Can homeowner's insurance premiums be excluded from the finance charge if the consumer chooses the insurer?

Homeowner's insurance premiums cannot be excluded from the finance charge under Regulation Z if the consumer has the option to select the insurer. According to Truth in Lending Act guidelines, any costs that a borrower is required to pay as a condition of obtaining credit are considered part of the finance charge unless certain exceptions apply.

In this case, if the borrower is allowed to select their own insurer, the lender is not mandating a specific cost, and thus, the premiums for insurance would be treated as an integral part of the total costs associated with obtaining the loan. Therefore, since the borrower can shop for insurance and is not limited to a particular provider, the premiums cannot be excluded, thus making the statement that they can be excluded false.