SB 297 - This act allows creditors to place insurance upon collateral they receive when loaning money. The creditor must meet the following conditions to place such insurance:

1) the debtor has entered into a credit transaction with the creditor;

2) the transaction has been written in the form of a credit agreement; and

3) the creditor issues a notice to the debtor that, unless the debtor has insurance coverage on the collateral, the creditor may purchase insurance to protect the creditor's interest.

The cost of such insurance shall be charged to the debtor. If insurance is placed on the collateral, the creditor must inform the debtor within thirty days after such placement. If the debtor shows he has obtained collateral insurance, the coverage placed by the creditor shall be cancelled.

Any action to enforce a debtor's liability for collateral protection coverage shall be commenced within two years after such coverage is purchased.

This act has an effective date of January 1, 1998.

JAMES KLAHR