Colorado § 5-4-302 - Insurance on creditor's interest only.

§ 5-4-302. Insurance on creditor's interest only.

If a creditor contracts for or receives a separate charge for insurance against loss of or damage to property, the risk of loss or damage not willfully caused by the consumer is on the consumer only to the extent of any deficiency in the effective coverage of the insurance even though the insurance covers only the interest of the creditor.

Source: L. 2000: Entire article R&RE, p. 1232, § 1, effective July 1.

Editor's note: This section is similar to former § 5-4-302, as it existed prior to 2000.

ANNOTATION

A creditor named as a beneficiary in a policy on the debtor's life is entitled out of the proceeds only to the amount of the actual debt, together with interest. Where the sole purpose to be accomplished in the issuance of an insurance policy upon the life of a debtor is to secure the payment of a debt to the creditor, or where the same single purpose is accomplished by a change in beneficiary, the creditor's right to the proceeds of the policy on the death of a debtor extends no further than indemnity. Under such circumstances all proceeds from the policy beyond the debt owed the creditor plus interest and premiums paid by him, are payable to the legal representatives of the deceased debtor. Forster v. Franklin Life Ins. Co., 135 Colo. 383, 311 P.2d 700 (1957) (decided under repealed § 73-5-1, CRS 53).