DELAWARE INSURANCE DEPARTMENT

Creditor-Placed Insurance

Creditor-placed insurance (sometimes called "force-placed" insurance) is purchased by the creditor, who is the named insured (or "covered person"), after the date of the credit transaction, and protects the creditor against any risk of damage to property serving as collateral for the loan (such as a home or an automobile). It is purchased according to the terms for the loan agreement as a result of the debtor's failure to provide insurance, and the cost of the coverage is charged to the debtor.

CONSUMER BEWARE

• Creditor-placed insurance may cost more than insurance you can buy on your own. The cost of creditor-placed insurance may be added to your loan balance, and the creditor may charge you interest on it. If that happens, you will pay interest at the same rate you pay on the loan.

• Creditor-placed insurance will only pay claims to the creditor for physical damage to your property. IT WILL NOT pay any liability claims made against you, and it will not pay for any physical damage claims you make. IT WILL NOT meet the requirements of Delaware's mandatory automobile insurance law.

• The creditor may receive compensation for placing this insurance, which is included in the cost of coverage charged to you.

• You can avoid the high cost of creditor-placed coverage. By maintaining insurance on your property as required under the loan contract, you will save money.

• If the property securing the loan is an automobile, and you are having trouble finding insurance because you are considered a "high-risk", contact the Delaware Insurance Department's Consumer Services Section. We can provide you with a list of insurers writing policies for higher-than-standard risks. While these premiums are high, they may still be lower than premiums for forced-place insurance.

• The creditor MUST CANCEL creditor-placed coverage and refund a certain percentage of your premiums ("unearned premiums") if you give the creditor proof that you have bought insurance somewhere else or if you pay off the loan.