a separate charge or receive a separate charge for insurance against loss of or damage to property in which the creditor holds a security interest or to property leased under a motor vehicle consumer lease unless all of the following conditions are met:
424.301(1)(a)
(a) The insurance covers a substantial risk of loss or damage to property which is allowable collateral under s.
422.417 for the credit transaction.
424.301(1)(b)
(b) The amount of the insurance does not exceed any of the following:
424.301(1)(b)1.
1. The actual cash value or stated value of any motor vehicle, manufactured home, or mobile home in which the creditor holds a security interest.
424.301(1)(b)2.
2. The cash value or replacement value of any property in which the creditor holds a purchase money security interest.
424.301(1)(b)3.
3. The stated amount of the customer's credit line if the purchase money security interest secures transactions pursuant to an open-end credit plan.
424.301(1)(b)5.
5. In any other transaction, the total payments or, if the transaction is for a term of 49 months or more, the amount financed.
424.301(1)(c)
(c) The term of the insurance is reasonable in relation to the terms of credit.
424.301(1m)
(1m) The limitations of subs.
(1) and
(2) and s.
422.202 (1) (b) do not apply to property insurance on some or all of the property in which the creditor holds a security interest if the creditor does not require any insurance on the property and if the creditor is not designated a loss payee in the policy. Subsection
(3) does not apply to a credit transaction solely to finance the purchase of such property insurance.
424.301(2)
(2) The term of the insurance is reasonable if it is customary and does not extend substantially beyond a scheduled maturity.
424.301(3)
(3) A creditor may not contract for or receive a separate charge for insurance against loss of or damage to property unless the amount financed exclusive of charges for the insurance is $800 or more, and the value of the property is $800 or more.
424.301(4)(a)(a) A creditor may not contract for or receive a separate charge for insurance against loss of or damage to the customer's property in which the creditor does not hold a security interest if any of the following apply:
424.301(4)(a)1.
1. The creditor sells the customer insurance described in sub.
(1) covering some or all of the same property, except as provided in sub.
(1m).
424.301(4)(a)2.
2. The amount of the insurance exceeds the amount by which the value of the property exceeds the amount of insurance against loss or damage to the property which the customer has in force at the time the consumer credit transaction is consummated.
424.301(4)(b)
(b) If the customer purchases property insurance in addition to that already in force, the value of the customer's property shall be verified by the customer's written statement or an appraisal or a bill of sale.
424.301 Annotation
Legislative Council Note, 1973: [As to sub. (1) (a)] Clarifies the scope of allowable property insurance. This paragraph sets forth one of the conditions necessary for property insurance. However, as it reads prior to amendment, no insurance could be taken on any household furnishings, regardless of whether the transaction involved a security interest in them. The effect of the amendment is to allow insurance on any permitted collateral, regardless of its nature. Therefore, if a creditor has a security interest in household furnishings, he will be able to protect his interest by the use of insurance against loss or damage. [Bill 432-A]
424.302
424.302
Insurance on creditor's interest only. If a creditor contracts for or receives a separate charge for insurance against loss of or damage to property, the risk of loss or damage not willfully caused by the customer is on the debtor only to the extent of any deficiency in the effective coverage of the insurance, even though the insurance covers only the interest of the creditor.
424.302 History
History: 1971 c. 239.
424.303
424.303
Cancellation by creditor. 424.303(1)(1)
A creditor shall not request cancellation of a policy of property or liability insurance except after the customer's default (s.
425.103), or in accordance with a written agreement by the customer at any time other than when the original transaction is entered into. In either case the cancellation does not take effect until written notice is delivered to the customer or mailed to the customer at an address as stated by the customer. The notice shall state that the policy may be canceled on a date not less than 30 days after the notice is delivered, or, if the notice is mailed, not less than 33 days after it is mailed.
424.303(2)
(2) Following cancellation, the customer shall be entitled to a rebate or credit for any prepaid charges which represent the premium for a period following cancellation.
424.303(3)
(3) This section shall not apply to a contract issued by an insurance premium finance company licensed under s.
138.12.
424.304
424.304
Cancellation by customer. 424.304(1)(1)
Following the sale of any insurance product under s.
