How is car insurance premium financing regulated in Texas?

How does Texas regulate car insurance premium financing?

The Texas Legislature says the rate is capped by Finance Code Chapter 342¹, and a premium finance company may not take or receive from an insured a greater rate or charge than is authorized.¹ The Texas Legislature also says that, in connection with a premium finance agreement, an insurance charge or any other charge or fee may not be imposed unless the Insurance Code chapter on premium finance authorizes it.² A premium finance agreement must contain the amount of any down payment and the principal balance, which is the difference between total premiums and the down payment, according to the Texas Legislature.⁴ The rate limit reads:

An insurance premium finance company may not take or receive from an insured a greater rate or charge than is authorized by Chapter 342 , Finance Code.

What else does the Texas Insurance Code limit for premium finance companies?

Subject	What the Insurance Code says
Advertising	A premium finance license holder may not advertise any false, misleading, or deceptive statement about the rates, terms, or conditions of an agreement.3
Finance charge	The finance charge is computed on the balance of the premiums due after subtracting any down payment made under the agreement.1
Cancellation	A premium finance company may cancel an insurance contract in an agreement only for the insured’s failure to make a payment at the time and in the amount provided in the agreement.5
Cancellation notice	The company must mail written notice of cancellation for default, and the stated time to cure the default is 10 days minimum from mailing5.5

What the sources do not state

The sources used here do not give the actual rate permitted under the Finance Code, and they do not say what down payment any premium finance company requires.

Next step

The Texas Legislature publishes these limits on its page for the premium finance chapter of the Insurance Code. The site also has a filing lookup tool.