Texas Finance Code 342.401 – Required Property Insurance
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(a) On a loan that is subject to Subchapter E with a cash advance of $300 or more, a lender may require a borrower to insure tangible personal property offered as security for the loan.
(b) On a secondary mortgage loan, a lender may require a borrower to provide property insurance as security against reasonable risks of loss, damage, and destruction.
Terms Used In Texas Finance Code 342.401
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Personal property: All property that is not real property.
- Property: means real and personal property. See Texas Government Code 311.005
- Written: includes any representation of words, letters, symbols, or figures. See Texas Government Code 311.005
(c) The insurance coverage and the premiums or charges for the coverage must bear a reasonable relationship to:
(1) the amount, term, and conditions of the loan;
(2) the value of the collateral; and
(3) the existing hazards or risk of loss, damage, or destruction.
(d) The insurance may not:
(1) cover unusual or exceptional risks; or
(2) provide coverage not ordinarily included in policies issued to the general public.
(e) A creditor may not require the purchase of duplicate property insurance if the creditor has knowledge that the borrower:
(1) has valid and collectible insurance covering the property; and
(2) has provided a loss payable endorsement sufficient to protect the creditor.
(f) For purposes of determining the knowledge required under Subsection (e), a creditor may rely on a written consent to purchase insurance in which the borrower is given the opportunity to disclose the existence of other coverage.