Tex. Fin. Code Section 342.406
Borrower’s Failure to Provide Required Insurance

(a)

If a borrower fails to obtain or maintain insurance coverage required under a loan contract or requests the lender to obtain that coverage, the lender may obtain substitute insurance coverage that is substantially equivalent to or more limited than the coverage originally required.

(b)

If a loan is subject to Subchapter E, the lender may obtain insurance to cover only the interest of the lender as a secured party if the borrower does not request that the borrower’s interest be covered.

(c)

Insurance obtained under this section must comply with Sections 342.407 (Requirements for Including Insurance Charge in Contract) and 342.408 (Furnishing of Insurance Document to Borrower).

(d)

The lender may add the amount advanced by the lender for insurance coverage obtained under this section to the unpaid balance of the loan contract and may charge interest on that amount from the time it is added to the unpaid balance until it is paid. The rate of additional interest may not exceed the rate that the loan contract would produce over its full term if each scheduled payment were paid on the due date.
Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.19(a), eff. Sept. 1, 1999.

Source: Section 342.406 — Borrower's Failure to Provide Required Insurance, https://statutes.­capitol.­texas.­gov/Docs/FI/htm/FI.­342.­htm#342.­406 (accessed May 26, 2025).

342.001
Definitions 342.002
Interest Computation Methods 342.003
Purchase from Mortgagee 342.005
Applicability of Chapter 342.006
Exemption for Certain Secondary Mortgage Loans 342.007
Deferred Presentment Transaction 342.008
Attempt to Evade Law 342.009
Return of Property in Sale-leaseback Transaction 342.051
License Required 342.052
Issuance of More than One License for a Person 342.053
Area of Business 342.101
Application Requirements 342.102
Bond 342.103
Investigation of Application 342.104
Approval or Denial of Application 342.105
Disposition of Fees on Denial of Application 342.106
License Term 342.151
Name and Place on License 342.152
License Display 342.153
Minimum Assets for License 342.154
License Fee 342.155
Expiration of License on Failure to Pay Fee 342.156
License Suspension or Revocation 342.157
Corporate Charter Forfeiture 342.158
License Suspension or Revocation Filed with Public Records 342.159
Reinstatement of Suspended License 342.160
Surrender of License 342.161
Effect of License Suspension, Revocation, or Surrender 342.162
Moving an Office 342.163
Transfer or Assignment of License 342.201
Maximum Interest Charge and Administrative Fee 342.202
Maximum Charge for Loan with Single Repayment 342.203
Additional Interest for Default: Regular Transaction 342.204
Additional Interest for Installment Deferment: Regular Transaction 342.205
Collection of Default or Deferment Interest 342.206
Additional Interest for Default: Irregular Transaction 342.251
Maximum Cash Advance 342.252
Alternate Charges 342.253
Maximum Interest Charge for Loan with Single Repayment 342.254
No Other Charges Authorized 342.255
Maximum Loan Term 342.256
Refund 342.257
Default Charge 342.258
Schedules for Weekly, Biweekly, or Semimonthly Installments 342.259
Loans with Larger Advances 342.260
Alternate Interest Charge Computation Methods 342.301
Maximum Interest Charge 342.302
Additional Interest for Default: Regular Transaction or Transaction Including Simple Interest 342.303
Additional Interest for Installment Deferment: Regular Transactions 342.304
Collection of Default or Deferment Interest 342.305
Additional Interest for Default: Irregular Transaction 342.306
Date of First Scheduled Installment 342.307
Amounts Authorized to Be Included in Contract 342.308
Amounts Authorized to Be Collected or Added to Loan 342.351
Refund of Precomputed Interest: Sum of the Periodic Balances 342.352
Refund of Precomputed Interest on Contract: Scheduled Installment Earnings 342.401
Required Property Insurance 342.402
Credit Life Insurance, Credit Health and Accident Insurance, or Involuntary Unemployment Insurance 342.403
Maximum Amount of Insurance Coverage 342.404
Insurance Notice 342.405
Insurance May Be Furnished by Borrower 342.406
Borrower’s Failure to Provide Required Insurance 342.407
Requirements for Including Insurance Charge in Contract 342.408
Furnishing of Insurance Document to Borrower 342.409
Lender’s Duty if Insurance Is Adjusted or Terminated 342.410
Payment for Insurance from Loan Proceeds 342.411
Insurance or Other Gain Not Interest 342.412
Action Under Subchapter Not Sale of Insurance 342.413
Required Agent or Broker Prohibited 342.414
Declination of Equal Insurance Coverage Prohibited 342.415
Effect of Unauthorized Insurance Charge 342.416
Nonfiling Insurance 342.451
Delivery of Information to Borrower 342.452
Receipt for Cash Payment 342.453
Acceptance of Prepayment 342.454
Return of Instruments to Borrower on Repayment 342.455
Agreement for More than One Loan or Cash Advance 342.456
Agreement to Modify Term of Secondary Mortgage Loan Contract 342.457
Automobile Club Membership Offered in Connection with a Loan 342.501
Obligation Under More than One Contract 342.502
Amount Authorized 342.503
Security for Loan 342.504
Confession of Judgment 342.505
Disclosure of Amount Financed and Schedule of Payments 342.506
Instrument with Blank Prohibited 342.507
Waiver of Borrower’s Right Prohibited 342.508
Maximum Loan Term 342.0515
Residential Mortgage Loan Originator Activities 342.551
Adoption of Rules 342.552
Examination of Lenders 342.553
General Investigation 342.554
Certificate 342.555
Transcript of Hearing: Public 342.556
Appointment of Agent 342.557
Payment of Examination Costs and Administration Expenses 342.558
Authorized Lender’s Records 342.559
Annual Report 342.560
Conducting Associated Business 342.601
Definitions 342.602
Disclosures to Military Borrowers 342.603
Prohibited Practices 342.604
Military Borrower 342.605
Repayment Agreement 342.1555
Grounds for Refusing Renewal 342.4021
Agreements Regarding Debt Suspension, Debt Cancellation, and Gap Waiver
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Verified:
May 26, 2025

§ 342.406. Borrower's Failure to Provide Required Ins.'s source at texas​.gov