State RegulationsCO specificDifficulty 2/5
A Colorado lender conditions a business loan on the borrower's purchasing property insurance from a particular agent that the lender owns. Under C.R.S. § 10-3-1105, this requirement is:
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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, the Colorado coercion-of-debtors statute, forbids requiring that insurance be purchased from any particular insurer, agent, or producer as a condition of a loan or extension of credit. The rule protects the borrower's free choice among insurers; competitive pricing or an offer of later flexibility does not make the condition lawful.
Why the other options are wrong
- A) Competitive pricing is not a defense; the statute bans the required-source condition itself, whatever the price.
- C) A promise of post-closing shopping freedom does not undo the prohibited loan condition.
- D) The protection applies to debtors generally; it is not limited to unsecured loans.
Memory hook
The loan buys the house — it never buys your insurance agent.