AG Obtains Refunds For Auto Credit Insurance Purchasers
American Heritage Life Insurance Co. to return almost $1.7million to affected Texans
AUSTIN - Attorney General Greg Abbott today reached a
settlement with American Heritage Life Insurance Co. that provides
meaningful protections for certain credit insurance purchasers. Under
the agreement, more than 5,200 Texas vehicle owners who purchased
credit insurance, and whose loans terminated between 2002 and 2006,
will receive $1.7 million in refunds.
“Today’s agreement
ensures that affected credit insurance purchasers will share $1.7
million in credit insurance premium refunds,” said Attorney General
Abbott. “Texas law requires insurers to refund premiums when customers
pay off their vehicles ahead of schedule. Under this settlement,
American Heritage agrees to fully comply with the law in the future.”
Credit
insurance policies sold by American Heritage were intended to cover
vehicle payments in the event the borrower died or became disabled.
American Heritage customers bought single-premium policies which were
paid in a lump sum, typically when the insureds 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, American Heritage 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.
American Heritage is the third insurer to
reach an agreement with the Attorney General involving credit insurance
policies. The Attorney General originally took legal action against
eight companies, five of which are still pending. In May, Enterprise
Life Insurance Co. was the first company to offer refunds to eligible
customers under the settlement agreement with the Attorney General.
