Articles Posted in Credit Life and Disability Policies

Credit Life Insurance policies always list specific termination times.  Here is a 1985, San Antonio Court of Appeals opinion that deals with credit life insurance and the issue of when the policy terminated.  The opinion is styled, Eagle Life Insurance v. G.I.C. Insurance Co.
This lawsuit was tried before the Judge and the judgment was in favor of G.I.C.  Eagle filed this appeal.  This Court reversed the trial Court and stated as follows:
The agreed undisputed facts are as follows.  G.I.C. and Eagle Life, entered into a reinsurance treaty.  Under the terms of this treaty, G.I.C. wrote credit life insurance policies which were re-insured with Eagle Life.  Eagle was given most of the insurance premiums and in turn agreed to reimburse G.I.C. “for all losses arising under the specific terms and provisions of the policies and certificates of insurance re-insured hereunder.”  Under the terms of the reinsurance treaty, G.I.C. retained the first $5,000.00 of each policy written, so Eagle Life’s obligation to reimburse G.I.C. was limited to amounts above $5,000.00 which G.I.C. properly paid out on valid claims.

The law office of Mark S. Humphreys, P.C. is pleased to announce the settlement of a case involving a Credit Life & Disability policy.

Mark’s client was the wife of a man who had died and she was the beneficiary named on the policy. The policy, a Credit Life & Disability policy, had been purchased when the husband bought a new vehicle. After his death, she made a claim for benefits which was denied due to the insurance company claim that her husband had misrepresented his health in his application for the policy. The problem for the insurance company was that the client had a copy of the application which did not have the misrepresentations. It appeared that the finance manager for the car dealership had altered the application in order to get commissions for selling the policy. In the end the insurance company paid more than three times the actual benefits.

Automobile dealerships are a source for a lot of Credit Life & Disability policies being sold.  The salesman and finance manager handling the sale are incentivized to sell these policies and often times have quotas they have to meet.  As a result, there is often times a lot of information on the application for these policies that is not entirely accurate.  Some rules governing these policies are found in the Texas Insurance Code, Sections 1153.151 through 1153.161.

The Law Offices of Mark S. Humphreys announces the settlement of another Credit Life & Disability policy.

In this case, Mark’s client purchased an automobile and as part of the purchase Mark’s client was offered the opportunity to purchase a ”’Credit Life & Disability” policy which would pay off his car in the event of his death or make the car payments in the event he became disabled and was unable to work. The client accepted the offer and purchased the policy.

Mark’s client suffered a disabling condition within a year and made a claim for benefits. The benefits were that the insurance company was to make the car payments until the disabling event ended. The insurance company denied the claim asserting that Mark’s client had made misrepresentations regarding his health at the time the policy was taken out.

The Law Office of Mark Humphreys announces the settlement of another case dealing with a “Credit Life & Disability” insurance policy.

This case involved a client who’s husband had purchased the policy as part of the deal when buying an expensive new truck. The client’s husband had numerous health issues that were not disclosed during the application process. About a year later the client’s husband died and the insurance company did a background check of the husbands medical history and discovered the numerous health issues. The insurance company denied the claim and a lawsuit resulted.

This case ultimately went to trial and a verdict was rendered in favor of Mark’s client, the wife of the deceased. Of significance to the trier of facts in this case was that the husband had died as the result of a broken neck when he fell off a trailer he was tying down for a trip. In other words, he death had nothing to do with the health conditions the insurance company alleged were misrepresented in the insurance application.

Fort Worth life insurance lawyers see lots of situations where a person had a credit life policy.  It is most often associated with the purchase of an automobile.

There are specific laws in the Texas Insurance Code dealing with these types of policies.  Section 1153.052, says that each individual policy or group certificate of credit life insurance and credit accident and health insurance must set forth in the policy the following:

  1. the insurer’s name and home office address

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.

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