Dallas Fort Worth Insurance Lawyer Blog

Mortgage holders in Grand Prairie, Weatherford, Arlington, Aledo, Azle, Fort Worth, Dallas, Irving, Hurst, Euless, Bedford, Pantego, and other places in Texas would find an interest in the case discussed below.
The United States Court of Appeals for the Fifth Circuit, issued an opinion on March 18, 2011, styled, Brenda LeMeilleur v. Monumental Life Insurance Company: Trustees of the National Homeowners Group Insurance Trust, c/o Countrywide Insurance Services, Incorporated. This case is an appeal from the district court where a ruling was handed down in favor of the insurance company. That ruling was affirmed by this appeals court.
Here are some facts:
Mrs. LeMeilleur sued the insurance company to recover an accidental death benefit from a Group Mortgage Accidental Death Policy ("Policy") which her deceased husband held.
Mrs. LeMeilleur and her husband purchased the Policy from Monumental. If Mr. or Mrs. LeMeilleur suffered an accidental death, the Policy states it would pay off the balance of the couple's home mortgage. The Policy also states that Monumental will pay the accidental death benefit when they "receive proof that the Insured died as a result of an Injury. The Policy defines an "Injury" as a "bodily Injury caused by an accident, independently of all other causes" and further stipulates that the "Injury must be the sole and direct cause of death." In September 2005, Mr. LeMeilleur fell and broke his hip, which required surgery. In July 2006, he died. According to Mr. LeMeilleur's death certificate, his death was due to a heart attack with hypertension as an underlying cause. Mrs. LeMeilleur submitted a claim for a death benefit for Mr. LeMeilleur's death, which Monumental denied. In court, Mrs. LeMeilleur argued that she was entitled to the death benefit because her husband's death was due to an insured accident - the fall. Mrs. LeMeilleur supported her contention with testimony from Dr. Milton Shaw, Mr. LeMeilleur's attending physician.
In its discussion of the case the court said, "all parts of the contract are to be taken together, and such meaning shall be given to them as will carry out and effectuate to the fullest extent the intention of the parties." "It is well established that a contract is to be construed in accordance with its plain language." They also said that policy language that is susceptible to more than one construction should be interpreted strictly against the insurer and liberally in favor of the insured. In an accidental death benefit claim, the combination of an accident and pre-existing conditions are insufficient for recovery. An accident must be more than a "proximate cause" of death, it must be the "sole proximate cause."
In this case, Mr. LeMeilleur had pre-exisiting conditions and the policy had language accepting these pre-existing conditions. Mrs. LeMeilleur claimed this kept Monumental from denying the claim. But as the court pointed out in its discussion of the case, Monumental did not deny the claim because of pre-existing illnesses or conditions. Monumental denied the claim because the accident in question, Mr. LeMeilleur's fall, was not the sole cause of death. Rather, he died due to heart failure and hypertension.
Mr. LeMeilleur's death certificate did not reference the fall and lists a heart attack as the immediate cause of death. And, Mrs. LeMeilleur's own expert, Dr. Shaw, testified that the fall was merely a contributing factor to Mr. LeMeilleur's death, not the sole cause of death. The connection between the fall and the death claim failed because there was no evidence to support her contention that the fall was the sole cause of death.
This case, or at least what appears in the written decision, does not appear to have been a hard call for the appeals court.
One thing an experienced Insurance Law Attorney would want to know more about is the language in the policy that talked about pre-existing conditions. This is brought up in the discussion of the case but is not discussed in much detail. A footnote in the case alludes to this not being adequately discussed at the trial level and thus was not subject to review by the appeals court.

When someone in Grand Prairie, Fort Worth, Dallas, Benbrook, Crowley, Cedar Hill, Newark, Cedar Hill, Weatherford, Aledo, Azle, Lake Worth, or anywhere else in Texas buys a car or truck on credit, the dealership will always offer the purchaser the option of getting a credit life and disability insurance policy. The purpose of this type of insurance policy is to pay off the loan if the purchaser dies before paying off the loan or makes the loan payments if the borrower becomes disabled while the debt is still owing.
A case from the Court of Appeals of Georgia issued an opinion on June 30, 2010, where this type of policy was the subject of a lawsuit. The style of the case is Resource Life Insurance Company v. Buckner et al. This was a class action lawsuit.
Here is some background. In early 2001, Dorothy Buckner purchased a car and financed it with a loan. As part of that transaction, Buckner bought both a credit life and a credit disability insurance policy from Resource Life Insurance Company (Resource). In November 2001, Buckner's automobile was totaled and her debt on the car was extinguished, thereby triggering the automatic cancellation of the Resource policies. At that time, Resource owed Buckner a refund of her unearned premium in the amount of $1,213.60. Based upon an alleged mathematical error by the automobile dealer who issued the refund on Resource's behalf, Buckner did not receive the entire amount she was owed.
The underlying issue in this case was whether Resource's failure to refund unearned premiums constituted a breach of the insurance contract and / or constituted a negligent or wilful breach of a legal duty owed its insureds.
To be clear; a credit life insurance policy pays the insured's car loan in the event of the insured's death; a credit disability policy makes an insured's payments on such a loan during the time the insured is totally disabled.
The record for the court to review showed that Resource credit insurance policies were sold by automobile dealers, who acted as Resource agents. The term of any given policy was synonymous with the term of the loan it covered - i.e., the insurance is in effect only so long as money remains due on the loan. Premiums are calculated based on the length of the loan. Rather than being paid on a quarterly, semi-annual or annual basis, however, these premiums were paid in their entirety, at the time the insured obtained his or her car loan.
In the event a loan terminated "early", the insured was, as a matter of law, entitled to a refund of the unearned premiums. Specifically, the "Resource Life Credit Insurance Guide," which was apparently provided to the automobile dealers that acted as Resource agents stated:
In the event an account is prepaid, a timely refund must be made. Under this circumstance, refunds are to be made without the Insured's written request. Notification of such pre-payment can be made directly by the lender or by reference to a debit on the reserve account statement.
With respect to "Cancellation Procedures," this Guide provided:
TERMINATION: Credit insurance is considered terminated when either the customer requests cancellation of the coverage or the loan is paid in full or refinanced for any reason before maturity. When Credit Insurance is terminated, a refund of unearned premium becomes due. It is the responsibility of the Group Policyholder / Agent to promptly compute and refund the unearned premium and prepare the necessary paperwork to notify the Insurance Company. FAILURE TO REFUND PREMIUM WHEN REQUIRED IS A VIOLATION OF INSURANCE LAW.
NOTICE OF CANCELLATION AND DISTRIBUTION OF REFUNDS:
Written notice by the Insured is not required to effect the cancellation when the indebtedness is paid in full or refinanced prior to the scheduled expiry date.
Dispite its legal obligation to refund unearned premiums, however, the Resource policies made such refunds contingent upon its receipt of written notice, either by or on behalf of the insured, that the insured was owed such a refund. Specifically, the policies provided, in relevant part:
Refunds: If the insurance stops before the end of the Term of Insurance, We will on written notice refund any unearned premium. We will pay it to the Creditor to reduce or pay off the Debt. Any remainder will be paid to You ... Refunds will be computed as of the date the insurance stops.
This case is based on Georgia law but Texas has law almost exactly the same. The Texas statute is found in the Texas Insurance Code, Section 1153.202.
These credit life and credit disability policies are often times the subject of litigation because many times the policy applications are filled out by salesmen whose only real goal is selling the policy so as to get a commission, rather than filling them out properly. If you have problems with one of these types of policies it is important that you seek the advice of an experienced Insurance Law Attorney as soon as possible.

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.