Likely denial of credit life claim

[gemmy]

Nebraska here.
I have a feeling that Central States Life of Omaha is going to deny my mother's credit-life benefit.
My mother passed away unexpectedly on Mar. 16th. That event automatically made me POA, and now legal guardian of my Father (who moved in with me & my family following Mom's death).
I've filed the rest of Mom's life insurance claims without a problem. Mom & dad purchased a used van on Mar 18, 2000. Dad's name is on the loan & the insurance policy also, but he does not drive. The payoff for the van is around 15K.

I filed a timely claim for the joint Gross Decreasing Life (credit-life insurance) that they bought with the vehicle loan. After 22 days, the insurance company requested in writing a list of Mom's dr's and hospital stays in the previous 2 years (ie... not before, but after coverage started!). I submitted the list the next day. CSO has since sent me form letters stating that they were still investigating the claim.

It's been almost 2 months and I've now rec'd 2 late notices, notice of default and possible repo from Ford Credit for the van. These prompted me to call and follow up on the claim. I was told by a claims rep that they *JUST* got the info back from the dr's, and submitted it to underwriting on May 10. I asked why was it taking so long to process, the rep informed me that both Mom & Dad had indicated they had not been "diagnosed, treated, or advised to be treated for a list of certain disorders within the past 2 yrs" when they signed the policy, and they were investigating that statement. Now, I know that my mother has had high blood pressure off & on for 20+yrs. This is one of the "disorders" listed. I know she would never have knowingly misrepresented this info to get the insurance. My father does not recall the finance guy (selling the insurance) asking anything about any medical conditions when they signed this policy at the dealership .

She died 2 DAYS short of the 2 yr contestability. Official cause was liver failure (another disorder on the list). She had never had any prior liver problems until a week before her death.

I need to know 3 things:
1) Is it plausible and believable that the finance guy neglected to mention anything about the 2yr conditions when my parents signed this policy?
If not,
2) Is her omission of her high blood pressure history indicative of "material misrepresentation"? Who determines if that alone would've denied her coverage?
3) Should I find a lawyer now, before the company even actually denies the claim?

Thanks,
Shari

 

[ALawyer]

I am a bit puzzled as CREDIT LIFE is usually NOT UNDERWRITTEN, but sort of highly priced and open to any buyer of a car. This sounds like a regular life policy, but decreasing term. If this involves "post-claim underwriting" you may have a break....

Get a lawyer now, it is usually easier to try to persuade a company BEFORE a decision is made, and sometimes knowing there will be a hard fight if there is a denial gets a favorable result in CLOSE cases.

If there is a material misrep - and high blood pressure probably is (it may depend HOW high) -- the company can void coverage. 2 days is close to the end of the period, but all periods are inherently arbitrary and that does not help if you are 2 short. The salesman's comments are not binding in most states.

 

[gemmy]

Verbally Denied

Thanks for the reply. I was told over the phone today that the co. is going to deny the claim and return the premium to Ford. I am using my local bar referral service to secure representation. Will update here with proceedings as they occur.

 

[totallybroke]

I found this on the web, don't know if you have already located it or not.

http://www.fordcredit.com/buy/buy_financial_prod_credit_life.jhtml

Was it Ford Credit Life?

 

[CIAA]

Credit Life

Go get'em Gemmy!

I am very familiar with this line of business. Originally, as ALawyer said, credit life was not underwritten. However, over the past 10 years state mandated rate reductions have resulted in Credit Insurance companies using what they call "simplified health applications". As you can imagine, there have been a lot of problems, most resulting from policy cancellations resulting from agents (F&I persons)not fully disclosing and explaining the application questions to the debtor. I am not a lawyer, this is not intended as legal advise and is informational only to the extent of my insurance claims knowledge on the subject. Having said that, I believe that research by you and your attorney will reveal;

1. That the F&I man was not properly licensed
2. That to rescind a policy in Nebraska, the Company must show not only a material misstatement but prove "intent to deceive".
3. That the Company will have little or nothing in the way of published and credible Underwriting Guidelines to prove "materiality".
4. That the incontestable provision may have expired. Many credit insurers have neglected, or prevented in some cases, to state that the coverage is incontestable after two years "during the lifetime of the insured" and/or "and prior to the time a claim arose".
GOOD LUCK !

 

[gemmy]

Still looking...

First, thanks for the encouragement, CIAA. Sure needed it. You have some great angles especially with the interpretation of the contestability. Good Job! Part of me wants to just fold and make the payments. That part of me is being ignored.

I got the denial letter in the mail yesterday. I have not decided on a lawyer yet, but I've talked to 2 over the phone. Both wanted to wait until I had letter in hand.

The insurance co returned 1/2 of the premium to Ford Credit. (Ford only has the loan, not the policytotallybroke, but thanks!) They are going to leave my father on the policy.

I did do some research on my own. I called the same dealership's finance dept acting like i wanted a car with the life ins. <actress on> I said my brother bought one last week. I like the idea of the life insurance. But... I have high blood pressure and diabetes, (as Mom actually did) so would I still be eligible? The woman asked me if I was on meds for these ailments. I told her the diabetes was diet-controlled and just 1 pill/day for the b.p. (again just like Mom). She told me that the insurance company trained them to go ahead with the short form (what my parents signed) if they are on one med or less for an illness. <actress off> I didn't record this conversation, but would a repeat performance in person with a video tape be entrapment?

I'll check back when I have more news for ya'll~!

 

[CIAA]

Gemmy, all I can say about that is that, when I was in the business, we had an insured in a similar situation send us a copy of a tape recorded conversation he had with the F&I person and we nearly fainted dead away, after hearing what was said.

By the way, I believe that you will find that the F&I man will be regarded as being the agent of the insurance company, regardless of his or her licensing status.

Again, good luck and if you want to speak privately with me, please feel free to send me an email.