(a) In order for the creditor to place insurance on the collateral pledged by the debtor and pass the cost of the insurance on to the debtor:

lawyer at desk

Ask an insurance law question, get an answer ASAP!
Click here to chat with a lawyer about your rights.

Terms Used In Tennessee Code 56-49-111

  • Collateral: means personal property that is pledged as security for the satisfaction of a debt. See Tennessee Code 56-49-103
  • Credit agreement: means the written document that sets forth the terms of the credit transaction and includes the security agreement. See Tennessee Code 56-49-103
  • 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 Tennessee Code 56-49-103
  • 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 Tennessee Code 56-49-103
  • 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 Tennessee Code 56-49-103
  • 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 insurance company, association or exchange authorized to issue insurance policies in this state. See Tennessee Code 56-49-103
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(1) The creditor must have a security interest in the personal property;
(2) The credit agreement must require the debtor to maintain insurance on the collateral to protect the creditor’s interest;
(3) The credit agreement must authorize the creditor to place the insurance if the debtor fails to provide evidence of the insurance; and
(4) These requirements must be clearly disclosed to the debtor at the inception of the credit transaction.
(b) The debtor shall always have 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.
  Previous section
Next section  
 Chapter 49 Contents