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COMMITTEE AMENDMENT ADOPTED
March 2, 1999
S. 337
Introduced by Senators McConnell, Matthews, Courtney, Patterson, Reese, Hayes, Jackson and Passailaigue
S. Printed 3/2/99--S.
Read the first time January 14, 1999.
TO AMEND CERTAIN PROVISIONS OF CHAPTER 29 OF TITLE 34 AND CHAPTERS 1, 2, 3, AND 4 OF TITLE 37 OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CONSUMER CREDIT TRANSACTIONS, SO AS TO, AMONG OTHER THINGS, REQUIRE THAT THE AMOUNT OF LIFE INSURANCE COVERAGE BE BASED UPON NET COVERAGE PLUS SIX MONTHLY PAYMENTS FOR LOANS WITH A TERM IN EXCESS OF SIXTY MONTHS; REQUIRE THE DEFINITION OF DISABILITY TO BE BASED UPON THE INSURED'S OWN OCCUPATION ON THE DATE OF DISABILITY FOR THE FIRST YEAR AND AN OCCUPATION WITH SUBSTANTIALLY EQUIVALENT REMUNERATION THEREAFTER; LOWER THE RATES FOR CREDIT LIFE INSURANCE; ADD A PROVISION RELATING TO UNFAIR CLAIMS PRACTICES; REQUIRE THAT CREDIT INSURANCE BE PORTABLE; REQUIRE THAT A POLICY MAY NOT BE CONTESTED UNLESS THE MISREPRESENTATION DIRECTLY CONTRIBUTES TO THE CONTINGENCY OR EVENT BY WHICH THE CLAIM ARISES; LOWER THE MAXIMUM PREMIUM FOR NON-FILING INSURANCE; ENHANCE CONSUMER DISCLOSURES; PROHIBIT NON-FILING INSURANCE AS A PERMITTED CHARGE FOR PURCHASE MONEY SECURITY INTEREST LOANS BEYOND APRIL 1, 2000; PROHIBIT A CHARGE FOR AND FILING OF A UCC SECURITY FORM FOR COLLATERAL THAT CANNOT BE USED AS SECURITY FOR A LOAN PURSUANT TO LAW; AND TO REQUIRE THAT IT MUST BE THE CONSUMER'S CHOICE TO PURCHASE INSURANCE FOR LESS THAN THE LENGTH OF THE LOAN.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 34-29-160 of the 1976 Code is amended to read:
"Section 34-29-160. Subject to the conditions provided in this section and notwithstanding any other provisions of this chapter, reasonable insurance may be sold to and required of the borrower for insuring personal property securing a loan and for insuring the life and earning capacity of not more than two parties obligated on the loan other than accommodation parties.
Property insurance shall be in an amount not to exceed the reasonable value of the property insured and for the customary term approximating the term of the loan contract. It shall be optional with the borrower to obtain such insurance in an amount greater than the amount of the loan or for a longer term.
Life insurance must be in an amount not to exceed the approximate amount of the loan debt and for a term not exceeding the approximate term of the loan contract. For purposes of credit insurance coverage, the amount of the debt means: for loans with a term of sixty months or less, the periodic installment payment times the number of scheduled periodic installment payments; and for loans in excess of sixty months, the amount necessary to liquidate the remaining debt in a single lump sum payment, excluding all unearned interest and other unearned finance charges, plus six monthly installment payments. Accident and health insurance and unemployment insurance, or both, must provide periodic benefits which may not exceed an amount which approximately equals the amount of each periodic installment payment to be made under the loan contract. However, when a loan is discharged or a new policy or policies of insurance are issued, the life, property, or accident and health insurance or all three on the prior obligation must be canceled and the unearned portion of the insurance premium or premiums, or identifiable charge, must be refunded to the borrower. However, the method of refunding the premiums on the policies must be pursuant to the Rule of 78 or the Sum of the Digits Method, except that no refund under two three dollars must be made; . the The insurance company shall calculate its reserves on the policies in the same manner or, in the case of credit life insurance, in accordance with a mortality table and interest assumption used for ordinary life policies. Notwithstanding this requirement, if the property insurance policy or policies cover the insurable interest of the borrower as well as the lender, the policy or policies may be continued in force at the request of the borrower.
This section does not require a creditor to grant a refund or credit of a life insurance premium to the debtor if any refund or credit due to the debtor under this section is less than two dollars.
