Michigan Laws 500.1621 – Insurance on collateral; conditions
Current as of: 2023 | Check for updates
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(1) For a creditor to place insurance on collateral pledged by the debtor and pass the cost of the insurance on to the debtor, all of the following must be met:
(a) The creditor must have a security interest in the collateral.
Terms Used In Michigan Laws 500.1621
- Collateral: means personal property that is pledged as security for the satisfaction of a debt. See Michigan Laws 500.1605
- Credit agreement: means the written document that sets forth the terms of the credit transaction and includes the security agreement. See Michigan Laws 500.1605
- Credit transaction: means a transaction by the terms of which the repayment of money loaned or credit commitment made, or payment of goods, services, or properties sold or leased, is to be made at a future date or dates. See Michigan Laws 500.1605
- Creditor: means the lender of money or vendor or lessor of goods, services, property, rights, or privileges for which payment is arranged through a credit transaction, or any successor to the right, title, or interest of a lender, vendor, or lessor. See Michigan Laws 500.1605
- Debtor: means the borrower of money or a purchaser or lessee of goods, services, property, rights, or privileges, for which payment is arranged through a credit transaction. See Michigan Laws 500.1605
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Insurer: means an individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds organization, fraternal benefit society, or other legal entity, engaged or attempting to engage in the business of making insurance or surety contracts. See Michigan Laws 500.106
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
(b) The credit agreement must require the debtor to maintain insurance on the collateral to protect the creditor’s interest.
(c) The credit agreement must authorize the creditor to place the insurance if the debtor fails to provide evidence of the insurance.
(d) The requirements listed in subdivisions (a) to (c) must be clearly disclosed to the debtor at the inception of the credit transaction.
(2) A debtor has the right to provide required insurance through existing policies of insurance owned or controlled by the debtor or of procuring and furnishing the required coverage through an insurer authorized to transact insurance within this state. However, a creditor may establish maximum acceptable deductibles, insurer solidity standards, and other reasonable conditions with respect to the required insurance.