Chapter 3918. CREDIT LIFE AND ACCIDENT AND HEALTH INSURANCE
All consumer credit insurance issued or sold in connection with
loans or other credit transactions for personal, family, or household purposes
is subject to sections 3918.01 to
3918.13 of the Revised Code,
except for all of the following:
Insurance written in connection with a credit transaction that is secured by a
first mortgage or deed of trust and is made to finance the purchase of real
property, or the construction of a dwelling on such property, or to refinance a
prior credit transaction made for such a purpose;
|| Insurance that is sold as an isolated transaction
on the part of the insurer and is not related to an agreement or plan for
insuring debtors of the creditor;
|| Insurance for which no identifiable charge is made
to the debtor;
|| Insurance on
As used in sections
3918.13 of the Revised Code:
|| "Consumer credit insurance"
means credit life insurance and credit accident and health insurance.
|| "Credit life insurance" means
insurance on the life of a debtor pursuant to or in connection with a specific
loan or other credit transaction.
|| "Credit accident and health insurance" means
insurance on a debtor to provide indemnity for payments becoming due on a
specific loan or other credit transaction while the debtor is disabled as
defined in the policy.
"Creditor" means the lender of money or vendor or lessor of goods, services,
property, rights, or privileges, for which payment is arranged through a credit
transaction or any successor to the right, title, or interest of any such
lender, vendor, or lessor, and an affiliated, associate, or subsidiary of any
of them or any director, officer, or employee of any of them or any other
person in any way associated with any of them.
|| "Debtor" means a borrower of money or a purchaser
or lessee of goods, services, property, rights, or privileges for which payment
is arranged through a credit transaction.
|| "Indebtedness" means the total amount payable by a
debtor to a creditor in connection with a loan or other credit transaction.
|| "Superintendent" means the
superintendent of insurance.
Credit life insurance and credit accident and health insurance
shall be issued only in the following forms:
|| Individual policies of life insurance issued to
debtors on the term plan;
Individual policies of accident and health insurance issued to debtors on a
term plan including individual policies issued on a franchise plan, as defined
3923.11 of the Revised Code, or
disability benefit provisions in individual policies of credit life insurance;
|| Group policies of life
insurance issued to creditors providing insurance upon the lives of debtors on
the term plan;
|| Group policies
of accident and health insurance issued to creditors on a term plan insuring
debtors or disability benefit provisions in group credit life insurance
policies to provide such coverage.
|| The amount
of credit life insurance shall not exceed the initial indebtedness.
Where an indebtedness repayable in substantially equal
installments is secured by an individual policy of credit life insurance the
amount of insurance shall at no time exceed the scheduled amount of
indebtedness and, where secured by a group policy of credit life insurance,
shall at no time exceed the amount of unpaid indebtedness.
|| The total amount of indemnity payable by
credit accident and health insurance in the event of disability, as defined in
the policy, shall not exceed the aggregate of the periodic scheduled unpaid
installments of the indebtedness; and the amount of each periodic indemnity
payment shall not exceed the original indebtedness divided by the number of
The term of any credit life insurance or credit accident or
health insurance shall, subject to acceptance by the insurer, commence on the
date when the debtor becomes obligated to the creditor, or the date from which
interest or finance charges accrue if later, except that, where a group policy
provides coverage with respect to existing obligations, the insurance on a
debtor with respect to such indebtedness shall commence on the effective date
of the policy. Where evidence of insurability is required and such evidence is
furnished more than thirty days after the date when the debtor becomes
obligated to the creditor, the term of the insurance may commence on the date
on which the insurance company determines the evidence to be satisfactory, and
in such event there shall be an appropriate refund of adjustment of any charge
to the debtor for insurance. The term of such insurance shall not extend more
than fifteen days beyond the scheduled maturity date of the indebtedness except
when extended without additional cost to the debtor. If the indebtedness is
discharged due to renewal or refinancing prior to the scheduled maturity date,
the insurance in force shall be terminated before any new insurance may be
issued in connection with the renewed or refinanced indebtedness. In all cases
of termination prior to scheduled maturity, a refund shall be paid or credited
as provided in section
3918.08 of the Revised Code.
|| All credit
life insurance and credit accident and health insurance sold shall be evidenced
by an individual policy, or in the case of group insurance by a certificate of
insurance, which individual policy or group certificate of insurance shall be
delivered to the debtor.
individual policy or group certificate of credit life insurance, or credit
accident and health insurance, or both shall, in addition to other requirements
of law, set forth the name and home office address of the insurer, and the
identity by name or otherwise of the person or persons insured, the rate or
amount of payment, if any, by the debtor separately for credit life insurance
and credit accident and health insurance, a description of the amount, term,
and coverage including any exceptions, limitations, or restrictions, and shall
state that the benefits shall be paid to the creditor to reduce or extinguish
the unpaid indebtedness, and, wherever the amount of insurance may exceed the
unpaid indebtedness, that any such excess shall be payable to a beneficiary,
other than the creditor, named by the debtor or to his estate.
|| Said individual policy or group
certificate of insurance shall be delivered to the insured debtor at the time
the indebtedness is incurred, except as provided in division (D) of this
|| If said individual
policy or group certificate of insurance is not delivered to the debtor at the
time the indebtedness is incurred, a copy of the application for such policy or
a notice of proposed insurance, signed by the debtor and setting forth the name
and home office address of the insurer, the identity by name or otherwise of
the person or persons insured, the rate or amount of payment by the debtor, if
any, separately for credit life insurance and credit accident and health
insurance, a description of the amount, term, and coverage provided, shall be
delivered to the debtor at the time such indebtedness is incurred. The copy of
the application for, or notice of proposed insurance, shall refer exclusively
to insurance coverage, and shall be separate and apart from the loan, sale, or
other credit statement of account, instrument, or agreement, unless the
information required by this subsection is prominently set forth therein. Upon
acceptance of the insurance by the insurer and within thirty days of the date
upon which the indebtedness is incurred, the insurer shall cause the individual
policy or group certificate of insurance to be delivered to the debtor. Said
application or notice of proposed insurance shall state that upon acceptance by
the insurer, the insurance shall become effective as provided in section
3918.05 of the Revised Code.
