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This entry was published on 2014-09-22
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SECTION 577-A
Premium finance agreements
Banking (BNK) CHAPTER 2, ARTICLE 12-B
§ 577-a. Premium finance agreements. 1. Any amount advanced by a
premium finance agency, with regard to any insurance policy issued
pursuant to any plan established under article fifty-three of the
insurance law shall be paid either by check or draft made payable to the
insurance company, or, if the company is not known, by check or draft
made payable to the entity which pursuant to the plan established under
article fifty-three of the insurance law designates which insurer shall
insure or service the risk. The check or draft shall not be made payable
to the insurance agent or broker.

2. Where insurance coverage is procured through a wholesale producer
for insurance policies financed with a premium finance agency, other
than policies subject to subdivision one of this section:

(a) Prior to or contemporaneously with the advancement of any funds to
an insurance retail producer who has procured an insurance policy
through a wholesale producer, the retail producer shall provide the
premium finance agency with the name and address of the wholesale
producer through whom coverage was procured and, if available, the
policy number of the insurance policy being financed, in writing;

(b) The premium finance agency shall notify, in writing, the wholesale
producer and the insurance company of the gross premium, the borrower's
name and address, and, if available, the policy number, within ten (10)
business days of acceptance of the agreement;

(c) Failure by the retail producer to comply with paragraph (a) of
this subdivision shall be a violation of subsection (d) of section
twenty-one hundred twenty of the insurance law, and the retail producer
shall be liable for actual damages caused by his or her failure to
disclose;

(d) For the purposes of this subdivision, a "retail insurance
producer" or "retail producer" means an insurance producer who directly
deals with an insured; a "wholesale insurance producer" or "wholesale
producer" means the producer from whom or through whom the retail
producer has procured coverage on behalf of the insured.