If the coverage provides accident and health benefits, the policy or certificate shall contain a provision that, if the insured obligor is disabled, as defined in the policy, for a period of more than three days, benefits shall commence as of the first day of disability, provided that accident and health insurance shall not be allowed on loans with a cash advance of less than one hundred dollars. Disability shall not be defined more restrictively than the inability of the insured to engage in his own occupation during the first year of disability or for the length of the benefit period if less than one year. After the first year of disability, disability shall not be defined more restrictively than the inability of the insured to engage in the substantial duties of any other gainful occupation for substantially equivalent remuneration to the insured's own occupation. Substantially equivalent remuneration means not less than seventy-five percent of the insured's base wage, exclusive of overtime and bonus, as of the date disability commences.
All insurance sold or provided pursuant to this section shall bear a reasonable and bona fide relation to the existing hazard or risk of loss and shall be written by an agent or agency licensed in this State in an insurance company authorized to conduct such business in this State. A licensee shall not require the purchasing of insurance from the licensee or any employee, affiliate, or associate of the licensee, as a condition precedent to the making of a loan and shall not decline existing insurance where such insurance is provided by an insurance company authorized to conduct such business in this State.
The licensee shall within thirty days after the loan is made, deliver to the borrower, or if more than one, to one of them, a policy or certificate of insurance covering any insurance procured by or through the licensee or any employee, affiliate, or associate of the licensee, which shall set forth the amount of any premium or identifiable charge which the borrower has paid or is obligated to pay, the amount of insurance, the term of insurance, and a complete description of the risks insured. Such policy or certificate may contain a mortgage clause or other appropriate provisions to protect the insurable interest of the licensee.
Notwithstanding any other provision of this chapter, any gain or advantages in the form of commission, dividend, identifiable charge, or otherwise, to the licensee or to any employee, affiliate, or associate of the licensee from such insurance or its sale shall not be deemed to be additional or further interest or charge in connection with such a loan.
Any accident and health or property insurance sold in conjunction with this chapter must be written on forms and at rates approved by the South Carolina Department of Insurance, provided that a minimum charge of two dollars may be made, pursuant to reasonable regulations adopted by it and having as their purpose the establishment and maintenance of premium rates which are reasonably commensurate with the coverage afforded and which are adequate, not excessive, and not unfairly discriminatory giving due consideration to past or prospective loss experience within or without this State, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to borrowers, to reasonable expense allowances necessary to achieve proper risk distribution and spread, and to all other relevant factors within or without this State. These regulations may include reasonable classification systems or programs based upon identifiable and measurable variations in the hazards or expense requirements and may include statistical plans, systems, or programs, which the insurers may be required to adopt, for the purpose of providing that statistical information and data as may be necessary or reasonably appropriate to the determination of premium rates or rate levels. The premium rates and rate levels must be calculated to produce and maintain a ratio of losses incurred, or reasonably expected to be incurred, to premiums earned, or reasonably expected to be earned, of not less than fifty percent, and rates producing a lesser loss ratio are considered excessive.
Credit Until January 1, 2001, credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness covered by insurance is scheduled to continue, subject to a minimum charge of three dollars:
Decreasing Balance Level Balance
Individual $ .65 $1.30
Joint Insurance $1.08 $2.16
Effective January 1, 2001, credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness covered by insurance is scheduled to continue:
Decreasing Balance Level Balance
Individual $ .57 $1.14
Joint Insurance $.95 $1.89
Effective January 1, 2003, credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness covered by insurance is scheduled to continue:
Decreasing Balance Level Balance
Individual $ .55 $1.10
Joint Insurance $.91 $1.83"
SECTION 2. The 1976 Code is amended by adding:
"Section 34-29-161. No person may act or attempt in a loan transaction to prevent the filing or receiving of payment on a legitimate insurance claim. In an action in which it is found that a person has violated this section, the court shall award to the borrower the actual damages and consequential damages, if any, and to his attorneys their reasonable fees and costs. In determining attorney's fees and costs, the amount of recovery on behalf of the consumer is not controlling."
SECTION 3. The 1976 Code is amended by adding:
"Section 34-29-162. If a consumer defers, refinances, or consolidates a loan and the insurance coverage upon the original loan has not lapsed:
(1) incontestability and waiting periods for insurance coverage, up to the amount of the coverage remaining at the time of the deferral, refinancing, or consolidation and for an additional period not to exceed the length of the term of the original insurance, must be based upon the date on which the insurer originally insured the debtor with respect to the insurance coverage on the indebtedness that is deferred, refinanced, or consolidated; and
(2) the insurance coverage, up to the amount of the coverage remaining at the time of the deferral, refinancing, or consolidation and for an additional period not to exceed the length of the term of the original insurance, on the indebtedness that is deferred, refinanced, or consolidated may not be subject to evidence of insurability.
