Robinson v. Volunteer State Life Ins. Co., 70418

• Decision Date: 02 July 1985
• Docket Number: No. 70418,70418
• Citation: 333 S.E.2d 171,175 Ga.App. 292
• Parties: ROBINSON v. VOLUNTEER STATE LIFE INSURANCE COMPANY.
• Court: Georgia Court of Appeals

Page 171

333 S.E.2d 171

175 Ga.App. 292

ROBINSON v. VOLUNTEER STATE LIFE INSURANCE COMPANY.

No. 70418.

Court of Appeals of Georgia.

July 2, 1985.

Jacqueline L. Payne, Decatur, for appellant.

Christopher D. Parker, Tucker, Dennis M. Hall, Atlanta, for appellee.

BIRDSONG, Presiding Judge.

The appellant Theresa Robinson borrowed money from the Georgia Department of Education Credit Union and became disabled while the loan was in debt. She submitted a timely claim for benefits under her credit health and accident insurance in order to pay off her loan, but was refused because the policy excludes coverage of disability caused by a pre-existing condition. It is undisputed that the appellant Robinson never received any notice of such an exclusionary provision and never was given a copy of the insurance policy or certificate of insurance. The authorizing statute requires that the individual policy or group certificate of insurance "shall be delivered to the insured debtor ..." OCGA § 33-31-7(c) and see OCGA § 33-31-7(d). On the issue of coverage, the trial court denied summary judgment to appellant, notwithstanding the decision in Investor's Nat. Life Ins. Co. v. Norsworthy, 160 Ga.App. 340, 287 S.E.2d 66, and granted summary judgment to the appellee Volunteer State Life Insurance Company because unlike the policy in Norsworthy, the policy was a blanket policy automatically extended to credit union borrowers, the premiums for which were paid by the credit union (not appellant Robinson) based upon the amount of loans outstanding and not upon the amount of the specific loan. Held:

The trial court erred in granting summary judgment to the appellee insurance company and denying summary judgment to appellant Robinson.

The authorizing statute plainly provides that the policy or certificate of insurance "shall be delivered to the ... debtor ..." (OCGA § 33-31-7)(c), and does not make an exception based upon whether the debtor paid the premium.

Moreover, OCGA § 33-31-7(d) specifically requires the policy or certificate to be delivered to the debtor in cases where the debtor pays for the premium. The appellee insurance company urges that this case is unusual in that the credit union paid the premium and was the actual insured, with appellant being more or less the third party beneficiary, whereas in the Norsworthy case and in the ordinary situation, the debtor is the insured and the creditor is the third-party beneficiary. Appellee cites Universal American Life Ins. Co. v. Finance Corp., 118 Ga.App. 160, 162 S.E.2d 813 which held that the Credit Insurance Act of Georgia "was passed for the benefit of the insured borrower, who pays the premium for the policy, as well as the creditor who makes the loan or extends the credit." (Emphasis supplied.) Id., p. 162, 162 S.E.2d 813.

This emphasized language in Universal American Life Ins. Co. merely assumes that the debtor pays the premium and is not intended to say that the debtor is an insured only if he pays the premium. The fact that the debtor does not directly pay the premium for credit life and disability insurance does not make her any less the insured. In Betts v. Brown, 219 Ga. 782, 785, 136 S.E.2d 365, the Supreme Court held that the Georgia Insurance Code, including the specific credit life, accident and sickness statutes, "evidences an intent that the insured debtor have an interest in this type of insurance and makes various provisions for the protection of that interest." Credit life insurance is " 'insurance on the life of the debtor'," and not upon the debt. Id. In Betts at p. 786, 136 S.E.2d 365, it was said that the statute "recognizes that it is the debtor who furnishes the insurance in credit transactions"; whether the statute does so is debatable, but there is nothing debatable about the fact that the code specifically gives the debtor the right to have an option to furnish the required amount of credit insurance through existing policies owned or controlled by him or of procuring and furnishing the required coverage through any insurer authorized to transact an insurance business within the state. OCGA § 33-31-11. It is therefore clear that, whoever technically "furnish...