State RegulationsCO specificDifficulty 3/5
A mortgage lender in Boulder, after requiring a borrower to obtain property insurance, adds a separate handling charge that is applied only to the insurance it requires. Under C.R.S. § 10-3-1105, the charge is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
C.R.S. § 10-3-1105 goes beyond banning forced placements: it also bars any separate handling charge imposed for insurance required in connection with a loan or other obligation. A Colorado lender may require the coverage, but may not tack on an insurance-only fee, disclosed or not, according to the Colorado Division of Insurance's unfair-competition framework.
Why the other options are wrong
- A) The statute prohibits the separate charge itself; relabeling it a handling cost does not make it lawful.
- B) Disclosure does not cure the violation because the prohibition is on the charge, not on its secrecy.
- D) The charge is prohibited regardless of its size; there is no premium-comparison threshold in C.R.S. § 10-3-1105.
Memory hook
Require the coverage, but never charge extra for it.