N.Y. Banking Law § 568: Limitation on service and other charges

§ 568. Limitation on service and other charges. 1. A premium finance

agency shall not, except as otherwise provided by law, impose, take,

receive from, reserve or charge an insured greater charges than are

permitted by this article.

2. A premium finance agency, including an insurance agent or broker

licensed as such, may, in a premium finance agreement, contract for, and

if so contracted for, the holder of the agreement may charge, receive

and collect a service charge, for financing or arranging the financing

of premiums under the agreement, computed as provided in subdivision

four.

3. An insurance agent or broker not licensed as a premium finance

agency may, in a premium finance agreement which is payable to the agent

or broker or his order at the office of a premium finance agency and

which is endorsed or otherwise transferred or assigned to such a premium

finance agency, contract for and, if so contracted for, the premium

finance agency holding the agreement may charge, receive and collect

charges for financing or arranging the financing of premiums under the

agreement, computed as provided in subdivision four.

4. (a) The service charge provided for in this section shall be

computed on the principal balance of the premium finance agreement from

the inception date of the insurance contract, the premiums for which are

advanced or to be advanced under the agreement, or from the due date of

such premiums, disregarding any period of grace or credit allowed for

payment thereof, to and including the date when the final instalment of

the premium finance agreement is payable, at not exceeding fourteen

dollars per one hundred dollars per annum, plus an additional charge of

ten dollars per premium finance agreement, which additional charge need

not be refunded upon cancellation or prepayment, provided, however, that

no insurance agent or broker or premium finance agency shall induce an

insured to become obligated under more than one premium finance

agreement for the purpose of obtaining more than one additional charge.

(b) In computing the service charge permitted by this subdivision, if

the premium finance agreement is executed later than thirty days after

the inception date, there shall be deducted from the amount of such

service charge an amount which bears the same proportion to such service

charge, as (i) the number of days from the thirtieth day after the

inception date until the day of execution of the premium finance

agreement, bears to (ii) the number of days from the inception date to

the date when the final instalment of the premium finance agreement is

payable. No deduction shall be required under this paragraph, however,

if the amount thereof is less than one dollar. For purposes of this

paragraph the term "inception date" shall mean the inception date of the

insurance contract being financed, or the due date of the premium being

financed (disregarding any period of grace or credit allowed for payment

thereof), which ever shall be earlier.

(c) Such service charge shall be computed on the principal balance of

a premium finance agreement payable in successive monthly instalments

substantially equal in amount for a period of one year. On a premium

finance agreement providing for instalments extending for a period less

than or greater than one year, the service charge shall be computed

proportionately.

(d) When a premium finance agreement provides for unequal or irregular

instalments, the service charge shall be computed at the effective rate

provided for in paragraph (a), having due regard for the schedule of

instalments.

(e) The foregoing charges shall be inclusive of all charges incident

to the premium finance agreement and for the extension of credit

provided for therein.

(f) The foregoing paragraphs of this subdivision four apply if the

premiums under only one insurance contract are advanced or to be

advanced under a premium finance agreement; if premiums under more than

one insurance contract are advanced or are to be advanced under a

premium finance agreement, the service charge shall be computed as if

the premiums under each insurance contract were advanced or to be

advanced under separate premium finance agreements.