Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
Jury awards 5 million on CUs insurance claim
SOUTHFIELD, Mich., and MADISON, Wis. (1/26/09)--A jury has awarded a Michigan credit union more than $5 million against its insurance company in a claim that involved losses stemming from hundreds of defaulted indirect auto loans. The jury awarded to Michigan First CU--a $490.7 million asset credit union based in Lathrup Village, Mich.,--the $5 million in damages against CUNA Mutual Insurance Society (CUMIS). The jury decided the company breached its insurance bond with the credit union when it refused to pay for losses resulting from the defaulted loans, which had been granted under the supervision of Michigan First's former vice president of lending. "We respect the jury's decision, but still believe the losses incurred by the credit union are not covered under the terms of our Bond policy," Phil Tschudy, media relations manager, CUNA Mutual Group, told News Now Friday. "We are also gratified the court issued a ruling agreeing with our interpretation of our Faithful Performance coverage as requiring intentional misconduct," he added. CUMIS maintained that the credit union's losses were the result of its own reckless behavior and lack of oversight. The company had denied the insurance claim under a faithful performance provision of the bond, saying the loans resulted from intentional violations of the credit union's lending policies. However, the jury unanimously determined the insurance claim was wrongfully denied. Michigan First's claim was first made in May 2004. If the ruling stands, the credit union could recover 12% penalty interest on the claim. That, added to the prejudgment interest, which would bring the total recovery closer to $9 million. CUNA Mutual is considering an appeal. "Our legal team will be reviewing information from the trial and assessing our appellate options," Tschudy said.


RSS print
News Now LiveWire
@CFPB today finalized a rule to promote more effective privacy disclosures from financial institutions to their customers. Watch News Now
46 minutes ago
Four consumer rights you didn't have 40 years ago via @CreditExperts http://t.co/RwSocTG1q4
1 hours ago
Cascade Community #CreditUnion has granted 30 educators almost $6,000 in Chalkboard grants for the 2014-15 school year.
1 hours ago
#NewsNow Money: CUNA's Schenk talks interest rates, inflation http://t.co/JbQlDrXzM3
1 hours ago
Eric Richard, CUNA's general counsel, details legal/regulatory trends affecting CUs at CUNA Attorneys Conf. today. http://t.co/n7ZATxT4eM
2 hours ago