PA 09-134—HB 6448

Insurance and Real Estate Committee


SUMMARY: This act (1) expands disclosure requirements under the Uniform Consumer Leases Act about insurance a lease agreement may require and (2) changes the name of the act to the Consumer Leases Act.

The act also applies its insurance disclosure requirements to a lease that is subject to the Uniform Commercial Code (UCC). The UCC allows the parties to a lease to agree upon (1) who must obtain and pay for insurance and (2) the insurance beneficiary.

EFFECTIVE DATE: October 1, 2009 and, other than the name change, applicable to consumer leases entered, renewed, modified, or extended on or after October 1, 2009.


By law, a lease agreement may require a lessee to maintain (1) casualty insurance on the leased goods, (2) liability insurance against personal injury or property damage caused to others, or (3) both.

Under prior law, if a leaseholder required a lessee to maintain insurance, it had to disclose that the lessee could choose the insurer, subject to the leaseholder's right to reject the insurer for reasonable cause. But this provision did not apply if the insurance was included in the lease for no additional cost to the lessee. The act instead requires a leaseholder to make this disclosure if (1) the insurance required is not included in the lease or (2) there is an additional charge for obtaining the insurance through the leaseholder.

The act requires the leaseholder also to disclose (1) whether the insurance required is included in the lease for no additional charge and (2) that insurance policies the leaseholder offers may duplicate coverage the lessee has under his or her personal insurance policies.

By law, the disclosures must be made in a record (information inscribed on a tangible medium or stored in an electronic or other media that is retrievable in a perceivable form). If casualty insurance is neither required nor provided, the law requires the lease to state this or be accompanied by a record that substantially states, “No insurance coverage for physical damage to the leased goods, or loss of the leased goods, is provided under this lease. ” The act requires this statement and the required disclosures to be conspicuous.

When a lease obligates a lessee to pay for insurance the leaseholder provides, the law requires the leaseholder to either give a copy of the policy or insurance certificate to the lessee or arrange for it to be provided.

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