Legal Question in Credit and Debt Law in Texas

Responsibility to Pay debt

I had purchased an extended warranty on an automobile from a third party warranty company. They bill me monthly.On Dec 16,2001 I had a claim which the warranty company approved and I had the repairs done and paid the amount that the warranty didnt cover . Two months later the dealership that did the repair work called me and said that I needed to pay the balance of the debt. I asked about the warranty company and was told by the service dept at the dealership that the warranty company would reimburse

me. This was not my understanding of the policy,so I called the warranty co. and they told me they were in recievership at the present time and wouldnt pay any claims unless the court ordered them to. In the mean time they have continued to debit my checking account for their monthly payments. Am I responsible for this debt?


Asked on 2/20/02, 10:35 pm

1 Answer from Attorneys
Peter Bradie Bradie, Bradie & Bradie

Re: Responsibility to Pay debt

You are responsible for any debt your insurer fails to pay. An insurance company goes into receivership, which is the same as bankruptcy in the insurance industry. You may submit a claim for reimbursement to the receiver, which may or may not be acknowledged.

If you believe they'll come out of receivership, and wish to keep the warranty, let them continue taking out the premiums. If you doubt that the warranty will ever be worth the paper it's printed on, stop the payments.

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Answered on 2/21/02, 1:09 pm


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