The provisions of this section do not apply to insurance for which no identifiable charge is made to the debtor."
SECTION 4. The 1976 Code is amended by adding:
"Section 34-29-163. A policy may not be declared void and the insurer may not avoid liability based upon a misrepresentation made by the insured, with respect to information provided regarding medical conditions or health history required in furnishing evidence of insurability, that is not causally related to the contingency or event by which the policy claim arises."
SECTION 5. The 1976 Code is amended by adding:
"Section 34-29-164. The amount charged for non-filing insurance coverage may not exceed seventy-five percent of the official fee as defined in Section 37-1-301(17)."
SECTION 6. The 1976 Code is amended by adding:
"Section 34-29-165. (1) Consumer credit insurance provided by a creditor may be subject to the furnishing of evidence of insurability satisfactory to the insurer. Whether or not such evidence is required, the term of the insurance shall commence when the debtor becomes obligated to the creditor or when the debtor applies for the insurance, whichever is later, except as follows:
(a) if any required evidence of insurability is not furnished until more than thirty days after the term would otherwise commence, the term may commence on the date when the insurer determines the evidence to be satisfactory; or
(b) if the creditor provides insurance not previously provided covering debts previously created, the term may commence on the effective date of the policy.
(2) If evidence of insurability is required and the insured's eligibility is to be determined by inquiries about existing or past medical conditions, the medical conditions inquired about shall be clearly and conspicuously disclosed in plain language on forms promulgated or approved by the Department of Insurance which achieve a grade level score of no higher than seventh grade on the Flesch-Kincaid readability test. The disclosure shall be made in a clear and conspicuous manner in bold type, with space for the insured to personally acknowledge the disclosure by a dated signature or initial immediately adjacent to the disclosure. Insurance coverage shall not be denied on the basis of any medical condition not so disclosed. Coverage shall not be denied if the insured's dated acknowledgment does not appear on the form."
SECTION 7. The 1976 Code is amended by adding:
"Section 34-29-166. If a creditor provides insurance, the insurance shall be evidenced by an individual policy or certificate of insurance delivered to the debtor at the time of the transaction where the debtor is present at the creditor's place of business.
If the debtor is not present at the creditor's place of business at the time of the transaction, the individual policy or certificate of insurance must be sent to him at his address as stated by him, within thirty days after the term of the insurance commences under the agreement between the creditor and debtor or, the creditor shall promptly notify the debtor of any failure or delay in providing the insurance.
Each policy or certificate of credit life insurance or credit accident and sickness insurance shall set forth the following on the first page of the policy or attached thereto in a manner that is clear and conspicuous and achieves a grade level score of no higher than seventh grade on the Flesch-Kincaid readability test:
(a) the name, address, and telephone number of the insurer and the process to be followed in submitting a claim;
(b) the name or names of the debtor, or in the case of a certificate, the identity by name or otherwise of the debtor;
(c) the age or date of birth of the debtor;
(d) the premium or amount payable by the debtor separately for credit life insurance and credit accident and sickness insurance;
(e) a description of the coverage including the amount and term of the coverage, and any exceptions, limitations, or restrictions;
(f) a statement that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness;
(g) a statement that, if the amount of insurance exceeds the amount necessary to discharge the indebtedness, any excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to the debtor's estate;
(h) a conspicuous statement that the insured debtor shall have the right to cancel the insurance policy or group certificate and have all the premiums paid by or charged to the insured debtor refunded or credited, upon giving written notice to the insurer within thirty days from the date the insured debtor received the policy or certificate;
(i) a conspicuous statement which reads as follows: `For specific information about credit insurance issued in conjunction with your loan, contact your creditor or your insurance company. For general information about credit insurance or complaints regarding your credit insurance, please contact the South Carolina Department of Insurance at 1-800-768-3467.'; and
(j) the provisions of this section do not apply to insurance for which no identifiable charge is made to the debtor."
SECTION 8. Section 37-1-301(17) of the 1976 Code is amended to read:
"(17) (a)`Official fees' means :
(a) (i) fees and charges prescribed by law which actually are or will be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest related to a consumer credit sale, consumer lease, or consumer loan; or
(b) (ii) premiums payable for insurance in lieu of perfecting a security interest otherwise required by the creditor in connection with the sale, lease or loan, if the premium does not exceed the fees and charges described in paragraph (a) which would otherwise be payable.