policies, certificates of insurance, notices of proposed insurance,
applications for insurance, endorsements and riders providing coverage on
residents of Ohio shall be filed with the superintendent of insurance.
|| The superintendent shall
within thirty days after the filing of any such policies, certificates of
insurance, notices of proposed insurance, applications for insurance,
endorsements, and riders, disapprove any such form if the table of premium
rates charged or to be charged appears by reasonable assumptions to be
excessive in relation to benefits, or if it contains provisions which are
unjust, unfair, inequitable, misleading, deceptive, or encourage
misrepresentation of the coverage, or are contrary to any provision of the
insurance laws of Ohio or of any rule or regulation promulgated thereunder.
|| If the superintendent
notifies the insurer that the form is disapproved, it is unlawful thereafter
for such insurer to issue or use such form. In such notice, the superintendent
shall specify the reason for his disapproval and state that a hearing will be
granted within twenty days after request in writing by the insurer. No such
policy, certificate of insurance, or notice of proposed insurance, nor any
application, endorsement, or rider shall be issued or used until the expiration
of thirty days after it has been so filed, unless the superintendent gives his
prior written approval thereto.
|| The superintendent may, at any time after a
hearing held not less than twenty days after written notice to the insurer
withdraw his approval of any such form on any ground set forth in division (B)
of this section. The written notice of such hearing shall state the reasons for
the proposed withdrawal.
insurer shall not issue such forms or use them after the effective date of such
|| Any order or
final determination of the superintendent under the provisions of this section
shall be subject to judicial review as provided in section
119.12 of the Revised Code.
insurer issuing credit life insurance or credit accident and health insurance
shall file with the superintendent of insurance its schedules of premium rates
for use in connection with such insurance. Any insurer may revise such
schedules from time to time, and shall file such revised schedules with the
superintendent. No insurer shall issue any credit life insurance policy for
which the premium rate exceeds that determined by the schedules of such insurer
as then on file with the superintendent. The superintendent may require the
filing of the schedule of premium rates for use in connection with and as a
part of the specific policy filings as provided by section
3918.07 of the Revised Code.
|| Each individual policy, group
certificate, or notice of proposed insurance shall provide that in the event of
termination of the insurance prior to the scheduled maturity date of the
indebtedness, any refund of an amount paid by the debtor for insurance shall be
paid or credited promptly to the person entitled thereto; provided, that the
superintendent shall prescribe a minimum refund and no refund which would be
less than such minimum need be made.
The formula to be used in computing such refund shall be filed
with and approved by the superintendent.
|| If a creditor requires a debtor to make any
payment for credit life insurance or credit accident and health insurance and
an individual policy or group certificate of insurance is not issued, the
creditor shall immediately give written notice to such debtor and shall
promptly make an appropriate credit to the account.
|| The amount charged to a debtor for credit life or
credit accident and health insurance shall not exceed the premium charged by
the insurer, as computed at the time the charge to the debtor is determined. No
dividend or rate credit with respect to premiums payable during a calendar or
policy year shall be granted by an insurer prior to the end of such calendar or
policy year and then only retrospectively based upon experience.
All policies of credit life insurance and credit accident and
health insurance shall be delivered or issued for delivery in this state only
by an insurer authorized to do an insurance business in this state.
|| All claims
shall be promptly reported to the insurer or its designated claim
representative, and the insurer shall maintain adequate claim files. All claims
shall be settled as soon as possible and in accordance with the terms of the
claims shall be paid either by draft drawn upon the insurer or by check of the
insurer to the order of the claimant to whom payment of the claim is due
pursuant to the policy provisions, or upon direction of such claimant to one
|| No plan or
arrangement shall be used whereby any person, firm, or corporation other than
the insurer or its designated claim representative shall be authorized to
settle or adjust claims. The creditor shall not be designated as claim
representative for the insurer in adjusting claims; provided, that a group
policy holder may, by arrangement with the group insurer, draw drafts or checks
in payment of claims due to the group policyholder subject to audit and review
by the insurer.
When credit life insurance or credit accident and health
insurance is required as additional security for an indebtedness, the debtor
shall, upon request to the creditor, have the option of furnishing the required
amount of insurance through existing policies of insurance owned or controlled
by him or of procuring and furnishing the required coverage through any insurer
authorized to transact an insurance business within this state.
The superintendent may, in accordance with section
119.03 of the Revised Code, adopt
such rules and regulations as he deems appropriate, for the enforcement of
sections 3918.01 to
3918.11 of the Revised Code.
Whenever the superintendent finds that there has been a violation of sections
3918.13 of the Revised Code or any
rules or regulations adopted pursuant thereto, and after written notice thereof
and hearing given to the insurer or other person authorized or licensed by the
superintendent, he shall set forth the details of his findings together with an
order for compliance by a specified date. Such order shall be binding on the
insurer and other person authorized or licensed by the superintendent on the
date specified unless sooner withdrawn by the superintendent or a stay thereof
has been ordered by a court of competent jurisdiction.
Any party to the proceeding affected by an order of the
superintendent shall be entitled to judicial review by following the procedure
set forth in section
119.12 of the Revised Code.
Whoever violates sections
3918.13, inclusive, of the Revised
Code, shall be fined not less than one hundred nor more than one thousand
The penalty provided in this section is in addition to any
other penalty provided by law.