KANSAS STATUTES AND CODES

40-282. Extension of credit to policyholder by insurance agent; conditions; request for cancellation of insurance for nonpayment of policyholder's account; exceptions.

40-282

Chapter 40.--INSURANCE Article 2.--GENERAL PROVISIONS

40-282. Extension of credit to policyholder by insurance agent;conditions; request for cancellation of insurance for nonpayment ofpolicyholder's account; exceptions.(a) Any insurance agent, as defined in K.S.A. 40-239 andamendments thereto, may extend credit to policyholders in connection withthe issuance or servicing of policies procured or negotiated by such agentbut any such credit so extended shall satisfy one of the following conditions,unless otherwise authorized by law:

(1) If credit is extended to policyholders for a period ofnot more than 30 days from the date the premium is due,and such credit is not evidenced by a written instrument, there shall be nointerest charged for such credit; or

(2) if credit is extended to policyholders for a period ofmore than 30 days from the date the premium is due,and such credit is not evidenced by a written instrument, interest may be charged forcredit extended after 30 days at a rate not exceeding 1 1/2% permonth on the unpaidbalance; or

(3) if the extension of credit to a policyholder is evidencedby a written instrument setting forth the terms, and signed by thepolicyholder, any interest charged for such credit shall be clearlystated in the instrument but it shall not exceed the legal rate ofinterest authorized in K.S.A. 16-207 and amendments thereto.

(b) Any insurance agent extending credit to policyholders as providedin subsection (a) (1) or (2) of this section may request the company tocancel such insuranceaccording to the terms of the policies for nonpayment of the policyholders'accounts, except as provided in K.S.A. 40-277 and amendments thereto, andexcept for policies paid by an escrow agent, or paid direct by an insuredto an insurance company, or where the insured specified that payment applyto a specific policy and all premiums due on that policy have been paid, orwhere the unearned premium is collateral for a loan under K.S.A. 40-2601et seq., and amendments thereto.

The insurance agent shall notify the policyholder of the requested cancellationin writing at the time the request is made to the insurance company.

Such insurance agent shall have a lien on any return premium for allpolicies of the same policyholder to the extent of amounts owed by the policyholder.

History: L. 1968, ch. 73, § 1; L. 1980, ch. 132, § 1; L. 1984,ch. 166, § 1; July 1.