Texas Insurance Code 651.164 – Restrictions On Premium Finance Agreements
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(a) A premium finance agreement may not contain any provision under which, absent default by the insured, the insurance premium finance company holding the agreement may arbitrarily or without reasonable cause accelerate the maturity of all or any part of the amount owing under the agreement.
(b) For purposes of Subsection (a), reasonable cause includes a proceeding in bankruptcy, receivership, or insolvency instituted by or against the insured or the insolvency of or suspension of business or cessation of the right to engage in business by an insurer writing policies that are financed for the insured under the premium finance agreement.
Terms Used In Texas Insurance Code 651.164
- Abstract of judgment: In a federal criminal proceeding, A certification from a U.S. District Court clerk that a judgment of restitution was entered against the defendant owing to the victim. If the defendant inherits, owns, or sells real property or holdings, these assets can then be attached at the state and local levels as well.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
(c) A license holder may not take:
(1) an instrument in which the insured waives any right accruing to the insured under this chapter;
(2) an instrument that has not been fully completed and executed by the insured;
(3) an assignment of wages as security for an insurance premium finance agreement entered into under this chapter;
(4) a lien on real property as security for a premium finance agreement entered into under this chapter, except any lien created by law on the recording of an abstract of judgment; or
(5) a confession of judgment or a power of attorney in favor of the license holder or a third person to confess judgment or to appear for an insured in a judicial proceeding.