HB 1554: Collateral Protection Insurance Act; enact

When a homeowner with a mortgage fails to keep required property insurance in force, lenders and mortgage servicers often buy their own policy, called collateral protection insurance, to protect their interest in the property and charge the cost to the borrower. Georgia law currently has no dedicated framework for how this works. This bill adds a new article to Georgia's insurance code (O.C.G.A. Title 33, Chapter 24) that spells out when such coverage can start and end, how its cost must be calculated, and what practices insurers and agents are barred from. The bill limits charges to the period after a lapse in coverage, requires premiums to be based on a home's replacement cost or the loan balance, and sends excess insurance payouts back to the borrower rather than the lender. It also bans insurers from paying kickbacks or commissions to lenders and servicers for placing this insurance, requires rate filings every four years, and requires annual reporting to the Department of Insurance for larger insurers. The law would take effect January 1, 2028 and apply to policies issued or renewed on or after that date.

• Creates a new legal framework in Georgia law specifically for collateral protection insurance on mortgaged real property.
• Bars insurers from charging mortgagors for coverage before its effective date or beyond its actual term.
• Requires premiums to be based on the home's last known insured value, its replacement cost, or the unpaid loan balance, in that order of preference.
• Requires that any insurance payout above the unpaid loan balance be paid to the homeowner, not kept by the lender.
• Prohibits insurers and agents from paying commissions, kickbacks, or below-cost services to lenders or servicers in exchange for collateral protection insurance business.
• Requires insurers to refile their rates with the Department of Insurance at least every four years and file annual loss data reports for programs over $100,000 in premium.

Homeowners whose mortgage lenders place collateral protection insurance on their homes, mortgage lenders and servicers, insurance companies and agents that write or sell this coverage, investors holding interests in mortgage loans, and the Georgia Department of Insurance, which reviews rate filings and collects the required reports.

Homeowners who fall behind on their own property insurance could see clearer limits on what lenders can charge them for forced-placed coverage, and any insurance payout beyond the loan balance would go to the homeowner instead of the lender. Insurers and lenders would face new restrictions on commissions and kickbacks tied to this type of insurance.

• New Code Section 33-24-130 states the legislature's intent to separate lenders and servicers from insurers and limit unfair practices, and defines which transactions the article covers and excludes, such as business loans and lender-owned foreclosed property.
• New Code Section 33-24-131 defines key terms including 'collateral protection insurance,' 'lapse,' 'mortgagor,' 'replacement cost value,' and 'servicer.'
• New Code Section 33-24-132(a)-(c) says coverage cannot start before an insurance lapse, sets termination triggers, and bars charging mortgagors before coverage begins or past its term.
• New Code Section 33-24-132(d) sets the order for calculating coverage value (last known coverage, then replacement cost, then unpaid loan balance) and requires excess payouts to go to the mortgagor.
• New Code Section 33-24-132(e) prohibits insurers and agents from self-dealing, paying commissions to lenders or servicers, sharing premiums or risk with them, or offering contingent payments tied to profitability.
• New Code Section 33-24-132(f) requires delivery of a policy or certificate to the mortgagor with specific disclosures, including the property address, coverage amount, premium, and claims contact information.
• New Code Section 33-24-133 requires rate refiling at least every four years, separate rates for collateral protection versus voluntary insurance on foreclosed property, and annual reports to the Department of Insurance for insurers with over $100,000 in premium, including a rate filing requirement if loss ratios fall below 35 percent for two years.
• Section 3 sets the effective date as January 1, 2028, applying to policies issued, delivered, or renewed on or after that date, with contracts deemed renewed no later than their first anniversary.

1. 2026-03-19House Second Readers (House)
2. 2026-03-18House First Readers (House)
3. 2026-03-16House Hopper (House)

• Jutt Howard (R, HD-071)Primary sponsor
• Kimberly New (R, HD-040)
• David Huddleston (R, HD-072)
• Tyler Smith (R, HD-018)

• mortgage insurance
• property insurance regulation
• homeowners rights
• insurance industry rules
• Department of Insurance