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244 BOARD OF GOVERNORS OF" THE FEDERAL RESERVE SYSTEM S-495 WASHINGTON ADDRESS OFFICIAL CDRREBPDNDENCE TD THE BOARD • l.'vlay 27, 1942 • .. . Dear Si:::-: Enclosed. for your information and files is a copy of a letter with reference • to the :?inancing of fire insurance pre?tiu.ms under Regulation ~7. Very truly yours, ~~ L. P. Bethea, Assistant. Secretary • ... • • Enclosure • TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS 245 May 15, 1942 _____ ------------Company, , Street -------- ' Gentlemen: In your letter of May 11, 1942, you asked whether the instalment financing of the premium on a three year fire insurance policy is exempted by section 8(g) of Regulation W if, upon cancellation of the policy by the finance company for default in an instalment payment on the loan contract, the unearned p~emium returnable by the insurance company on a sho1·t-ra.te cancellation basis would be only 60 per cent of the entire premium, whereas under the loan contract, the insured wo11ld owe the lender an amount equnl to 66-2/3 per cent of such pr~miu.m. .. Your inquiry requires .g_ nego:tive answer, since section 8(g) applies only in cases where the extension of credit is at all times to oe fully secured by the unearned premium returnable b.Y the insurer on cancellation of the policy. The adrninistrt.Ltion of Regulation W has been decenand, therefore, if you have further inquiries relating thereto, it is suggested tha.t you address them to the Branch of the Federal Reserve Be.nk of _··------"·• tr~lized, Very (Signed) t~tJly yours, L. P. Bethea L. P. Bethea, Assistant Secr~tarJ • • • •
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