(a) If the retail buyer fails to present to the holder reasonable evidence that the buyer has obtained or maintained a coverage required by the retail installment contract or retail charge agreement, the holder may:
(1) obtain substitute insurance coverage that is substantially equivalent to or more limited than the coverage required; and
(2) add the amount of the premium advanced for the substitute coverage to the unpaid balance of the contract or agreement.
(b) Substitute insurance coverage under Subsection (a)(1):
(1) may be limited to coverage only of the interest of the holder or the interest of the holder and the buyer; and
(2) must be written at lawful rates and in accordance with the Insurance Code by a company authorized to do business in this state.
(c) If substitute insurance is obtained by the holder under Subsection (a), the amendment adding the premium or rescheduling the contract is not required to be signed by the retail buyer. The holder shall deliver to the buyer or send to the buyer's most recent address shown in the records of the holder specific written notice that the holder has obtained substitute insurance.
Official text of the Texas Finance Code as published by the Texas Legislative Council.