Monday, December 10, 2007
Attorney General Abbott Secures $1.5 Million in Credit Insurance Premium RefundsAUSTIN – Attorney General Greg Abbott reached another in a settlement with another auto credit insurance company that sold credit insurance plans to Texas vehicle owners and unlawfully retained the unearned premiums. Under the settlement announced today, Protective Life Insurance Co. will refund unearned premiums worth $1.57 million to more than 7,000 eligible Texas policyholders. The premium refunds apply to vehicle owners whose loans terminated between 2002 and 2006.
“Today’s agreement ensures that affected Texans will share more than $1.5 million in credit insurance premium refunds,” Attorney General Abbott said. “Texas law requires insurers to refund credit insurance premiums when customers pay off their vehicles ahead of schedule. Under this settlement, Protective Life agrees to fully comply with the law in the future.”
The company, headquartered in Birmingham, Ala., sold policies that were intended to cover vehicle payments in the event the borrower died or became disabled. The company’s customers bought single-premium policies which were paid in a lump sum, typically when the customers purchased their vehicles. The full cost of the credit insurance policy was bundled into the buyer’s vehicle loan. The coverage period lasted through the term of the vehicle loan, in some cases as long as six years.
Under the Texas Insurance Code, Protective Life was obligated to refund the unearned portion of the insurance premiums to those customers who paid off their loans ahead of schedule. The company, however, retained the unearned premiums.
With this settlement, six insurers have now reached agreements with the Attorney General involving credit insurance policies. The Attorney General originally took legal action against eight companies, two of which are still pending: Resource Life Insurance Co. and Universal Underwriters Life Insurance Co. Last May, Enterprise Life Insurance Co. was the first company to offer refunds to eligible customers under its settlement agreement with the Attorney General.