(2) State chartered banking institutions and federally chartered
banking institutions shall not extend credit, lease or sell property of
any kind, or furnish any services, or fix or vary the consideration for
any of the foregoing, on the condition or requirement that the customer
obtain insurance from such institution, its affiliate or subsidiary, or
a particular insurer, agent or broker, provided, however, that this
prohibition shall not prevent such institution from engaging in any
activity described in this subdivision that would not violate section
106 of the Bank Holding Company Act Amendments of 1970, as interpreted
by the Board of Governors of the Federal Reserve System. This
prohibition shall not prevent a state chartered banking institution or
federally chartered banking institution from informing a customer that
insurance is required in order to obtain a loan or credit, that loan or
credit approval is contingent upon the customer's procurement of
acceptable insurance, or that insurance is available from such
institution; provided, however, that the state chartered banking
institution or the federally chartered banking institution shall also
inform the customer in writing that his or her choice of insurance
provider shall not affect the institution's credit decision or credit
terms in any way. Such disclosure shall be given prior to or at the time
that any such institution or person selling insurance on the premises
thereof solicits the purchase of any insurance from a customer who has
applied for a loan or extension of credit.
(b) This section shall not prevent the exercise of any right to
approve or disapprove of the insurance company selected to underwrite
the insurance, except that in exercising such right, whether pursuant to
this section or any other law, such person, firm, or corporation and its
trustees, directors, officers, agents and employees shall not:
(1) discriminate against an insurance company which issues a policy of
insurance that is non-assessable as to any designated mortgagee or any
secured creditor designated as a loss payee because of the insurer's
type of organization, or
(2) refuse to accept an insurance policy because it was not negotiated
through a particular insurance company, agent or broker.
(c) No such person, firm or corporation shall, in connection with
compliance with a covenant to insure, require that the person, firm or
corporation for whom the purchase of the property is financed or to whom
a mortgage loan is made or who owns the property shall pay a fee or
other charge as a condition to accepting, during the unexpired term of a
policy then held, another policy of insurance in substitution therefor.
No state chartered banking institution or federally chartered banking
institution shall require a debtor, insurer, or insurance agent or
broker to pay a separate charge in connection with the handling of
insurance that is required in connection with a loan or other extension
of credit or the provision of another traditional banking product solely
because the insurance is being provided by an insurance agent or broker
which is not the state chartered banking institution or federally
chartered banking institution or any subsidiary or affiliate thereof.
(d) Except with respect to a flood insurance policy or a credit
unemployment insurance policy, group credit life insurance policy, a
group credit health, group credit accident or group credit health and
accident policy, or similar group credit insurance covering the person
of the insured, when a customer obtains insurance and credit from a
state chartered banking institution or federally chartered banking
institution, then the credit and insurance transactions shall be
completed through separate documents. The expense of insurance premiums
may not be included in the primary credit transaction without the
express written consent of the customer.
(e) Any state chartered banking institution or federally chartered
banking institution and any subsidiary or affiliate thereof which is
licensed to sell insurance in this state shall maintain separate and
distinct books and records relating to its insurance transactions,
including all files relating to and reflecting consumer complaints, and
such insurance books and records shall be made available to the
superintendent for inspection upon reasonable notice.
(f) For the purposes of this section, the terms "state chartered
banking institution" and "federally chartered banking institution" shall
have the same meanings as set forth in subdivision one of section
twelve-a of the banking law.
* NB Effective until September 10, 2024
* ยง 2502. Designation of particular insurer, agent or broker in
property financing transactions. (a) No person, firm or corporation
engaged in the business of financing the purchase of real or personal
property, lending money on the security thereof, or servicing a mortgage
thereon, and none of its trustees, directors, officers, agents or other
employees, shall require, as a condition precedent to financing any such
purchase or making any such loan or renewing or extending any such loan
or mortgage or performing any other act in connection therewith, that
the person, firm or corporation for whom the transaction is undertaken
negotiate any policy of insurance or renewal thereof covering such
property through a particular insurance company, agent or broker.
(b) This section shall not prevent the exercise of any right to
approve or disapprove of the insurance company selected to underwrite
the insurance, except that in exercising such right, whether pursuant to
this section or any other law, such person, firm, or corporation and its
trustees, directors, officers, agents and employees shall not:
(1) discriminate against an insurance company which issues a policy of
insurance that is non-assessable as to any designated mortgagee or any
secured creditor designated as a loss payee because of the insurer's
type of organization, or
(2) refuse to accept an insurance policy because it was not negotiated
through a particular insurance company, agent or broker.
(c) No such person, firm or corporation shall, in connection with
compliance with a covenant to insure, require that the person, firm or
corporation for whom the purchase of the property is financed or to whom
a mortgage loan is made or who owns the property shall pay a fee or
other charge as a condition to accepting, during the unexpired term of a
policy then held, another policy of insurance in substitution therefor.
* NB Effective September 10, 2024