Tex.
Fin. Code Section 342.401
Required Property Insurance
(a)
On a loan that is subject to Subchapter E with a cash advance of $300 or more, a lender may require a borrower to insure tangible personal property offered as security for the loan.(b)
On a secondary mortgage loan, a lender may require a borrower to provide property insurance as security against reasonable risks of loss, damage, and destruction.(c)
The insurance coverage and the premiums or charges for the coverage must bear a reasonable relationship to:(1)
the amount, term, and conditions of the loan;(2)
the value of the collateral; and(3)
the existing hazards or risk of loss, damage, or destruction.(d)
The insurance may not:(1)
cover unusual or exceptional risks; or(2)
provide coverage not ordinarily included in policies issued to the general public.(e)
A creditor may not require the purchase of duplicate property insurance if the creditor has knowledge that the borrower:(1)
has valid and collectible insurance covering the property; and(2)
has provided a loss payable endorsement sufficient to protect the creditor.(f)
For purposes of determining the knowledge required under Subsection (e), a creditor may rely on a written consent to purchase insurance in which the borrower is given the opportunity to disclose the existence of other coverage.
Source:
Section 342.401 — Required Property Insurance, https://statutes.capitol.texas.gov/Docs/FI/htm/FI.342.htm#342.401 (accessed Jun. 5, 2024).
