AGO 1989-054.

• Case Date: May 01, 1989
• Court: Kansas

Kansas Attorney General Opinions 1989. AGO 1989-054. May 1, 1989ATTORNEY GENERAL OPINION NO. 89-54Judith Bravence-Stringer Consumer Credit Commissioner Landon State Office Building 900 Jackson Room 352 Topeka, Kansas 66612 Re: Consumer Credit Code--Finance Charges and Related Provisions; Consumer Credit Transaction; Other Charges and Modifications--Additional Charges; Blanket Single Interest Insurance Programs Synopsis: A charge for single interest insurance may be excluded from the finance charge pursuant to the Uniform Consumer Credit Code if all appropriate disclosures are made, the insurer waives rights to subrogation against the consumer, and the consumer is allowed to choose the insurer. K.S.A. 16a-2-501(2). The term "single interest insurance," for purposes of this statute, includes protection against physical property damage, confiscation and skip. Cited herein: K.S.A. 16a-1-301; 16a-2-501; 16a-4-106; 16a-4-302; 10 U.S.C. § 1605; 12 C.F.R. § 226.4. * * * Dear Commissioner Bravence-Stringer: You request our opinion regarding the sale of insurance in connection with consumer credit transactions. Specifically you question whether charges for certain types of coverage contained in a blanket single interest insurance program may be passed on to the consumer as an additional charge or must be included in the finance charge. The types of coverage in question are 1) all risk physical damage installment loan insurance and 2) confiscation and skip insurance. The information you have provided indicates that the physical damage insurance indemnifies the creditor against all risks of physical loss or damage, with certain exceptions, to vehicles held as collateral by the creditor for a consumer loan. The confiscation and skip insurance indemnifies the creditor against loss by reason of the creditor's inability to locate either the debtor or the vehicle or by reason of the confiscation of the vehicle by a public official. The federal reserve board has advised that the federal truth-in-lending act, 15 U.S.C. § 16059(c), and regulation Z, 12 C.F.R. § 226.4(d)(2), authorize charges for these types of coverage to be excluded from the finance charge if the consumer has the option of obtaining the insurance from a person of the consumer's choice, such option is disclosed to the consumer, other required disclosures are made, and the...