Kansas Statutes 40-2610. Service charges; computation; maximum; refund on prepayment
A premium finance company shall not charge, contract for, receive, or collect a service charge other than as permitted by this act.
The service charge shall be computed on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the premium finance agreement) from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.
Terms Used In Kansas Statutes 40-2610
- Contract: A legal written agreement that becomes binding when signed.
- Insurance premium finance company: means a person engaged in the business of entering into insurance premium finance agreements under this act. See Kansas Statutes 40-2602
- Month: means a calendar month, unless otherwise expressed. See Kansas Statutes 77-201
- Premium finance agreement: means an agreement by which an insured or prospective insured promises to pay to a premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent in payment of premium on an insurance contract insuring against the perils of fire, extended coverage, marine and inland marine as defined in article 9 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto, and insuring against casualty losses as defined in article 11 of chapter 40 of the Kansas Statutes Annotated and amendments thereto, together with a service charge as authorized and limited by this act. See Kansas Statutes 40-2602
The total service charges shall be a maximum of $12 per $100 per year, plus an additional charge of $10 per premium finance agreement, which need not be refunded on prepayment. No insurance premium finance company shall induce an insured to become obligated under more than one premium finance agreement for the purpose of obtaining more than one additional charge of $10. The insured may prepay the premium finance agreement at any time and if the premium finance agreement is prepaid in full (by cash, renewal or refinancing) one month or more before the final payment is due, any unearned service charge shall be refunded on the basis of the rule commonly known as the rule of seventy-eighths (78ths), which is computed as follows:
The amount refunded shall be the proportion of the service charge which the sum of the monthly balances scheduled to follow the date of prepayment in full bears to the sum of the scheduled monthly balances of the premium finance agreement.