Chapter

Chapter 105

2003 -- H 5091 SUBSTITUTE A

Enacted 07/03/03

 

A N A C T

RELATING TO INSURANCE -- FIRE INSURANCE POLICIES AND RESERVES

     

     

     Introduced By: Representative Rene R. Menard

     Date Introduced: January 16, 2003

 

   

It is enacted by the General Assembly as follows:

 

     SECTION 1. Section 27-5-3.2 of the General Laws in Chapter 27-5 entitled "Fire

Insurance Policies and Reserves" is hereby amended to read as follows:

     27-5-3.2. Property insurance. [Effective until April 1, 2003.] (a) No person, bank, or

lending institution doing business in this state, whether acting under state or federal authority,

which includes, but is not limited to: (1) a bank, savings bank, or trust company, as defined in this

title, its affiliates or subsidiaries, (2) a bank holding company, as defined in 12 U.S.C. section

1841, its affiliates or subsidiaries, (3) mortgage companies, and (4) any other individual,

corporation, partnership, or association authorized to take deposits and/or to make loans of money

under the provisions of title 19, making a mortgage loan, shall, as a condition of the mortgage or

as a term of the mortgage deed, require that the mortgagor carry property insurance on the

property which is the subject of the mortgage in excess of the replacement cost of any buildings

or appurtenances subject to the mortgage; provided, that if a mortgage is sold, transferred,

conveyed, or assigned, it shall be the responsibility of the holder of the mortgage to notify the

insurance producer issuing the property insurance policy in writing of that sale, transfer,

conveyance, or assignment. This notice shall be made in writing and shall be sent to the insurance

producer within thirty (30) days of the sale, transfer, conveyance, or assignment by registered

mail. In the event that the holder of a mortgage shall fail to notify the insurance producer who

issued the property insurance policy that is in force, in writing, of that sale, transfer, conveyance,

or assignment within thirty (30) days, the holder shall indemnify and hold the insurance producer

harmless.

     (b) Nothwithstanding any provision in this title to the contrary, no such holder of a

mortgage shall be entitled to payment of a claim under a property insurance policy for a loss to a

covered building which equals less than three thousand five hundred dollars ($3,500), and for

which such holder of a mortgage is otherwise entitled to payment, unless no liability exists as to

the mortgagor.

     27-5-3.2. Property insurance. [Effective April 1, 2003.] (a) No lending institution, as

defined in section 19-9-1, doing business in this state, its affiliates or subsidiaries, or a bank

holding company, as defined in 12 U.S.C. section 1841, its affiliates or subsidiaries, shall, as a

condition of the mortgage or as a term of the mortgage deed, require that the mortgagor carry

property insurance on the property which is the subject of the mortgage in excess of the

replacement cost of any buildings or appurtenances subject to the mortgage; provided, when in

the course of selling, transferring, conveying or assigning a mortgage, the servicing rights of the

mortgage are similarly transferred, conveyed or assigned, then and in that event it shall be the

responsibility of the holder of the mortgage to notify the insurance producer issuing the property

insurance policy and the insurer in writing of that sale, transfer, conveyance, or assignment. This

notice shall be made in writing and shall be sent to the insurance producer and the insurer within

thirty (30) days of the sale, transfer, conveyance, or assignment by mail. In the event that the

holder of a mortgage shall fail to notify the insurance producer and the insurer who issued the

property insurance policy that is in force, in writing, of that sale, transfer, conveyance, or

assignment within thirty (30) days, the holder shall indemnify and hold the insurance producer

harmless.

     (b) Notwithstanding any provision in this title to the contrary, no such holder of a

mortgage shall be entitled to payment of a claim under a property insurance policy for a loss to a

covered building which equals less than three thousand five hundred dollars ($3,500), and for

which such holder of a mortgage is otherwise entitled to payment, unless no liability exists as to

the mortgagor.

     SECTION 2. This act shall take effect upon passage.

     

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LC00632/SUB A

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