(b) `Official fees' does not mean:
(i) effective April 1, 2000, a premium payable for insurance in lieu of perfecting a security interest when the security interest is a purchase money security interest as defined in Section 36-9-107, for which, in accordance with Section 38-9-302(1)(d), perfection by the filing of a financing statement is not required; or
(ii) a premium payable for insurance in lieu of perfecting a security interest when the collateral is such that it cannot be used as a security for a loan pursuant to the Federal Credit Practices Rule or Section 37-5-108 of the South Carolina Code of Laws, annotated."
SECTION 9. Section 37-4-105 of the 1976 Code is amended to read:
"Section 37-4-105. (A) If a creditor agrees with a debtor to provide provides insurance: ,(1) the insurance shall be evidenced by an individual policy or certificate of insurance delivered to the debtor at the time of the transaction where the debtor is present at the creditor's place of business.
If the debtor is not present at the creditor's place of business at the time of the transaction, the individual policy or certificate of insurance must be, or sent to him at his address as stated by him, within thirty days after the term of the insurance commences under the agreement between the creditor and debtor; or (2) the creditor shall promptly notify the debtor of any failure or delay in providing the insurance.
(B) Each policy or certificate of credit life insurance or credit accident and sickness insurance shall set forth the following on the first page of the policy or attached thereto in a manner that is clear and conspicuous and achieves a grade level score of no higher than seventh grade on the Flesch-Kincaid readability test:
(1) the name, address and telephone number of the insurer and the process to be followed in submitting a claim;
(2) the name or names of the debtor, or in the case of a certificate, the identity by name or otherwise of the debtor;
(3) the age or date of birth of the debtor;
(4) the premium or amount payable by the debtor separately for credit life insurance and credit accident and sickness insurance;
(5) a description of the coverage including the amount and term of the coverage, and any exceptions, limitations, or restrictions;
(6) a statement that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness;
(7) a statement that, if the amount of insurance exceeds the amount necessary to discharge the indebtedness, any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate;
(8) a conspicuous statement that the insured debtor shall have the right to cancel the insurance policy or group certificate and have all the premiums paid by or charged to the insured debtor refunded or credited, upon giving written notice to the insurer within thirty days from the date the insured debtor received the policy or certificate; and
(9) a conspicuous statement which reads as follows: `For specific information about credit insurance issued in conjunction with your loan, contact your creditor or your insurance company. For general information about credit insurance or complaints regarding your credit insurance, please contact the South Carolina Department of Insurance at 1-800-768-3467.'
(C) If a credit life or a credit accident and sickness insurance policy or certificate 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, the credit life or credit accident and sickness insurance 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.
(D) The provisions of subsections (B) and (C) do not apply to insurance for which no identifiable charge is made to the consumer."
SECTION 10. Section 37-4-110(1) of the 1976 Code is amended to read:
"(1) A creditor may not contract for or receive a separate charge for insurance in connection with a deferral (Section 37-2-204 or Section 37-3-204), a refinancing (Section 37-2-205 or Section 37-3-205), or a consolidation (Section 37-2-206 or Section 37-3-206), unless:
(a) the debtor agrees at or before the times of the deferral, refinancing, or consolidation that the charge may be made;
(b) the debtor is or is to be provided with insurance for an amount or a term, or insurance of a kind, in addition to that to which he would have been entitled had there been no deferral, refinancing, or consolidation;
(c) the debtor receives a refund or credit on account of any unexpired term of existing insurance in the amount that would be required if the insurance were terminated (Section 37-4-108); and
(d) the charge does not exceed the amount permitted by this chapter (Section 37-4-107).
If the insurance coverage upon the original loan has not lapsed, the creditor must offer the consumer a choice to continue disability or life insurance coverage up to the amount of the insurance coverage remaining at the time of the deferral, refinancing, or consolidation and for an additional period not to exceed the length of the term of the original insurance. The election of the consumer must be evidenced by an affirmatively signed, clear and conspicuous statement. Coverage may not be required upon deferral, refinancing or consolidation.
If the insurance coverage upon the original loan has not lapsed, incontestability and waiting periods for insurance coverage, up to the amount of the coverage remaining at the time of the deferral, refinancing, or consolidation and for an additional period not to exceed the length of the term of the original insurance, are based upon the date on which the insurer originally insured the consumer with respect to the insurance coverage on the indebtedness that is deferred, refinanced or consolidated.
