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structure of the NADS program had afforded. As excess loss
insurer, Travelers also had a vital interest in the size and
security of the trust fund. The PLRF accounts served as
Travelers' buffer. Release of reserves under any circumstances
(claims for repairs, cancellation refunds, unconsumed reserves)
reduced the account balances and increased the insurance
company's exposure.
The contract holder would have been largely indifferent to
the status of the trust fund. Under the VSC the contract holder
was entitled to have his losses covered up to the maximum amount
specified in the contract from the PLRF, the Dealership's own
funds, or Travelers. If the Dealership failed to satisfy a
covered claim or refund the unearned portion of the contract
price upon cancellation, the contract holder had recourse against
Travelers. With "one of the six largest property and casualty
insurance companies in the United States" providing ultimate
assurance to the contract holder that his interests would be
protected, a beneficial interest in the PLRF would have been
essentially superfluous to him.
If the Dealerships had understood the VSC program to protect
the contract holders by granting them a beneficial interest in
the trust fund, one would expect them to have called attention to
this aspect of the program when they recommended it to their
customers. It generally appears that the Dealerships did not
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