HB 5994

HOUSE BILL NO. 5994
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 1510 (MCL 500.1510), as amended by
1994 PA 6.
the people of the state of michigan enact:
Sec. 1510. (1) An insurance premium
finance agreement may provide for the payment by the insured of a delinquency
charge of $1.00 to a maximum of 5% of the amount of the delinquent installment
payment on any installment payment that is in default for a period of 10 days
or more. However, an insurance premium finance agreement shall must not
provide for the payment by the insured of a delinquency charge that exceeds
$5.00 on any installment that is in default for a period of 10 days or more for
either of the following:
(a) An insurance
premium finance agreement that finances an insurance contract primarily for a
personal, family, or household purpose.
(b) An insurance
premium finance agreement, the annual premium of which does not exceed
$10,000.00, that is issued to a nonprofit organization exempt from taxation
under section 501 of the internal revenue code of 1986, 26 U.S.C. USC 501.
(2) If a default
under subsection (1) results in the cancellation of any insurance contract
listed in the agreement, the agreement may provide for the payment by the
insured of a cancellation charge equal to the difference between any
delinquency charge imposed in respect to the installment in default and $5.00.
(3) A finance
company may impose or pass along a fee for an insured making payment by credit
card, debit card, electronic funds transfer, electronic check, or other
electronic means to offset actual costs incurred by the premium finance company
for accepting and processing payments made by electronic means subject to the
following:
(a) Any fee
collected by the premium finance company under this subsection must not exceed
the actual costs incurred by the premium finance company. However, the premium
finance company may impose a fee instead of the actual cost of the individual
payment type that does not exceed the average of the actual cost incurred for
the various types of electronic payments for which the premium finance company
imposes a fee.
(b) The premium
finance company charging, collecting, or passing through a fee under this
subsection shall notify the insured of the amount of the fee before completing
a transaction, provide an opportunity for the insured to cancel the transaction
without incurring a fee, and make available the option to make a payment on a
loan by check, cash, or money order directly to the premium finance company
without the imposition of a fee for a card payment or electronic payment.
(c) If an
insured elects to make a payment to the premium finance company by credit card,
debit card, electronic funds transfer, electronic check, or other electronic
means and a fee is imposed and collected under this subsection, the payment of
the fee must not be refundable.
(d) The fee
may be charged in addition to all other interest and fees allowed by law.
(e) The premium
finance company shall not charge a fee on any debit card or prepaid card
transaction if the payment card network on which the transaction is initiated
or processed prohibits the fee by contract, rule, or policy.
(4) As used
in this section, "actual costs" means actual third-party costs
incurred or charged for the processing of payments made by electronic means. If
a premium finance company is an affiliate of an entity that processes payments
made by electronic means, the payment processing affiliate is considered a
third party.