Decrease in the premium due to an improperly rated policy, improperly calculated premium, or any other premium reduction shall be effective on the date the insurance premium finance company received the return premium from the insurance company and shall be handled as follows: (1) credit the amount of return premium to the insured's account balance as a current payment and reduce in like amount the insured's next payment(s) due. No reduction of the original finance charge is necessary when the credit of return premium is given in this manner; or (2) credit the return premium on the insured's account balance plus finance charge credit on the returned premium equal to the difference between the amount of finance charge initially charged and the amount that should have been charged at the same finance charge rate on the reduced amount financed. The insured's repayment schedule shall be revised to reflect smaller monthly
payments due to the reduction of the account balance or the finance charge and premium credits shall be applied to the final maturing installments; (3) the insurance premium finance company shall notify the insured of the decrease in premium, the effective date of the decrease and the method chosen to reflect the insured's reduced repayment obligation.
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