---
kind: "section"
citation: "12 U.S.C. § 2218"
title: "12"
title_heading: "Banks and Banking"
number: "2218"
heading: "Lines of insurance"
release: "119-102"
url: "https://uscodex.org/usc/12/2218"
units:
  - "Chapter 23 — Farm Credit System"
  - "Subchapter IV — Provisions Applicable to Two or More Classes of Institutions of the System"
  - "Part F — Sale of Insurance"
---

# §2218. Lines of insurance

- (a) **Regulatory authorization—**
  - (1) The regulations of the Farm [Credit](/usc/12/5481.md?p=7) Administration governing financially related services that the [banks](/usc/12/221a.md?p=a) and [associations](/usc/12/1828.md?p=s-4-E-i) of the Farm [Credit](/usc/12/5481.md?p=7) System may provide under subchapters I and II of this chapter may authorize the sale to any [member](/usc/12/1426a.md?p=g-1) of or borrower from any such [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i), on an optional basis, of [credit](/usc/12/5481.md?p=7) or term life and [credit](/usc/12/5481.md?p=7) disability insurance appropriate to protect the loan commitment in the event of death or disability of the debtors and other insurance necessary to protect the [member](/usc/12/1426a.md?p=g-1)’s farm or aquatic unit, but limited to, hail and multiple-peril crop insurance, title insurance, and insurance to protect the facilities and equipment of aquatic borrowers. A [member](/usc/12/1426a.md?p=g-1) or borrower shall have the option, without coercion from the [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i) of such [member](/usc/12/1426a.md?p=g-1) or borrower, to accept or reject such insurance.
  - (2) In making insurance available through private insurers, the [banks](/usc/12/221a.md?p=a) shall approve the programs of more than two insurers for each type of insurance offered in the [district](/usc/12/221a.md?p=a), if more than two insurers for each type of insurance have proposed programs to a [bank](/usc/12/1426a.md?p=g-1) that will, in all likelihood, have long-term viability and meet the requirements of [subsection (b)(2)(D)](#b-2-D). The [banks](/usc/12/221a.md?p=a) may provide comparative information relating to costs and quality of approved programs and the financial conditions of approved [companies](/usc/12/24a.md?p=g-1). [Associations](/usc/12/1828.md?p=s-4-E-i) shall offer at least two insurers for each program from among those approved by the Farm [Credit](/usc/12/5481.md?p=7) [Banks](/usc/12/221a.md?p=a), if at least two insurers have been approved in accordance with this paragraph.
- (b) **Contents of regulations—** Such regulations shall provide that—
  - (1) in any case in which insurance is required as a condition for a loan or other financial assistance from a [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i), notice be given that it is not necessary to purchase the insurance from the [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i) and that the borrower has the option of obtaining the insurance elsewhere;
  - (2) such insurance services may be offered only if—
    - (A) the [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i) has the capacity to render insurance service under this chapter in an effective and efficient manner;
    - (B) there exists the probability that any insurance program under this chapter will generate sufficient revenue to cover all costs;
    - (C) rendering insurance service will not have an adverse effect on the [bank](/usc/12/1426a.md?p=g-1)’s or [association](/usc/12/1828.md?p=s-4-E-i)’s [credit](/usc/12/5481.md?p=7) or other operations;
    - (D) the insurance program has been approved by the [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i) from among specific programs made available to it by insurers—
      - (i) meeting reasonable financial and quality of service standards; and
      - (ii) licensed under [State](/usc/12/1707.md?p=d) law to do business in the [State](/usc/12/1707.md?p=d); and
    - (E) in making insurance available through approved insurers, the [board](/usc/12/221a.md?p=a) of [directors](/usc/12/2279bb.md?p=3) of the [association](/usc/12/1828.md?p=s-4-E-i) or [bank](/usc/12/1426a.md?p=g-1) selects and offers at least two approved insurers for each type of insurance made available to the [members](/usc/12/1426a.md?p=g-1) and borrowers, if at least two insurers have been approved in accordance with [subsection (a)(2)](#a-2); and
  - (3) no [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i) shall directly or indirectly discriminate in any manner against any agent, broker, or insurer that is not affiliated with such [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i), or against any party who purchases insurance through any such nonaffiliated insurance agent, broker, or insurer.
- (c) **Continuation of existing coverage—** Notwithstanding any provision of this section to the contrary, any [bank](/usc/12/1426a.md?p=g-1) or [association](/usc/12/1828.md?p=s-4-E-i) that on December 24, 1980, is offering insurance coverages not authorized by this section may continue to sell such coverages for a period of not more than one year from such date and may continue to service such coverages until their expiration.

## Source credit

(Pub. L. 92–181, title IV, § 4.29, as added Pub. L. 96–592, title IV, § 404, Dec. 24, 1980, 94 Stat. 3448; amended Pub. L. 100–233, title IV, § 422(a), Jan. 6, 1988, 101 Stat. 1655; Pub. L. 100–399, title IV, § 411, Aug. 17, 1988, 102 Stat. 1003; Pub. L. 101–624, title XVIII, § 1834, Nov. 28, 1990, 104 Stat. 3833.)

## Notes

### Editorial Notes

### Amendments

1990—Subsec. (a)(2). Pub. L. 101–624, § 1834(1), inserted “, if more than two insurers for each type of insurance have proposed programs to a bank that will, in all likelihood, have long-term viability and meet the requirements of subsection (b)(2)(D)” before period at end of first sentence, and “, if at least two insurers have been approved in accordance with this paragraph” before period at end of third sentence.

Subsec. (b)(2)(E). Pub. L. 101–624, § 1834(2), inserted before semicolon at end “, if at least two insurers have been approved in accordance with subsection (a)(2)”.

1988—Subsec. (a). Pub. L. 100–233, § 422(a)(1), designated existing provisions as par. (1), struck out “of this Act” to conform to style of original enactment, resulting in no change in text, inserted “or borrower from” before “any such bank”, inserted provision at end giving a member or borrower the option, without coercion from the bank or association of such member or borrower, to accept or reject such insurance, and added par. (2).

Subsec. (a)(1). Pub. L. 100–399, § 411(a), substituted “subchapters I and II of this chapter” for “sections 2019, 2033, 2076, and 2097 of this title”.

Subsec. (a)(2). Pub. L. 100–399, § 411(b), substituted “Farm Credit Banks” for “Federal intermediate credit banks”.

Subsec. (b)(2). Pub. L. 100–233, § 422(a)(2), redesignated cls. (i) to (iii) as subpars. (A) to (C), respectively, and added subpars. (D) and (E).

### Statutory Notes and Related Subsidiaries

### Effective Date of 1988 Amendment

Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see section 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title.

### Continuation of Program

Pub. L. 100–233, title IV, § 422(b), Jan. 6, 1988, 101 Stat. 1656, provided that: “Notwithstanding the amendments made to section 4.29 [12 U.S.C. 2218] by subsection (a), any insurance program offered by any bank or association of the Farm Credit System on the date of the enactment of this Act [Jan. 6, 1988] that does not meet the requirements of section 4.29, as so amended, may be continued until July 1, 1988.”