§ 5-4-108 — Refund or credit required - amount

(1) (a) Except as provided in
subsection (3) of this section, an appropriate refund or credit of unearned premiums
shall be made to the person entitled thereto with respect to any separate charge
made to the consumer for insurance if:

(I) The insurance is not provided or is provided for a shorter term than that
for which the charge to the consumer for insurance was computed; or

(II) The insurance terminates prior to the end of the term for which it was
written because of prepayment in full of the indebtedness or the insurance
terminates for any other reason.

(b) All consumer credit insurance shall terminate upon prepayment in full of
the indebtedness.

(2) If a refund or credit of unearned premiums is required pursuant to the
provisions of subsection (1) of this section:

(a) The original creditor, if he or she is the holder of the indebtedness at the
time of prepayment, shall either promptly make the appropriate refund or credit or
shall promptly notify the consumer and the insurer in writing that a refund or credit
is due. Upon the receipt of notice that a refund or credit is due, the insurer shall
promptly make an appropriate refund or credit of unearned premiums pursuant to
the provisions of section 10-10-110 (2), C.R.S. For purposes of this section, original
creditor means the person to whom the indebtedness was initially payable, and
insurer means every person engaged as principal, indemnitor, surety, or
contractor in the business of making contracts of insurance, excluding any licensed
insurance agent.

(b) (I) The assignee, if the indebtedness has been assigned, shall either
promptly make the appropriate refund or credit or shall promptly notify the
consumer, the original creditor, and the insurer, if known, in writing that a refund or
credit is due. For the purposes of this section, assignee means a person other than
the original creditor who at the time of prepayment holds the indebtedness.

(II) The original creditor, upon receipt of notice pursuant to subparagraph (I)
of this paragraph (b), shall either promptly make the appropriate refund or credit or
shall promptly notify the insurer in writing that a refund or credit of unearned
premiums is due.

(c) The insurer, upon the receipt of notice that a refund or credit is due
pursuant to paragraph (a) or (b) of this subsection (2), shall make an appropriate
refund or credit of unearned premiums pursuant to the provisions of section 10-10-110 (2), C.R.S., and subsection (1) of this section.

(d) An assignee or original creditor gives notice pursuant to this section upon
delivery or mailing of the notice to the last address provided to him or her. Once an
original creditor or an assignee has notified the appropriate party, as provided in
paragraphs (a) and (b) of this subsection (2), the original creditor and the assignee
shall have no further obligations.

(3) This article does not require a refund or credit of unearned premiums if:

(a) All refunds and credits due to the debtor under this article amount to less
than one dollar; or

(b) The charge for insurance is computed from time to time on the
outstanding balance of the indebtedness and the charge relates to only one
premium period.

(4) Except as otherwise required, a refund or credit is not required because:

(a) The insurance is terminated by payment of proceeds under the policy; or

(b) The original creditor or assignee pays or accounts for premiums to the
insurer in the amounts and at the times determined by the agreement between
them; or

(c) The original creditor or assignee receives directly or indirectly under any
policy of insurance a gain or advantage not prohibited by law.

(5) If a single type of insurance is terminated by the payment of proceeds
under the policy pursuant to paragraph (a) of subsection (4) of this section, a refund
or credit of unearned premiums for all other types of consumer credit insurance
issued on the same indebtedness shall be made if so required by the provisions of
this section and section 10-10-110 (2), C.R.S.

(6) A refund or credit required by subsection (1) of this section is appropriate
as to amount if it is computed according to a method prescribed or approved by the
commissioner of insurance or a formula filed by the insurer with the commissioner
of insurance at least thirty days before the consumer's right to a refund or credit
becomes determinable unless the method or formula is employed after the
commissioner of insurance notifies the insurer that he or she disapproves it.

Legislative History

Source: L. 2000: Entire article R&RE, p. 1227, � 1, effective July 1.