422.202 (1) (b), the customer has the right to cancel the insurance until 30 days after the policy is mailed or otherwise delivered to the customer. The creditor shall provide the customer a notice in duplicate in the form set forth in subs.
(2) and
(3).
424.304(2)
(2) The notice required by sub.
(1) shall be in substantially the following form:
CUSTOMER'S RIGHT TO SUBSTITUTE PROPERTY
OR LIABILITY INSURANCE
You may cancel the property or liability insurance which you purchased through .... (name and address of lender) to insure the collateral securing your loan dated .... (date). To cancel, you must mail or deliver a written notice, together with the original policy for the property or liability insurance, to us before midnight of the 30th day after the date our policy was mailed or otherwise delivered to you. In addition, you must include a copy of a policy or endorsement for substitute insurance from another insurance company, such as the company insuring your home, that provides the same coverage and that names our company as loss payee. If you cancel and you do not provide evidence of substitute insurance to us with your notice or within 7 days after sending a cancellation notice to us, we may purchase other insurance to cover our risk and charge you for it.
If you wish, you may use this page as your written notice by writing “I hereby cancel this insurance" and adding your name, address and the date. This page, the original policy and a copy of the substitute policy or endorsement showing our company as loss payee must be sent or delivered to us before midnight on the 30th day after the date our policy was mailed or otherwise delivered to you. Keep the copy of this page for your records.
If you cancel this insurance, you may elect to receive either a check for the insurance premiums or a credit against your loan balance in the amount of the insurance premiums and the amount of applicable finance charge. Check which of the following you elect:
1. .... I want you to send me a check in the amount of $.... (amount of insurance premiums) for the insurance premiums.
2. .... I want you to credit my loan balance in the amount of $.... (amount of insurance premiums) which is the amount of the insurance premiums, plus the amount of applicable finance charge.
424.304(3)
(3) A creditor may elect to provide only a credit to a customer who cancels insurance under this section. If a creditor so elects, the creditor shall delete the last paragraph of the notice under sub.
(2) and shall substitute the following: “If you cancel this insurance, we will credit your loan balance in the amount of $.... (amount of insurance premiums), which is the amount of the insurance premiums, plus the amount of applicable finance charge."
424.304(4)
(4) Any customer who cancels and substitutes insurance within the 30-day period under sub.
(1) is entitled to a credit or payment under s.
424.402. Any insurance policy covered by the notice shall be void as of the date of purchase, unless a loss has occurred, upon mailing or delivery of the notice of cancellation by the customer and all rights under the policy shall terminate. The creditor shall promptly provide the customer with a credit or payment, as applicable, even if the original policy does not accompany the notice of cancellation.
424.304 History
History: 1985 a. 256.
OTHER INSURANCE PRODUCTS
424.401
424.401
Cancellation by customer. 424.401(1)(1)
Following the sale of any insurance product under s.
422.202 (2s) (a) 2., including insurance described in s.
424.301 (1m), or, if for a term of more than one year, any future service or motor club service contracts under s.
422.202 (2s) (a) 3., the customer has the right to cancel the products or contracts until 30 days after the insurance policy, future service contract or motor club service contract is mailed or otherwise delivered to the customer. The creditor shall provide the customer a notice in duplicate in the form set forth in subs.
(2) and
(3).
424.401(2)
(2) The notice required by sub.
(1) shall be in substantially the following form:
CUSTOMER'S RIGHT TO CANCEL OPTIONAL ....
(INSURANCE, FUTURE SERVICE CONTRACT
OR MOTOR CLUB SERVICE CONTRACT)
You may cancel the optional .... (insurance, future service contract or motor club service contract) which you purchased and financed through .... (name and address of lender) on .... (date). To cancel, you must mail or deliver a written notice to us before midnight of the 30th day after the date this .... (insurance policy or service contract) was mailed or otherwise delivered to you.
If you wish, you may use this page as your written notice by writing “I hereby cancel this .... (insurance or service contract)" and adding your name, address and the date. This page and the original .... (policy or contract) must be sent or delivered to us before midnight on the 30th day after the date the .... (insurance policy or service contract) was mailed or otherwise delivered to you. Keep the copy of this page for your records.
