Attorney General Greg Abbott today reached a settlement with an automobile credit insurance company that unlawfully withheld insurance premiums from than 12,000 Texans who paid off their vehicle loans early. With today's agreement, the Office of the Attorney General has now settled with eight out of the nine auto credit insurance companies it has investigated for similar practices.
Under the terms of today's settlement, Universal Underwriters Life Insurance Co. agreed to refund insurance premiums worth $2.4 million to Texas policyholders whose loans terminated between 2002 and 2006. The company also will pay $125,000 in attorneys' fees to the state.
The Overland Park, Kan., company sold policies that were intended to cover vehicle payments in the event the borrower died or became disabled. Customers who bought single-premium policies paid for the insurance in a lump sum, typically when they purchased their vehicles. The full cost of the credit insurance policy was bundled into the buyer's vehicle loan and the coverage period lasted through the term of the vehicle loan, in some cases as long as six years.
Under the Texas Insurance Code, Universal Underwriters was obligated to refund the insurance premiums' unearned portion to those customers who paid off their loans early. The company, however, retained the unearned premiums.