§3548. Cancellation of insurance; refund or credit upon cancellation

A. When a consumer credit transaction is paid in full for any reason, the insurance paid by the debtor and provided, sold, or obtained through the extender of credit in connection therewith shall be cancelled; however, this provision shall not apply to credit life insurance and property insurance other than contents insurance which is the subject of a specific written request by the consumer requesting that such insurance remain in force beyond the provision of this Section.

B. When insurance paid by the debtor is canceled, or terminated for any reason, the refund for unearned insurance premiums received by the extender of credit shall, at the extender's option, be applied toward payment of the premium for insurance to replace the coverage canceled, adjusted, or terminated, or toward payment of the unpaid balance of the consumer credit transaction. The order of applying said unearned premium shall be inverse to the order in which the installments of the consumer credit transaction are payable according to its terms, beginning with the installment due on the final due dates and not to the next ensuing installment which shall remain payable as originally scheduled. The remaining balance of unearned insurance premiums, if any, shall be refunded to the consumer; however, no cash refund shall be required if the amount thereof is less than one dollar, or to the extent provided for by federal law.

Added by Acts 1972, No. 454, §1, eff. Jan. 1, 1973. Amended by Acts 1980, No. 694, §1; Acts 1995, No. 1184, §2; Acts 1997, No. 237, §1.