Auto Loan Insurance Refunds

Enterprise Life Insurance Company has reached a settlement with Texas’ Attorney General Greg Abbott in regards to the credit insurance that they offered to customers on their auto loans. The company had come under fire for offering the auto loan insurance to customers that did not need the car insurance for as long as they did.

The way the insurance worked, the auto loan consumer would purchase the extra insurance to cover the payment of the auto loan should the purchaser become disabled or died. The insurance was there to benefit the consumer so that they or their survivors would not be settled with the debt.

However, the full cost of the credit auto insurance policy was bundled into the auto loan, so that it was spread out over the course of the loan. However, if the person paid the auto loan off early, they would still have paid for the insurance, even though they did not actually need it. Enterprise should have returned the premiums back to the consumers that paid their auto loans off early but they didn’t.

The settlement ended up being for $4.9 million, and would give an average of $230 back from their premiums. More than 21,000 Texans will be getting the refund. Under Texas’s auto insurance code, Enterprise was obligated to return the premium and thus with this ruling they will.

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