Credit Disability Company Liability

[wesbet]

What is the name of your state? NC

Husband off work from surgery a year and a half ago. We had two payments on our home loan and personal loan put off until the end of pay-off. Then he went back to work.

On Nov 9, 2001, he was in an auto accident and has been on permanent disability since. Insurance company has been making the payments for him to the bank. It's now time for the end pay-off.

The insurance company says that the 2 payments that we put off til end of pay-off is due and payable by US. They state that they are not responsible to pay the 2 payments for us even though he is Disabled.

Can they do this? Are they not responsible for the payments also?

And the bank has been charging an "automatic late fee" to our account each time the insurance company has not made payment on time. Do we have to pay these fees?

Also, on the Credit Disability payments.

Can the insurance company only make a Partial Payment on the $184.80? The last payment they made 1/6/03 was for $117.04 and they expect the bank to bill us the remaining balance of $67.76 Plus another late charge of $7.39 PLUS the remaining 2 payments $396.60, for a Total Balance of $514.15

Anxiously waiting your input.

 

[CIAA]

Dear Wesbet,

Q: Husband off work from surgery(2 months?)...We had two payments on our home loan and personal loan put off (extended)...Then he went back to work...(Then)he was in an auto accident and has been on permanent disability since...The insurance company says that...they are not responsible to pay the 2 payments...Can they do this? Are they not responsible for the payments also?

A: They are probably not responsible. The cost of credit disability is based on the original Monthly Benefit x Loan Term. You basically got a loan extention of 2 months, but you did not pay additional premium to extend the insurance for an additional 2 months. Therefore the insurance expires at the end of the original term. If disability coverage was in force during the timeyour husband was off 2 months for surgery you can still file for the monthly disability benefit for that period, even though the payments had been extended.

Q: And the bank has been charging an "automatic late fee" to our account each time the insurance company has not made payment on time. Do we have to pay these fees?

A: Technically yes, but procedurally perhaps not. Send the bank a certified letter, briefly explaining the disability, pointing out that because you must first be disabled for 1 month to qualify for a 1 month ins. pmt., coupled with the fact that the insurance co. needed time to handle some of the payments were "late" and each time an "automatic late fee" was charged. Since the disability coverage was finance as and made part of the loan, by the bank who is the beneficiary, you want to make sure that they do not "waive any late charges for their disabled debtors..." "Please advise me in writing if you have ever waived late charges for your customers on credit disability". Many times they have and don't want to publicize, and will waive the late charges rather than make a written misrepresentation of past practices. On its face, this seems a discriminatory practice, but that's another story.

Q: Can the insurance company only make a Partial Payment on the $184.80? The last payment they made 1/6/03 was for $117.04 and they expect the bank to bill us the remaining balance of $67.76...

A: You want to make sure that the insurance company paid all that they should pay. Based on a monthly payment stated, they should have paid $184.80 for every month (1/30th) for each day of disability from the date disability began (minus any waiting period) up to your "last payment due date" of the original loan term. You should also try to file for the two month "surgery" disability, if your disability coverage was in force at that time.