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.