N.H. Rev. Stat. Ann. § 417:4(XVI) states, in part, the following:
“(a) No creditor or lender engaged in the business of financing the purchase of real or personal property or of lending money on the security of real or personal property may require, as a condition to such financing or lending, or as a condition to the renewal or extension of any such loan or to the performance of any other act in connection with such financing or lending, that the purchaser or borrower, or the purchaser’s or borrower’s successors shall negotiate through a particular insurance company or companies, insurance agent or agents, broker or brokers, type of company or types of companies, any policy of insurance or renewal of a policy insuring such property. This provision does not prevent the exercise by any mortgagee of the right to approve on a reasonable nondiscriminatory basis only insurance companies authorized to do business in this state, selected by the borrower.
(b) There shall be no interference either directly or indirectly with such borrower’s, debtor’s or purchaser’s free choice of an agent and of an insurer which complies with the foregoing requirements, and the creditor or lender may not refuse the policy so tendered by the borrower, debtor or purchaser. Upon notice of any refusal of such tendered policy, the insurance commissioner shall order the creditor or lender to accept the tendered policy, if the commissioner determines that the refusal is not in accordance with the foregoing requirements of this subparagraph. Failure to comply with such an order of the insurance commissioner is a violation of this section.”
We have been providing Cx3750 for this requirement, in order for a lender to provide documentation that the borrower was aware of his rights to choose an insurance agent and policy of his choice. While most state laws do allow for a lender to reserve the right to reject the borrower’s choice based on uniform, reasonable standards (such as the financial ratings of the agency), the statute above only allows the lender to reject the borrower’s choice if the agency is not authorized to conduct business in New Hampshire.
Upon receiving verbal confirmation from the New Hampshire Banking Department that this is, in fact, the only case in which the borrower’s choice may be denied, we will be revising the last sentence in the New Hampshire-version of Cx3750 to stipulate this fact.
This change will be effective August 31, 2013. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
August 30, 2013