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This entry was published on 2014-09-22
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SECTION 568
Limitation on service and other charges
Banking (BNK) CHAPTER 2, ARTICLE 12-B
§ 568. Limitation on service and other charges. 1. A premium finance
agency shall not, except as otherwise provided by law, impose, take,
receive from, reserve or charge an insured greater charges than are
permitted by this article.

2. A premium finance agency, including an insurance agent or broker
licensed as such, may, in a premium finance agreement, contract for, and
if so contracted for, the holder of the agreement may charge, receive
and collect a service charge, for financing or arranging the financing
of premiums under the agreement, computed as provided in subdivision
four.

3. An insurance agent or broker not licensed as a premium finance
agency may, in a premium finance agreement which is payable to the agent
or broker or his order at the office of a premium finance agency and
which is endorsed or otherwise transferred or assigned to such a premium
finance agency, contract for and, if so contracted for, the premium
finance agency holding the agreement may charge, receive and collect
charges for financing or arranging the financing of premiums under the
agreement, computed as provided in subdivision four.

4. (a) The service charge provided for in this section shall be
computed on the principal balance of the premium finance agreement from
the inception date of the insurance contract, the premiums for which are
advanced or to be advanced under the agreement, or from the due date of
such premiums, disregarding any period of grace or credit allowed for
payment thereof, to and including the date when the final instalment of
the premium finance agreement is payable, at not exceeding fourteen
dollars per one hundred dollars per annum, plus an additional charge of
ten dollars per premium finance agreement, which additional charge need
not be refunded upon cancellation or prepayment, provided, however, that
no insurance agent or broker or premium finance agency shall induce an
insured to become obligated under more than one premium finance
agreement for the purpose of obtaining more than one additional charge.

(b) In computing the service charge permitted by this subdivision, if
the premium finance agreement is executed later than thirty days after
the inception date, there shall be deducted from the amount of such
service charge an amount which bears the same proportion to such service
charge, as (i) the number of days from the thirtieth day after the
inception date until the day of execution of the premium finance
agreement, bears to (ii) the number of days from the inception date to
the date when the final instalment of the premium finance agreement is
payable. No deduction shall be required under this paragraph, however,
if the amount thereof is less than one dollar. For purposes of this
paragraph the term "inception date" shall mean the inception date of the
insurance contract being financed, or the due date of the premium being
financed (disregarding any period of grace or credit allowed for payment
thereof), which ever shall be earlier.

(c) Such service charge shall be computed on the principal balance of
a premium finance agreement payable in successive monthly instalments
substantially equal in amount for a period of one year. On a premium
finance agreement providing for instalments extending for a period less
than or greater than one year, the service charge shall be computed
proportionately.

(d) When a premium finance agreement provides for unequal or irregular
instalments, the service charge shall be computed at the effective rate
provided for in paragraph (a), having due regard for the schedule of
instalments.

(e) The foregoing charges shall be inclusive of all charges incident
to the premium finance agreement and for the extension of credit
provided for therein.

(f) The foregoing paragraphs of this subdivision four apply if the
premiums under only one insurance contract are advanced or to be
advanced under a premium finance agreement; if premiums under more than
one insurance contract are advanced or are to be advanced under a
premium finance agreement, the service charge shall be computed as if
the premiums under each insurance contract were advanced or to be
advanced under separate premium finance agreements.