State RegulationsCO specificDifficulty 2/5
A Colorado Springs lender conditions a commercial loan on buying property insurance through a specified agency and then adds a separate charge for 'handling' the required coverage. Under C.R.S. 10-3-1105, what is the status of the handling charge?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
C.R.S. 10-3-1105 addresses coercion of debtors and bars a separate handling charge for insurance that the debtor is required to carry in connection with a loan. Requiring the coverage and charging extra to place it are distinct wrongs, and disclosure in the loan papers does not legitimize the charge under Colorado law.
Why the other options are wrong
- A) Administrative convenience does not authorize the charge; the statute prohibits it outright for required insurance.
- C) Disclosure does not cure the violation; the prohibition applies regardless of what the loan documents say.
- D) The charge is a problem precisely because the insurance is required; the statute targets charges on coverage forced as a loan condition.
Memory hook
Required coverage, no extra grab - handling charges are banned.