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The group policy explains the insurance coverage in detail. When
insurance is issued to a buyer he receives a certificate of
enrollment. The certificate contains an outline of the benefits
included in the group policy.
To provide credit insurance to its customers, Classic
contracted with Western Diversified Life Insurance Company
(Western). Western issued certain group credit insurance
policies to Classic. Berger contracted with American Way Life
Insurance Company (American Way). American Way issued certain
group credit insurance policies to Berger.
Installment buyers may finance the cost of credit insurance
as part of the installment sales contract. If financed, the
premiums for credit insurance are included as a specific item in
the contract. Berger and Classic each collected the full
insurance premium as part of the remittance from the financial
institution after assignment of the installment sale agreement to
that financial institution. In 1990, Berger and Classic made a
single remittance each month of all premiums they collected to
Western and American Way, respectively. The dealers did not
retain any portion of the premiums and were not reimbursed by
either Western or American Way for any of their direct or
indirect costs in connection with offering and marketing group
credit insurance.
Western paid a commission on each premium collected by
Classic to the Woodcliff Agency, Inc. (Woodcliff), a duly
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Last modified: May 25, 2011