I increased the deductible (both comprehensive and collision) on my autos a couple of months ago (from $100 to $2000).
I have 2 vehicles with loans from different lien holders. One vehicle is 2 years old with a loan balance of $10,000 while the other vehicle is 8 years old with a loan value of $2,200.
Several weeks after making the change, I was notified by the lien holder on the OLDER vehicle with the LOWEST loan that t hey were increasing my car note $50 per month for additional auto insurance coverage.
Upon inquiring about the notice, I was told I could not increase my deductible beyond $1000. I reviewed the lien holders consumer loan agreement for the older vehicle. It only states that suitable insurance coverage is required. However, it does not define any minimum or maximum coverage.
I received no notice from the lien holder of my newer vehicle. But out of curiosity I called to inquire if changing my deductible was going to result in the same actions taken by my other lien holder. They in essence could have cared less that I changed the deductible amounts.
I reluctantly changed my deductible back to $1000. Of course, the lien holder on my older vehicle refused to reverse the insurance charges for the time period (all 6 weeks) they claimed to have provided "gap" coverage.
They also were kind enough to send me yet another notice informing me they were rejecting my last two payments (weeks after they were auto-debited from my cking account) because they were not enough to cover the additional $50 surcharge I was being assessed for "gap insurance.
The letter also stated (after 42 months of timely payments) my account was being reported to the credit bureau as 30 days past due; assessed an additional $80 in late fees ($40 each payment) and a $50 fee for repossession initiation fee.
I paid the full amount owed because I know all to well that you cannot reason with thugs and morons.
But I would like to know if this sort of extortionism is legal.
If there are no minimum amount stated for a deductible coverage in the loan agreement, how is it enforceable?
If I made my payments for the regular loan amount can they reject the payments and report my account has past due to the credit bureau?
1 Answer from Attorneys
Get a good lawyer. If the language did not support their actions, you may have a valuable lawsuit against them. This will hinge on the exact language, so a lawyer will need to review it.
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