ARTICLE 2. General [18580. - 18596.]

Cal. Financial Code - FIN 2.

in effect

Cal. Financial Code - FIN § 18580. Section 18580.

A premium finance agency desiring the full authority which may be conferred by this division, shall, in respect to any lending operations other than insurance premium financing, be required to amend its articles of incorporation and meet the requirements of this division as if it were making an original application for authority to organize under this division.

Cal. Financial Code - FIN § 18581. Section 18581.

The articles of incorporation of any corporation organized under this division as a premium finance agency shall include reference to that fact.

Cal. Financial Code - FIN § 18582. Section 18582.

Capital stock of any premium finance agency shall not be less than seventy-five thousand dollars ($75,000) and need not exceed that sum regardless of the number of branch offices or business locations which may be authorized under the provisions of this division.

Cal. Financial Code - FIN § 18583. Section 18583.

Before a premium finance agency commences business or opens a branch office or place of business, there must be paid in cash, for the benefit of the agency, 100 percent of the amount of the minimum capital stock required under this chapter.

Cal. Financial Code - FIN § 18584. Section 18584.

An insurance premium finance agreement, as defined in Section 18564, may be prepared in the office of an insurance producer licensed by the Department of Insurance, and mailed or otherwise delivered to a premium finance agency for acceptance without the office of the producer thereby being constituted a place of business of the company. A producer at whose office a premium finance agreement is so prepared shall not be considered to be a broker of the company as that term is used in this division.

Cal. Financial Code - FIN § 18585. Section 18585.

In the event of any conflict in the provisions of this chapter with the provisions of any other chapter in this division, the provisions of this chapter shall control with regard to a premium finance agency or to insurance premium financing.

Cal. Financial Code - FIN § 18586. Section 18586.

The provisions of Sections 18023, 18024, 18120, 18205, 18268, 18269, 18271, 18272, 18274, and 18455 shall not apply to a premium finance agency.

Cal. Financial Code - FIN § 18587. Section 18587.

The provisions of Sections 18607, 18625, and 18626 shall not apply to any bona fide loan with a principal amount of two thousand five hundred dollars ($2,500) or more or to a premium finance agency in connection with such loans if the provisions of this section are not used for the purpose of evading this division.

Cal. Financial Code - FIN § 18588. Section 18588.

Unless the insured has notice of the assignment of a premium finance agreement, payment thereunder by him to the last known assignee of the agreement shall be binding upon all subsequent assignees. Assignment of the premium finance agreement shall not cut off any defenses which the insured would have against the company or an assignee of the agreement arising from obligations imposed by this division. The obligations and rights of a premium finance agency, under this chapter, shall also apply to the assignee of a premium finance agreement.

Cal. Financial Code - FIN § 18589. Section 18589.

At any time during the term of the premium finance agreement, but not later than one year after the last payment thereunder, the company shall upon written request of the insured, give or mail to him a written statement of the dates and amounts of payment, and the total amount, if any, unpaid thereunder. Such a statement shall be supplied once each year without charge; if any additional statement is requested, the company shall supply such statement at a charge not exceeding one dollar ($1) for each additional statement so supplied.

Cal. Financial Code - FIN § 18590. Section 18590.

Upon payment of a loan in full the company upon request shall return the premium finance agreement marked “Paid” to the insured.

Cal. Financial Code - FIN § 18591. Section 18591.

No filing of the premium finance agreement shall be necessary to perfect the validity of such agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrances, successors or assigns of the insured.

Cal. Financial Code - FIN § 18592. Section 18592.

Any downpayment which is made and which is received by the company from the insured, or from the insurance producer on behalf of the insured, shall be held by the company in trust for and in transit to the insurer, and shall be paid to the insurer, together with the balance of the premium payable pursuant to the terms of the premium finance agreement within 30 days from the effective date of the policy, or within 30 days after the receipt of a proper premium finance agreement by the company, or within 15 days after the company has mailed to the insured notice of a revised finance agreement pursuant to Section 18606, whichever is later. In the event that the premium is paid to the insurance agent or broker of record, such agent or broker of record shall not be deemed the agent of the company by reason of such payment. Upon request of the commissioner, the company shall furnish an authorization for disclosure to the commissioner of financial records of such trust accounts pursuant to Section 7473 of the Government Code.

Cal. Financial Code - FIN § 18593. Section 18593.

The downpayments received by the company under the provisions of Section 18592, may be held by the company in trust in a separate bank account or depository, or in lieu thereof, the company may maintain a time deposit with a bank, savings and loan association, or comparable institution, or obtain a certificate or certificates of deposit or a clean and irrevocable letter or letters of credit from a bank, in an amount at least equal to the average amount of such downpayments being held at any given time by the company as ascertained by the commissioner, and which are payable to the insurer pursuant to the terms of the premium finance agreement. Such deposits, certificates, or a clean and irrevocable letter or letters of credit shall be held in trust for the benefit of the insureds, as their relative interests in such downpayments may exist at any given time, and in the event of the insolvency of a company, such funds on deposit under the provisions of this section or as represented by a certificate or certificates of deposit or a clean and irrevocable letter or letters of credit shall be first applied to remitting the amount of the downpayment to the insureds on all premium finance agreements upon which the company has not then forwarded in full the downpayments collected from and then being held for insureds, and, if insufficient to pay all such amounts in full, then such funds shall be applied for such purposes pro rata.

Cal. Financial Code - FIN § 18594. Section 18594.

Any corporation organized as an industrial loan company other than a premium finance agency shall conduct any insurance premium financing business under the authority of this chapter and it shall be subject to all of the provisions of this chapter in respect to such business, as if it were a premium finance agency.

Cal. Financial Code - FIN § 18595. Section 18595.

A premium finance agency shall not incorporate the words “industrial loan company” in its corporate name, on its loan forms, or in its advertising.

Cal. Financial Code - FIN § 18596. Section 18596.

A premium finance company may issue or sell investment certificates only (a) to its customers directly in connection with the financing of premiums for those customers, provided that the aggregate finance charges, including interest paid or not paid on those investment certificates, do not exceed those charges permitted under Section 18626 and (b) to any institutional investors, governmental agency, or instrumentality as the Commissioner of Financial Protection and Innovation may designate by rule.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026