Insurance-regulated mortgages
128 Insurance-regulated mortgages
Subject to this section, a mortgagee under a regulated mortgage—
may require the mortgagor to enter into a contract of compulsory insurance in respect of goods subject to the mortgage; and
may require the mortgagor to enter into a contract of insurance (other than compulsory insurance) in respect of property subject to the mortgage in the names of, and for the respective rights and interests of, the mortgagee and the mortgagor against such risks as the mortgagee thinks fit—
at the expense of the mortgagor, subject to the amount financed under the regulated contract to which the mortgage relates not including any amount payable in respect of that insurance exceeding the amount payable to keep the insurance in force for a period of twelve months or the duration of the regulated contract, whichever is the lesser amount so payable.
Subsection (1) does not authorize or permit a mortgagee—
to require insurance by a particular insurer;
to require insurance for a period, against risks or subject to terms, conditions or exceptions which the mortgagee would not reasonably require if he were to arrange the insurance at his own expense; or
to require insurance for a period subsequent to that for which insurance is in force as referred to in subsection (1) against risks or subject to terms, conditions or exceptions which the mortgagee did not require in respect of the immediately preceding period.
A mortgagee shall not enter into a regulated mortgage that includes—
a condition that the mortgagor enters into a contract of insurance in respect of the mortgage not being a contract of insurance or compulsory insurance authorized by subsection (1); or
a condition that the mortgagor maintains in force a contract of insurance in respect of the mortgage, not being a contract of insurance or compulsory insurance authorized by subsection (1).
- 20 penalty units.
Where a mortgagor enters into a regulated mortgage, the mortgagor shall be deemed to have entered into the mortgage on the basis that it does not include—
a condition that he enter into a contract of insurance in respect of the mortgage, not being a contract of insurance or compulsory insurance authorized by subsection (1); or
a condition that he maintain in force a contract of insurance in respect of the mortgage, not being a contract of insurance or compulsory insurance authorized by subsection (1).
Where a mortgagor enters into a regulated mortgage that includes a condition referred to in subsection (3), the condition is void.
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