Dallas Fort Worth Insurance Lawyer Blog

Most every person in Grand Prairie, Arlington, Mansfield, Fort Worth, Bedford, Mesquite, De Soto, Duncanville, Weatherford, or anywhere else in the State of Texas, has at one time or another purchased something on credit. Many times when a credit purchase is made a person will have the opportunity to purchase some sort of insurance that will pay the debt in the event that you become disabled or killed before the debt is repaid.
Almost all credit card companies will offer credit life and disability for a few extra dollars each month and charged a fee based on the total amount of the debt due on your credit card. The payment for this insurance is going to be charged and included in your credit card payment. Another place most people will see this type of insurance being offered is with a home purchase. If you do not purchase this option when you purchase the home, you will receive numerous solicitations in the mail offering this insurance to you. Another time a person is almost always requested to purchase this type of insurance is when an automobile purchase is made on credit. If this type of insurance is purchased in a car transaction it is going to be at the point of sale and is usually a lump sum and rolled into the loan for the vehicle.
Texas laws exist to regulate credit life and disability policies in Texas. The chapter of the law dealing with this is cited as the Act for the Regulation of Credit Life Insurance and Credit accident and Health Insurance.
Texas Insurance Code, Section 1153.003, defines "credit accident and health insurance" as insurance to provide indemnity for payments that become due on a specific credit transaction of a debtor when the debtor is disabled, as defined in the policy. It defines "credit life insurance" as insurance on the life of a debtor in connection with a specific credit transaction.
The above definitions are found in Chapter 1153 of the Insurance Code. The various subchapters define and describe how this type of insurance is regulated.
This is an area of insurance that is ripe for abuse. Too many times this insurance is needed most when the debtor dies. Usually it is only the debtor who knew the insurance existed. Good probate attorneys know to ask questions of survivors that will get them to search for this type of insurance to cover the debts of someone who has passed away, but too often people who die did not have estates left behind that the survivors feel it is worth getting a probate attorney to look into.
One area where people get abused quite a bit is when these policies are sold at the time of a vehicle purchase. The sales person is almost never qualified to sell this type of insurance and their motive is to just sell the policy in order to get a commission off the sale. As a result, the paperwork filled out for the purchase of this insurance is usually not completed properly with the debtor. In other words, the salesman fills out the paperwork without really going over important parts of the application. In fact the salesman will not even ask a lot of the relevent questions, rather the salesman will just fill out the paperwork in the manner they know will be acceptable for completing the sale without regard to the truthfulness or completeness of the answers to the questions. The result of doing it this way is that when a claim for benefits is made, the claim is denied because of untruthful or incomplete answers to the questions.
Experienced Insurance Law Attorney will be able to tell you plenty of "war stories" of examples where this credit life and disability insurance has been improperly handled by those selling the policies.

A DFW area (Weatherford) widow and resident of Texas, recently got a good settlement involving a credit life insurance policy.

In 2005 a man went into a local car dealership to buy a new truck. After the down payment and trade-in he financed a little over $27,000 on the truck. While closing the deal with the finance manager at the dealership he was asked to purchase a credit life policy covering the debt on the truck and he did. This type of policy is suppose to pay any remaining debt on the loan. A year later he died and the debt on the truck remained at about $23,000.

His widow applied for benefits to pay off the truck and was denied. The stated reason for denial was that her husband had lied about his medical conditions on the application for insurance. He had died from a cause that was asked about on the application. The application had a box checked wherein he was stating he had never had that medical problem, and it was signed by him. The insurance company sent a copy of the application with the box checked and the husbands signature, to his widow.

Here was the problem: The widow had her copy of the application wherein the box was not checked. As a result, it was obvious that someone with the insurance company or the car dealership had checked the box at a later date.

The widow had sought the help of an attorney who did not regularly practice Insurance Law. Right before trial the attorney insisted that the widow settle for $10,000 which the insurance company was offering. He told her she would never get more. She refused and sought another attorney.

She came to Insurance Attorney Mark humphreys who immediately re-sued the insurance company, the car dealership, and the finance manager for violations of the Texas Insurance Code, Deceptive Trade Practices, Breach of Contract, fraud, negligence, and other causes of action.

The case settled 4 months later for 6 figures.

Some people know what a Credit Life and Disability Policy is but not everybody. Essentially it is a policy of insurance that is purchased by a borrower of money and the policy is suppose to do two basic things. One, pay off the loan in the event the insured person dies and two, make the payments due on the borrowed money while a person is disabled for as long as the disability lasts.

Most of the time these are purchased in two situations. The first and most common is when someone mortgages their home. The second is when someone purchases an automobile. There are many other financial situations where a credit life and disability policy is offered to a borrower and sometimes the lender requires it to be purchased.

Another situation where these types of policies are seen is in credit card transactions. Lots of credit cards offer the coverage free of charge while others charge you a few dollars a month for the coverage. In the credit card situation it is usually a matter of knowing or remembering you have the coverage when the time comes for yourself or a surviving heir to apply for the benefit. We have not seen lots of situations where this benefit is denied or refused in a credit card situation and in the situations where it has occurred, we have been able to resolve the conflict with a few phone calls or certified letters. It has been rare to actually get involved in a lawsuit.

When these policies are part of an automobile purchase is where we have had the most litigation. These seem to almost always get denied. The reasons vary some but for the most part here is what happens. The automobile purchaser meets with the finance manager after deciding to purchase the car and the purchaser starts being offered all kinds of options for the car and financing one of which is the credit life and disability policy. The finance manager is sliding papers back and forth, checking boxes on the papers and asking questions, then telling and pointing to you a half dozen places for you to sign the papers.

The finance manager gets a commission for selling you these various options and when it comes to the insurance he justs wants to sell the policy in order to get the commission. So what he does, is either not ask you the questions that are on the application or asks you but does not pay attention to what you say, rather fills it out in such a way as to get coverage for you so that he gets his commission. He knows that most of the time it is not going to make and difference. The attitude is that if you never make a claim, "no harm, no foul". But if you do make a claim and something was not filled out correctly, your claim will be denied. It will be you, not the finance manager accused of fraud and lying on your application. After all, you signed it!

If you are paying for a credit life and disability policy that gets denied you probably have a winning case. Get to a Texas Claims Denial Attorney.