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Insurance companies that issue credit insurance may not return unearned premiums for early termination.
Investigation Source
- Nationwide
Investigation Scope
Category Information
Investigation Topics
- Over Charge
- Excessive or Unauthorized Fees
- Improper Insurance Added To Loan Payment
Product or Service
- Credit Insurance
Injury Type
- Monetary Loss
Investigation Details
This is an investigationg a potential class action lawsuit on behalf of purchasers of credit life insurance, credit disability insurance, and other types of credit insurance policies.
Credit insurance policies are designed to protect entities that finance automobile purchases (i.e., automobile dealers, banks, and finance companies) in the event that the person taking a loan out for the automobile becomes disabled or is otherwise unable to satisfy the loan. If that event were to occur, the issuer of the credit insurance policy would pay the balance of the loan to the creditor.
Purchasers of credit insurance policies typically make a one-time, lump sum premium payment at the beginning of the coverage.
It has been reported that the contracts used by certain issuers of credit insurance policies, provide that if the underlying loan is terminated early (by a pre-payment of an automobile loan, for example), the policyholder is entitled to a refund of the unearned premium.
This investigation focuses on whether certain credit insurance policy issuers do not refund the unearned premiums following the early termination of the loan, in violation of the contract and certain laws.
Credit insurance policies are designed to protect entities that finance automobile purchases (i.e., automobile dealers, banks, and finance companies) in the event that the person taking a loan out for the automobile becomes disabled or is otherwise unable to satisfy the loan. If that event were to occur, the issuer of the credit insurance policy would pay the balance of the loan to the creditor.
Purchasers of credit insurance policies typically make a one-time, lump sum premium payment at the beginning of the coverage.
It has been reported that the contracts used by certain issuers of credit insurance policies, provide that if the underlying loan is terminated early (by a pre-payment of an automobile loan, for example), the policyholder is entitled to a refund of the unearned premium.
This investigation focuses on whether certain credit insurance policy issuers do not refund the unearned premiums following the early termination of the loan, in violation of the contract and certain laws.