Articles Posted in Credit Life and Disability Policies

Stephenville insurance lawyers know that Credit Life and Disability claims are denied way too often.  The reason for denial is almost always the allegation that there was a misrepresentation in the policy application.  This issue is discussed in a 1983, Houston Court of Appeals [1st Dist.] opinion.  The opinion is styled, Cartusciello v. Allied Life Insurance Company of Texas.

The facts are undisputed.  Cartusciello applied for and was issued a policy from Allied Life on March 7, 1978.  She died on March 8 from coronary thrombosis with lymphatic leukemia listed as a secondary cause of death.  A claim for benefits was made.  The claim was denied due to health status misrepresentations in the application.

Allied Life filed a motion for summary judgment which was granted by the Court.

Insurance lawyers in Menard, Junction, Mason, Fredricksburg, and Kerrville need to read this case from the Southern District Court, Houston Division.  It is styled, Ruben N. Saenz, Individually and as Representative of the Estate of Decideria Saenz, Deceased v. Transamerica Life Insurance Company.

This lawsuit arise out of the denial of an insurance claim for credit life insurance purchased at the time a car was purchased and financed.  Saenz wife died and Ruben Saenz made the claim for benefits.  Transamerica filed a motion to dismiss the case alleging that Saenz does not have proper standing to file the lawsuit.

Because Transamerica’s motion contains factual evidence, the court treats the motion as a factual attack.  As a factual attack, there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of power to hear the case.

Burleson insurance attorneys will see potential new clients come in their office with issues related to “credit life” insurance. This is a type of insurance that pays off a debt in the event of the death of the insured. A 1998, Houston Court of Appeals [1st Dist.] opinion gives us something to learn about these types of policies. The style of the case is, Norman v. League City National Bank and Life of America Insurance Company. Here is what the case tell us.

Mr. Norman applied for and obtained two loans from the Bank. In connection with both loans, he applied for and obtained credit life insurance from Life of America Insurance Company. Mr. Norman died before making any payments on either loan. The Bank submitted a claim to Life of America, but the claim was denied. The Bank then filed suit against Life of America for payment under the insurance policies. The Bank also filed suit in probate court against Mr. Norman’s estate and Mrs. Norman for payment of the loans. Mrs. Norman then filed suit against the Bank and Life of America asserting claims under the Texas Insurance Code, the DTPA, and for breach of warranty. All actions by all parties were consolidated in the probate court.

The Bank and Life of America eventually settled their claims without notifying or involving Mrs. Norman. The trial court granted motions for summary judgment in part, holding that the claims asserted by Mrs. Norman were without merit as a matter of law, but the court also found Mrs. Norman was a “prevailing party” under the DTPA and was therefore entitled to recover reasonable attorney’s fees. All parties appealed.

Duncanville insurance attorneys need to be able to discuss credit disability issues with a prospective client. A 1996, Austin Court of Appeals opinion helps to understand credit disability issues. The case is styled, American National Insurance Co. v. Paul. Here is some of the relevant information.

The Pauls purchased a van from Dodge. In the negotiations, Mr. Paul asked the salesman whether the purchase price included credit disability insurance. The salesman did not know. There was no further discussion regarding credit disability insurance. The Pauls came into the car dealership later, stated that they were in a hurry and needed to buy the van over the lunch hour. The Pauls met the finance agent who prepared documents which included an application for credit disability insurance provided by American National. The total purchase price included premium payments for this coverage. The finance agent did not orally disclose the existence of the credit insurance application and the Pauls did not read the paperwork.

The insurance application contained a paragraph entitled “Applicant’s Statement” which required the applicant to affirm that she was in good health and had not consulted a doctor within three years for certain conditions. Mrs. Paul signed the statement even though at the time she suffered from Lou Gehrig’s disease. As of April 1, 1994, Mrs. Paul became permanently and totally disabled and unable to continue working. On May 5, 1995, she applied for disability insurance benefits pursuant to the credit disability insurance policy which American National denied. When American National discovered her condition, they refunded the premium payment to Chrysler Credit which in turn refunded it to the Pauls.

All insurance cases have to looked at closely by insurance attorneys. Not every time an insurance company denied a claim means that the insurance company has breached its duty of good faith and fair dealing. The 2006, Texas Supreme Court case Minnesota Life Insurance Company v. Vasquez is a good illustration of this. Here is the relevant information on this case.

Minnesota Life issued a Mortgage Accidental Death Insurance policy to Joe and Elia Vasquez, promising to pay their home mortgage in the event either died due to an accident. In June 2000, Joe Vasquez became ill, was hospitalized, suffered a seizure, and lapsed into a coma. Twelve days later, he emerged from the coma and was transferred to a hospital room. Later that day, while no one else was present, he apparently fell, hit his head, and died.