If you cancel this .... (insurance or service contract), you may elect to receive either a check for the .... (insurance premiums or service contract charges), or a credit against your loan balance in the amount of the .... (insurance premiums or service contract charges) plus the amount of applicable finance charge. Check which of the following you elect:
1. .... I want you to send me a check in the amount of $.... (amount of insurance premiums or service contract charges) for the .... (insurance premiums or service contract charges).
2. .... I want you to credit my loan balance in the amount of $.... (amount of insurance premiums or service contract charges), which is the amount of the .... (insurance premiums or service contract charges), plus the amount of applicable finance charge.
424.401(3)
(3) A creditor may elect to provide only a credit to a customer who cancels insurance or a service contract under this section. If a creditor so elects, the creditor shall delete the last paragraph of the notice under sub.
(2) and shall substitute the following: “If you cancel this .... (insurance or service contract), we will credit your loan balance in the amount of $.... (amount of insurance premiums or service contract charges), which is the amount of $.... (insurance premiums or service contract charges), plus the amount of applicable finance charge."
424.401(4)
(4) Any person who cancels insurance or a service contract within the 30-day period under sub.
(1) is entitled to a credit or payment under s.
424.402. Any insurance policy or service contract covered by the notice is void as of the date of purchase upon mailing or delivery of the notice of cancellation by the customer and all rights under the policy or contract shall terminate. The creditor shall promptly provide the customer with a refund or credit, as applicable, even if the original policy or contract does not accompany the notice of cancellation.
424.401 History
History: 1985 a. 256;
2013 a. 230.
424.402
424.402
Insurance cancellation credit or payment. 424.402(1)(1)
Any customer who cancels insurance or a service contract under s.
424.304 or
424.401 shall receive one of the following:
424.402(1)(a)
(a) A credit against the balance of the customer's obligation or account in the amount of the insurance premiums or service contract charges plus that portion of the finance charge attributable to the insurance premiums or service contract charges.
424.402(1)(b)
(b) A payment in the amount of the full amount of the insurance premiums or service contract charges, which amount shall continue to be part of the customer's obligation, if the creditor offers and the customer elects this option.
424.402(2)
(2) With respect to the application of a credit under sub.
(1) (a) to a customer's obligation for a consumer credit transaction other than one pursuant to an open-end credit plan, a merchant shall do one of the following:
424.402(2)(a)
(a) If the obligation is for a consumer credit transaction other than a precomputed consumer loan, apply the credit in one of the following ways:
424.402(2)(a)1.
1. First against the final installment due on the customer's obligation and then to the preceding installments in the reverse order in which they are due.
424.402(2)(a)2.
2. Against the balance of the customer's obligation and proportionately reduce the amount of each remaining installment.
424.402(2)(b)
(b) If the obligation is for a precomputed consumer loan, apply the credit against the balance of the customer's obligation, compute and apply a refund of the finance charge, less the portion included in the credit, in the manner described in s.
422.209 (2) as of the date of the loan or the nearest scheduled installment due date, and thereafter charge interest at a rate not to exceed the annual percentage rate of finance charge which was disclosed to the customer when the loan was made.
424.402(3)
(3) If a credit under sub.
(1) (a) is applied to a precomputed consumer loan, the finance charge resulting after application of the credit shall be the finance charge for the precomputed consumer loan, but the cancellation shall not otherwise alter the customer's obligation for the precomputed consumer loan.
424.402(4)
(4) A contract between an insurer and a creditor may not provide for a refund to the creditor upon cancellation by a customer under s.
424.304 or
424.401 in an amount less than the amount of the insurance premiums that the creditor must credit to the customer's account or pay to the customer under sub.
(1).
424.402 History
History: 1985 a. 256.
INSURANCE PRACTICES
424.501
424.501
False, misleading or deceptive insurance solicitation. 424.501(1)(1)
A creditor may not solicit or offer for sale any insurance product in connection with a consumer credit transaction in any manner that is false, misleading or deceptive or that omits to state material information with respect to the insurance or the consumer credit transaction that is necessary to make the solicitation or offer not false, misleading or deceptive.
424.501(2)
(2) It is not a violation of sub.
(1) to use printed materials or forms that have been approved for use by the office of the commissioner of insurance.
424.501 History
History: 1985 a. 256.
