Credit Insurance Policy

Credit policies sold in Grand Prairie, Arlington, Mansfield, Fort Worth, Dallas, or any other place in Texas are regulated by the Texas Department of Insurance and the Texas Insurance Code. This means that when one of the policies are denied when an application for benefits is made, that an experienced Insurance Law Attorney should be consulted so that a beneficiary’s rights are not wrongfully denied.
Here is a case that was strange.
This is a 2001, case that was decided by the Beaumont Court of Appeals. The style of the case is, Paula Guillory v. Service Life and Casualty Insurance Company. Here is some of the background on the case.
This is an appeal from an order granting summary judgment in favor of Service Life. The lawsuit was originally brought for numerous allegations resulting from Service Life denying a claim for benefits. The allegations included violations of the Texas Deceptive Trade Practices Act (DTPA), negligence, breach of contract, and violations of the Texas Insurance Code. The face amount of the credit life insurance policy was $21,430.80.
The gist of Paula’s allegations was that she and her father, Paul Isaac Colligan, executed an application for credit life insurance in the course of the purchase of a vehicle; that Mr. Colligan listed various physical infirmities from which he was suffering at the time; that about six months later, Mr. Colligan died of pancreatic cancer which was diagnosed only three weeks before his death; that when Paula filed to collect the insurance proceeds on the vehicle so as to pay the balance owed, she was informed by Service Life that the credit life application had been rejected because Mr. Colligan was not truthful on said application regarding his health status.
The claim made by Service Life was that Paula was not entitled to recover in the capacity in which she sued. The entirety of the substance of Service Life’s motion for summary judgment is reproduced here as follows:
“Defendant is entitled to summary judgment because the Plaintiff, Paula Guillory, is not the insured or the beneficiary under the Policy. Therefore, Plaintiff lacks an essential element to any cause of action, the legal capacity to sue.
Under Texas law there are two basis for subrogation, the first is contractual and the second is equitable. There is no basis for contractual subrogation because Paula Guillory is neither the insured nor the beneficiary under the policy. The insured is Paul I. Colligan, the first beneficiary is GMAC, and the second beneficiary is the Estate of Paul I. Colligan. Likewise, there is no basis for equitable subrogation because Paula Guillory, as the Co-Buyer on the retail installment contract, is primarily liable for the debt to GMAC.”
Service Life says it included as part of the evidence the following (1) the affidavit of Barbara Marsh, authorized representative of Service Life and Casualty Insurance Company; (2) the Retail Installment Contract, attached to the affidavit of Barbara Marsh; and (3) the Credit Life Insurance Policy, attached to the affidavit of Barbara Marsh. However, a copy of the Credit Life Insurance Policy was not to be found.
The court in discussing this case ultimately said: As party to the credit life application, Paula had capacity to bring a lawsuit against the other party to the lawsuit. Regardless of whether she was a “third-party beneficiary,” as she claims in her response, Service Life had the burden to provide summary judgment proof that Paula lacked “capacity” as a matter of law. If the credit life insurance been in effect at the time of Paul Colligan’s death, the court inferred that the terms of the policy permitted the balance of the installment contract to be paid off, thus wiping out Paula’s personal liability for the balance of the debt to GMAC.
This case can be a little confusing but illustrates the extent some insurance companies will go to keep from paying a claim

Contact Information