On October 6, 2000, Elia Vasquez filed a claim with Minnesota Life requesting payment of the balance due on her mortgage (about $41,000) and submitted copies of the death certificate and autopsy report. After reviewing the documents, Minnesota Life sought advice from a medical consultant as to whether Mr. Vasquez’s death resulted from an accident “independently of all other causes,” as required by the policy. The consultant advised that he needed to see the relevant medical records.

Aledo insurance law lawyers need to be able to discuss how insurance companies interpret their policies that provide coverage for “total disability.” An old 1932 case from what was then called the Court of Commission of Appeals of Texas, Section A, is a good place to start reading. The style of the case is Kemper v. Police & Firemen’s Ins. Ass’n. Here is some information from that case.

The Kemper sued the insurer to recover $2,000 alleged to be due as insurance on the life of William H. Kemper, deceased husband, on a contract of insurance issued by the insurer to the deceased during his lifetime, in which certificate Kemper was named beneficiary. Trial in the district court with a jury resulted in a verdict and judgment for Kemper for the full amount of the policy. The policy of insurance made the basis of this suit contains, among others, the following provisions:

“Any and all such payments or liability to pay shall be and is in accordance with, subject to, each and all of the provisions of the by-laws of said association and of the provisions of any and all amendments, alterations and new issues of said by-laws, which said by-laws are hereby referred to and made a part hereof as fully as if they were recited at length over the signatures hereto affixed as soon as such amendments, alterations or new issues of said by-laws respectively are or may be duly adopted, and the said William H. Kemper hereby and by the acceptance hereof agrees to abide and be bound by said by-laws and each of them and by any and all lawful amendments, alterations and new issues thereof or of any of them.”

Tarrant County insurance attorneys need to be able to interpret policies when discussing possible cases with clients. The Texarkana Court of Appeals issued an opinion in a 1967 case, styled Willeford v. Home Indemnity Company that is helpful to read. Here is some of the relevant information.

Lewis Willeford, as plaintiff, sued defendant insurance company for $10,000.00 on an insurance policy covering defendant’s deceased wife, Cordia Willeford, allegedly due as a death indemnity benefit under said policy. Plaintiff and defendant both filed motions for summary judgment and the trial court entered summary judgment for defendant and denied plaintiff’s motion for summary judgment. However it appears that there was no dispute that plaintiff was entitled to recover $3,500.00 for the loss of sight of one eye sustained by Mrs. Willeford and the summary judgment awarded this amount to plaintiff. Plaintiff appealed, contending that he is entitled to judgment for $10,000.00, rather than $3,500.00.

Defendant issued its Family Automobile Policy to Lewis Willeford effective August 15, 1964, with endorsement 157 M. Under such endorsement, Willeford contends that he is entitled to the principal sum of $10,000.00 as a result of the death of his wife, Cordia Willeford, which occurred more than 90 days after the hereinafter referred to accident. The policy of insurance and endorsement provided in part as follows:

Aledo insurance attorneys need to know how the court interpret “total disability” in an insurance policy. The 1961, Texas Supreme Court case styled, Prudential Insurance Company of America v. Tate is a good case to read for understanding. Here is some of the relevant information.

This policy provided for certain benefits to be paid to Tate in the event he was disabled before reaching the age of 60 years. It was stipulated that Tate was under 60 years of age at the time he claimed he became totally and permanently disabled. Upon answer to special issues in favor of Tate by the trial jury, the trial court granted Tate’s motion for judgment on the verdict for the sum of $2,922, due under the terms of the policy, and $350.64 as 12% penalty provided by statute for failure of Prudential to pay upon demand by Tate.

This court held that the lower courts were in error in determining the amount due under the terms of the policy and reversed the judgments of both lower courts and remand the cause to the trial court.

Dallas life insurance attorneys will find this case valuable to know. It is a 2006, Texas Supreme Court case styled, Minnesota Life Insurance Company v. Vasquez. Here is the relevant information.

In November 1998, Minnesota Life issued a Mortgage Accidental Death Insurance policy to Joe and Elia Vasquez, promising to pay their home mortgage in the event either died due to an accident. In June 2000, Joe Vasquez became ill, was hospitalized, suffered a seizure, and lapsed into a coma. Twelve days later, he emerged from the coma and was transferred to a hospital room. Later that day, while no one else was present, he apparently fell, hit his head, and died.

On October 6, 2000, Elia Vasquez filed a claim with Minnesota Life requesting payment of the balance due on her mortgage (about $41,000) and submitted copies of the death certificate and autopsy report. After reviewing the documents, Minnesota Life sought advice from a medical consultant as to whether Mr. Vasquez’s death resulted from an accident “independently of all other causes,” as required by the policy. The consultant advised that he needed to see the relevant medical records.

Dallas life insurance lawyers need to know a basic rule of life insurance. This rule is the designated beneficiary must have an insurable interest in the life of the insured.

Beginning in an 1894 case, the Texas Supreme Court has said many times that it is well settled that a life insurance beneficiary must have an insurable interest in the insured’s life.

The basis for this rule is twofold: