33-18-501. Lenders -- favored agent of insurer -- coercion of debtors. (1) (a) A person may not require, as a condition precedent to the lending of money or extension of credit or any renewal of these, the person to whom the money or credit is extended or whose obligation a creditor is to acquire or finance to negotiate any contract of insurance or renewal of these through a particular insurer or group of insurers or a particular insurance producer or group of insurance producers.

(b) Subsection (1)(a) does not prohibit a person, a depository institution, or an affiliate of a depository institution from informing a customer or prospective customer:

(i) that insurance is required to obtain a loan or credit;

(ii) that loan or credit approval is contingent on the procurement by the customer of acceptable insurance; or

(iii) that insurance is available from the person, depository institution, or affiliate of a depository institution.

(2) A person who lends money or extends credit may not do any of the following:

(a) solicit insurance for the protection of real property, after a person indicates interest in securing a first-mortgage credit extension, until the person has received a commitment in writing from the lender as to a loan or credit extension;

(b) unreasonably reject a contract of insurance furnished by the borrower for the protection of the property securing the credit or lien. A rejection is not unreasonable if it is based on reasonable standards, uniformly applied, relating to the extent of coverage required and the financial soundness and the services of an insurer. These standards may not discriminate against any particular type of insurer or call for the rejection of an insurance contract because the contract contains coverage in addition to that required by the credit transaction.

(c) require that any consumer, borrower, mortgagor, purchaser, insurer, or insurance producer pay a separate charge in connection with the handling of any contract of insurance required as security for a loan on real estate or pay a separate charge to substitute the insurance policy of one insurer for that of another. This subsection (2)(c) does not include the interest that may be charged on premium loans or premium advancements in accordance with the terms of the loan or credit document and does not apply to charges that would be required when the person, depository institution, or affiliate of a depository institution is the licensed producer providing the insurance.

(d) use or disclose information relative to a contract of insurance that is required by the credit transaction:

(i) for the purpose of replacing the insurance; and

(ii) without the prior written consent of the borrower;

(e) use an advertisement or other insurance promotional material that would cause a reasonable person to mistakenly believe that the federal government or the state is responsible for the insurance sales activity of, or stands behind the credit of, the person, depository institution, or affiliate of a depository institution;

(f) require any procedures or conditions of licensed insurance producers or insurers not customarily required of those insurance producers or insurers affiliated or in any way connected with the person who lends money or extends credit.

(3) Each person that lends money or extends credit and that solicits insurance primarily for personal family or household purposes or on real and personal property subject to subsection (2) must explain to the borrower in writing that the insurance related to such credit extension may be purchased from an insurer or insurance producer of the borrower's choice, subject only to the lender's right to reject a given insurer or insurance producer as provided in subsection (2)(b). The disclosure must inform the customer that the customer's choice of insurer or insurance producer will not affect the credit decision or credit terms in any way, except that the depository institution may impose reasonable requirements concerning the creditworthiness of the insurer and the scope of coverage chosen as provided in subsection (2)(b).

(4) The commissioner may examine and investigate insurance activities of any person, depository institution, affiliate of a depository institution, or insurer that the commissioner believes may be in violation of this section. The person, depository institution, affiliate of a depository institution, or insurer shall make its insurance books and records available to the commissioner and the commissioner's staff for inspection upon reasonable notice. An affected person may submit to the commissioner a complaint or material pertinent to the enforcement of this section.

(5) Nothing in this section prevents a person, a depository institution, or an affiliate of a depository institution who lends money or extends credit from placing insurance on real or personal property in the event the mortgagor, borrower, or purchaser has failed to provide required insurance in accordance with the terms of the loan or credit document.

(6) Nothing in this section applies to credit life or credit accident and health insurance.

(7) For the purposes of this section, the terms "depository institution" and "affiliate of a depository institution" have the same meaning as provided in 32-1-109.