Single interest insurance placed by financial institutions.

(1) If a financial institution purchases, or causes to be issued, insurance coverage to protect its security interest in a loan or indebtedness, and pursuant to contract or other agreement the borrower is responsible for payment of the premium, the financial institution must notify the borrower within 30 days after such purchase or issuance, in writing sent by first-class mail, of the following:

(a) The financial institution has purchased or caused to be issued an insurance policy which covers only its property interest which is the security for the loan or indebtedness.

(b) The borrower may avoid any additional premium charges by purchasing an acceptable dual interest insurance policy within 30 days after this notice, which shall terminate the single interest policy as of the effective date of the dual interest policy, and that any unearned premium paid will be returned, plus interest.

(2) This section does not apply to single interest insurance policies which provide coverage for property which is in transit or for conversion, embezzlement, or secretion by the borrower.