Tex. Finance Code § 342.401
This is the official text of Tex. Finance Code § 342.401, part of Texas’s Finance Code — regulates banks and other financial institutions.
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§ 342.401. REQUIRED PROPERTY INSURANCE.
Official statutory text
(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.
(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.
Status: in_force · Read it on the official government site
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