If the insurance coverage upon the original loan has not lapsed, insurance coverage, up to the amount of the coverage remaining at the time of the deferral, refinancing, or consolidation and for an additional period not to exceed the length of the term of the original insurance, on the indebtedness that is deferred, refinanced, or consolidated is not subject to evidence of insurability.
The provisions of this section do not apply to insurance for which no identifiable charge is made to the debtor."
SECTION 11. Section 37-4-201 of the 1976 Code is amended to read:
"Section 37-4-201. (1) Consumer credit insurance provided by a creditor may be subject to the furnishing of evidence of insurability satisfactory to the insurer. Whether or not such evidence is required, the term of the insurance shall commence no later than when the debtor becomes obligated to the creditor or when the debtor applies for the insurance, whichever is later, except as follows:
(a) if any required evidence of insurability is not furnished until more than thirty days after the term would otherwise commence, the term may commence on the date when the insurer determines the evidence to be satisfactory; or
(b) if the creditor provides insurance not previously provided covering debts previously created, the term may commence on the effective date of the policy.
(2) If evidence of insurability is required, and the insured's eligibility is to be determined by inquiries about existing or past medical conditions, the medical conditions inquired about shall be clearly and conspicuously disclosed in plain language on forms promulgated or approved by the Department of Insurance which achieve a grade level score of no higher than seventh grade on the Flesch-Kincaid readability test. The disclosure shall be made in a clear and conspicuous manner in bold type, with space for the insured to personally acknowledge the disclosure by a dated signature or initial immediately adjacent to the disclosure. Insurance coverage shall not be denied on the basis of any medical condition not so disclosed. Coverage shall not be denied if the insured's dated acknowledgment does not appear on the form.
(2)(3) The originally scheduled term of the insurance shall extend at least until the due date of the last scheduled payment of the debt, except as follows:
(a) if the insurance relates to a revolving charge account or revolving loan account the term need extend only until the payment of the debt under the account and may be sooner terminated after at least thirty days' notice to the debtor; or
(b) if the consumer chooses to purchase insurance for less than the term of the consumer credit transaction and if the debtor is advised in writing that the insurance will be written for a specified shorter time as follows, the term need extend only until the end of the specified time.:
(i) For all closed-end credit transactions in which the debtor's age at loan maturity would not exceed any applicable age limit, the debtor shall be given a disclosure that the insurance is for the length of the loan.
(ii) The disclosure may allow the consumer to affirmatively sign a statement that the term of the insurance is less than the length of the loan, in which event, the coverage shall be for the duration so agreed to and the disclosure must clearly and conspicuously indicate the length of the insurance coverage and that the length of the insurance coverage is less than the term of the loan.
(iii) The disclosures must achieve a grade level score of no higher than seventh grade on the Flesch-Kincaid readability test.
(3)(4) The term of the insurance shall not extend more than fifteen days after the originally scheduled due date of the last scheduled payment of the debt unless it is extended without additional cost to the debtor or as an incident to a deferral, refinancing, or consolidation."
SECTION 12. Section 37-4-202(1)(a) of the 1976 Code is amended to read:
"(1)(a) In the case of consumer credit insurance providing life coverage, the amount of insurance may not initially exceed the debt and, if the debt is payable in installments, may not at any time exceed the greater of the scheduled or actual amount of the debt. For purposes of this subsection, the amount of the debt means: for a consumer credit transaction with a term of sixty months or less, the periodic installment payment times the number of scheduled periodic installment payments; and for a consumer credit transaction in excess of sixty months, the amount necessary to liquidate the remaining debt in a single lump sum payment, excluding all unearned interest and other unearned finance charges, plus six monthly installment payments. In the case of a consumer lease contract, the residual value of the consumer credit lease may be included in the debt,; however, the lessor shall not require the lessee to buy insurance covering the residual value of the leased item; or"
SECTION 13. Section 37-4-203(2) of the 1976 Code is amended to read:
"(2) Except as provided in subsection (3), all policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders relating to consumer credit insurance, other than life insurance, delivered or issued for delivery in this State, and the schedule of premium rates or charges pertaining thereto, shall be filed by the insurer with the Director of Insurance Commissioner. Within ninety days after the filing of any form or schedule, he shall disapprove it if the premium rates or charges are unreasonable in relation to the benefits provided under the form, or if the form contains provisions which are unjust, unfair, inequitable or deceptive, or encourage misrepresentation of the coverage, or are contrary to any provision of the Insurance Code or of any rule or regulation promulgated thereunder."
