(a) Credit insurance may not be deemed to be a collateral sale, purchase, or agreement within the terms of section 833(2), section 846, or section 847 when the insurance is provided in accordance with the Virgin Islands Insurance Code and this section. As used in this chapter:(1) “Credit insurance” means credit life, disability, and loss-of-income insurance, or any combination of these coverages.(2) “Credit life insurance” means a life insurance policy designed to pay off a borrower’s debt if that borrower dies. The face value of a credit life insurance policy decreases proportionately with an outstanding loan amount as the loan is paid off over time until both reach zero value and “credit disability insurance” is defined as a type of disability insurance policy that makes payments if you become sick or disabled and are unable to work.(3) “Credit loss-of-income insurance” means insurance issued to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is involuntarily unemployed, as defined in the policy.
(1) “Credit insurance” means credit life, disability, and loss-of-income insurance, or any combination of these coverages.
(2) “Credit life insurance” means a life insurance policy designed to pay off a borrower’s debt if that borrower dies. The face value of a credit life insurance policy decreases proportionately with an outstanding loan amount as the loan is paid off over time until both reach zero value and “credit disability insurance” is defined as a type of disability insurance policy that makes payments if you become sick or disabled and are unable to work.
(3) “Credit loss-of-income insurance” means insurance issued to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is involuntarily unemployed, as defined in the policy.
(b) A licensee may provide credit insurance with the borrower’s consent, the form to be approved by the Commissioner of Insurance, and a copy, together with evidence of its approval by the Commissioner of Insurance, and a copy of the schedule of rates together with evidence of its approval by the Commissioner, to be filed with the Board prior to the offer or sale of the credit insurance and in an amount not in excess of the amount of the indebtedness, and, with respect to credit life or disability insurance, may collect from the borrower an amount not in excess of that permitted by the Virgin Islands Insurance Code and rules and regulations.
(c) If the loan is prepaid in full by cash, a new loan, refinancing, or otherwise, except by credit insurance, before the final installment date, the borrower shall receive a rebate of that amount computed in accordance with the formula approved by the Commissioner.
(d) When charges for the loan are precomputed in accordance with section 886, any permitted deferment charge may be computed on the combined total of the precomputed charge and the credit insurance charge. Only one deferment charge may be collected in connection with any loan contract, irrespective of the number of borrowers, and only one borrower need be insured. The amount of the deferment charge may be deducted from the principal of the loan.
(e) If life or disability insurance is provided, and if the insured borrower dies or becomes disabled during the term of the loan contract, the insurance must be sufficient to pay the total amount due on the loan, excluding unearned charges, outstanding on the date of death, or all amounts that become due on the loan during the period of disability, as the case may be, without any exception, reservation, or limitation, subject, however, to the provisions of section 850.
(f) Any credit insurance provided must be in force as soon as the loan is made. A licensee may not require credit insurance as a condition of making a loan.
(g) If a borrower procures credit insurance by or through a licensee, the statement required by section 877 must disclose the cost of the credit insurance to the borrower, and the licensee shall deliver or cause to be delivered to the borrower a copy of the policy, certificate, or other evidence thereof, within a reasonable time. If a licensee provides credit disability or loss-of-income insurance pursuant to this chapter, the licensee shall also deliver an understandable written statement to the borrower detailing the conditions under which the borrower will be entitled to make a claim under the insurance policy and the procedure to be followed in making the claim. This statement must be first approved by the Commissioner of Insurance.
(h) The amount charged to the borrower for credit life or disability insurance may not exceed the amount established by the Virgin Islands Insurance Code and regulations.
(i) Nothing in this chapter prevents a licensee from selling insurance as other business if authorized by section 794.
(j) This section does not apply to any loan of a bona fide principal amount of $50,000 or more, or to a duly licensed finance lender in connection with the loan or loans as determined in accordance with section 885.