Credit Disability and Credit Life Insurance: What to Do When Your Claim Goes Unpaid

Credit disability and credit life insurance policies can be taken out on almost anything that you buy such as a boat, car or motorcycle – even things you don’t normally think about that are bought on credit would offer it through your credit card. Getting one of these policies is easy; but getting your insurance company to pay the benefits isn’t.

Getting the policy is so easy – you may have forgotten all about it

That’s what Bob Scott, a California attorney and partner with the Advocate Law Group, says. He provided an example in which consumers are very familiar:

If you think back to the last car you financed, can you even remember them talking about any of this when you completed the transaction? As many people know, one you decide to buy a car, they usually move you to a room called ‘finance’ in a car dealership. That person’s job is really to sell you the extended warranty, the credit disability and life, and the clear seal to the car – all of which have high yields to the dealer.

What consumers can do to get their claims paid

Insurance companies who write these policies are notorious for not paying benefits and have been consistently investigated by state insurance commissioners. So what can consumers do to get their claims paid? Scott continued:

You have to perfect your claim and that should be done by the individual initially. You don’t need a lawyer for that and a lawyer really shouldn’t be involved in that on these types of transactions. Consumers should find out who the carrier is, look back on their documents, complete the claim form, keep a copy for themselves and then send it certified mail to make sure they receive it.

It’s important to comply with their requirements of having an attending physician statement as well. Usually, you have to sign an authorization for the insurance company to get your records and then go ahead and give them a statement of whatever they’re going to need over the phone. Once they have all the information, they should make a claims decision in 30-60 days.

And if that doesn’t work?

Scott says that if that doesn’t work, consumers have two choices:

  1. You could get an attorney; however, I would recommend contacting them again by certified mail first – not by telephone – and demand that they make a claims decision or explain in writing why they’re not.
  2. If you don’t get satisfaction from that on the short haul, I would encourage filing a complaint with the state insurance commissioner. That’s the quickest remedy to get the responding insurance claims department to get going.

However, if all that fails or you’re unhappy with the claims decision, Scott says that consumers should “seek out a lawyer that just has general insurance claims experience because these policies and claims are just like any other disability policy or any other life insurance policy at the end of the day.”

Damages add up quickly

There any several causes of action which ensue due to the insurance company not paying the claim and a policyholder’s credit being destroyed. Scott explained:

The majority of states now have insurance bad faith laws which let you sue for an unreasonable claim denial beyond just the benefit of the policy. Depending on the state, it may allow you to sue for emotion distress, economic loss, consequential losses and attorney fees. Someone’s credit being destroyed falls into the consequential loss area as those are very direct and foreseeable results in this kind of credit transaction where the insured would suffer a great deal within a couple of months’ time. As we all know, most companies require payment in 30 days, so the damage could add up quickly.

If your insurance company hasn’t paid your valid credit disability or credit life insurance benefits, they may have acted in bad faith. To contact a qualified attorney whose practice focuses in this area of the law, please click here. Consultations are free, without obligation and are strictly confidential.

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