SECTION 14. Section 37-4-203(5) of the 1976 Code is amended to read:
"(5) Credit Until January 1, 2001, credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness covered by insurance is scheduled to continue, subject to a minimum charge of three dollars:
Decreasing Balance Level Balance
Individual $ .65 $1.30
Joint Insurance $1.08 $2.16
Effective January 1, 2001, credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness covered by insurance is scheduled to continue:
Decreasing Balance Level Balance
Individual $ .57 $1.14
Joint Insurance $.95 $1.89
Effective January 1, 2003, credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness covered by insurance is scheduled to continue:
Decreasing Balance Level Balance
Individual $ .55 $1.10
Joint Insurance $.91 $1.83"
SECTION 15. The 1976 Code is amended by adding:
"Section 37-4-205. No person may act or attempt in a consumer credit transaction to prevent the filing or receiving of payment on a legitimate insurance claim. In an action in which it is found that a person has violated this section, the court shall award to the consumer the actual damages and consequential damages, if any, and to his attorneys their reasonable fees and costs. In determining attorney's fees and costs, the amount of recovery on behalf of the consumer is not controlling."
SECTION 16. The 1976 Code is amended by adding:
"Section 37-4-206. Notwithstanding the requirements of Sections 37-2-202(2), 37-3-202(2), 37-4-110(1)(e), and 37-4-201(3)(b) required disclosures must be given and acknowledged, but need not be signed by the debtor, in a transaction that meets all of the following requirements:
(a) the plan is an open-end loan or open-end credit plan;
(b) the insurance election or change is made by the debtor at a time after the plan documents are initially completed and the plan is established;
(c) the premiums or insurance charges are to be added to the account monthly on an outstanding balance basis;
(d) the insurance election or change is requested by the debtor by telephone or other electronic means;
(e) the consumer has the ability to cancel the credit insurance at any time; and
(f) the consumer is given a clear and conspicuous disclosure in plain language on the first statement in which the additional charge is included stating that there has been an increase in the insurance premium and that the coverage may be canceled at any time. In lieu of providing the disclosure on the first statement in which the additional charge is included, a separated disclosure may be mailed to the consumer no later than in conjunction with the mailing of the first statement in which the additional charge is included."
SECTION 17. The 1976 Code is amended by adding:
"Section 37-4-207. A policy may not be declared void and the insurer may not avoid liability based upon a misrepresentation made by the insured, with respect to information provided regarding medical conditions or health history required in furnishing evidence of insurability, that is not causally related to the contingency or event by which the policy claim arises."
SECTION 18. The 1976 Code is amended by adding:
"Section 37-4-208. The amount charged for non-filing insurance coverage may not exceed seventy-five percent of the official fee as defined in Section 37-1-301(17)."
SECTION 19. The 1976 Code is amended by adding:
"Section 37-4-209. Nothing in this chapter shall be construed to prohibit the creditor from combining disclosures required in this chapter with other disclosures required under state and federal law, in order to avoid redundancy."
SECTION 20. The 1976 Code is amended by adding:
"Section 37-4-210. Disability shall not be defined more restrictively than the inability of the insured to engage in his own occupation during the first year of disability or for the length of the benefit period if less than one year. After the first year of disability, disability shall not be defined more restrictively than the inability of the insured to engage in the substantial duties of any other gainful occupation for substantially equivalent remuneration to the insured's own occupation. Substantially equivalent remuneration means not less than seventy-five percent of the insured's base wage, exclusive of overtime and bonus, as of the date disability commences."
SECTION 21. If any provision of this act or the application of such provision to any person or circumstance is held to be unconstitutional, the remainder of this act and the application of the provisions of such to any person or circumstance shall not be affected thereby.
SECTION 22. Upon approval by the Governor, this act takes effect January 1, 2000. The provisions in SECTION 1 and SECTION 14 relating to changes in credit life insurance rates are effective as indicated in the respective sections. The South Carolina Department of Insurance may, prior to the effective date of this act, review any policies and filings necessary to implement the provisions of this act in order to transition into any additional or altered requirement provided therein by this act. Any action of the department to implement this act prior to January 1, 2000, shall be subject to the provisions, requirements, and law of this act effective on January 1, 2000.
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