Hon. hlter C. Voodward CNlnmn 

~wo8dofT~ance Com&rlonerr 

* 

Dear sirs Opinion Jio. 04460 

Ret: Whether the deaarlbed type of lmurarm transaatlon violates the ineurMae laws of Texa8 and whether It is 

within the charter powers of the 

United Travelers Insurance Compmy, 

Houston Texaa, to deal with an lndlviduai or oorporation ln the 

Mnner outlined. 

As a basis for preaentlng the above questions for an 

opinion of this department, we quote from your letter of June 18, wherein you Qaks the request, as follows: 

“In the cases referred to it Is proposed that 

certain individuals or oorporatlons will provide their 

customers with insurance usually accident Insurance, 

without cost to such CUB & omer8 upon the purchase of retail cominodltles. The cost of the insurance 1s paid to 

an Insurance company by the individual or corporation 

selling the aomodlty, In accordance with the terms of 

an insurance contract issued by the lnsurancr company 

to the individual or corporation insurlhg the customers 

of the indlvldual or corporation. 

“The individual or varloua representative8 of 

the corporation are to be licensed agents of the inmrance oompany, and It is our request that you advise us 

at your earliest convenienae whether or not in your 

opinion this type of insurance transaction violates the 

Insurance Laws of this State ln any respect, and whether 

or not it 1s within the charter powers of the insurance 

coupany to deal with an Individual or corporation 3x1 

the manner outlined.” 

Accompanying your request Is a certificate form proposed 

to be issued by the United Travelers Insurance Company, Houston, Texas, 

dcslgnated as a conbined customer’s receipt and insurance policy, which 

states that the conpany agrees to lnaure the customers of Eaton’s Gulf 

Serviae ofSlUdmore, Texas, by a group poliay of insurance No. 0208 under 

the subject to tho tern-m and conditlone OS' said policy and the appllcat ion there for. The group @lay form Is not submitted with your request. 

The plan proposed M stated ln go* request In certain 

respects, Is a semblance of the plan upon which group lnaurancc is 

generally orovlded by an emlorer for the benefit of lta employees. It 
Hon. Walter C. Woodward, Chomn, Pagee 2 3-2463 

Is to be observed that the corporation owning and controlling ~~‘10~s 

wrvlw etetlona, oontraote with the insurance aostpury for a groug 

POllOY under and by VirtUb of whlah It gurOhaw8 oertlflcatee in book 

lots, with l aah aertlflaate to be leewd as a policy or lneurence and 

given free at its aervloe stations to auetomere upon their purehaae 

0r the acsmaodltlea 0r the oorporatlon on lt~le at such statlone. mu3 

corporation or owners or the conmmditlce or group @Icyholders, ln 

this ree 

p” 

ct are propoalng to assume the statue of an employer under 

a dsenera Iy reeognlzed group polloy, ln which It pays the premium ror 

each oertffloate ieeued. It aan be assumed that tha aorporatlon or 

group pollayholder aleo pay8 all of the coetebr hendliag the lneurme 

ror Its auatolaere. Not only the group polloyholder paye to the lnwed the prenhm due for each Uertiflcate lemmd by Its a&ent, but it 

also transmits, through its agent or servioe station attendant, the 

pG8d.i ior My extended ooverage the cuetomer may desire and pCkye l’or 

. 

Viewing the proposed certificate form, we may assume that 

It contains the tesentlal provisions of the master group policy 

provides for payment In lieu of all other indemnity, the sum of r 500.33 

lnssedlat@Iy upon reoeipt of due proof of the death of the insured as a 

reeult of bodily Injuries which are the sole cause of loss of life 

effected solely and excluelvcly by violent external causes and solely 

thz%mgh accidental meant during the coverage period of the certlflcate 

War policy, 

Under Title 76 Chepte3, Vernon’s Civil Statutes entitled “Life, Health and Accident Insurance”, under which t’he a&ove 

rimed company is Incorporated, your attention is directed to Article 

&‘64a, Sections l-6. Section 1 of this Statute deflnlng group life 

insurance provldeet 

“Sec. 1. Oroup Life Insurance Is hereby dcclared to be that form of Llfc Insurance covering not 

lees than twenty-rive employees written under a policy 

lwued to the employer, the premium tor wfilch is to be 

paid by the employer or by the employer and employees 

jointly and lnaurlng all of his employees, or all of 

any class or alasses thereof determined by conditions 

pertaining to the en~Iiym?nt, for a~ounta of lnrmrmce 

based upon some plan which will preclude Individual selection, and Sor the benefit of persons other than the 

employer; provided, however, that when the premium Is 

to be paid by the employer end employee6 jointly and 

the beneflta of the policy sre offered to all eligible 

employees, not less than seventy-five per oentum of 

such employees may be so insured. For the purposes 

or this Act the members of any labor union who are 

actively engaged In the same oucupatlon shall be considered employees of such union. The provislonn or 

this Section, howeve?, ahall not appl;- tc Croup,,Insurame now In effect, or to any renewals thereof. 

It seems to be well settled by the authorities that a 

policy provldlng ror payment ln case of aocldental death is, to the extent or such provleion, to be deemed a policy of life insurance within 
the mean- of a statute having relation to life lneurance. Logan v. 

Fidelity and Casualty Company of Hew York, 146 MO. 114 47 S.V. 948; 

zimser v Central Aaoldent Ineurenoe Comparq 207 Pa. 472 56 A. 1003; 

Paoifla ktual Life Xmurance Cwny of Calirornla v. P&ker et ux., 

71 F. (24) 872, and other authorltlee alted therein. 

In the Logan oaea, eupra, the Suprem Court of Hleeouri 

etatest 

“The promise to pay a weekly indemnity by an 

lneuranoe aompany ln the event the Insured reoelvee 

8n injury fmm an aacldent not resulting In death 

does not change the aharaoter of the agreement of 

the policy to pay a certaia other sum when the accldent results fatally, whioh 18 life Insurance from 

accidental causes, as the promise to pay a certain 

etlpulated sum to the insured (now contained in mtu’q 

of the pollclee leeued b what 1s knm es 'old line1 

life lneurance oompeniee f when tho Insured attains 

a given age or 5.n a definite specified time, and If 

berore the insured arrives at the age designated, or 

before the time fixed ior Its certain payment, he 

shall die from any came, accidental or otherwise, 

to pay his legal representatives or eoms one named 

In the polioy as bcneflolary the amount etlpulated, 

Is nona the less life insurance became coupled 

Yith an investment or bond feature, not found In what 

18 commonly known as a ‘8traIght life insurance 

POllCY. 

Yhe calling of a contract of insurance sn 

‘accident, ltontlne,v or lrerpler' life policy, or for that 

matter, by any other appellation that may be adopted 

for business or conventional uses or claesif1cation, 

cannot make a pCrllcy contalnlng an agreement to pay 

to another a sum of money designated upon the hsppening 

of an unknown or contlngent event, depending upon the 

existence 0r life, lees a policy of lneurence on llfe. 

Ineurancc on life includes all pollclee of Insurance 

in which the payment of the InsUranCe money ISContIngent upon the lees of life.” 

The particular group policy under consideration, with 

payment 0r the principal sum contingent, depending uponthe existence 

or life, insuring a collection of lndlvlduals limited to the customers 

of the grou policyholder, is clearly not within the ecope of Section 1 

of Article E 764a above referred to. Section 6 OS this law provldesr 

“Except ae may be provided In this Act, Itshall 

be unlawful to make a contract of life insurance coverlng a group In this State,” 

We think it clear that the propooed plan or transaction, 

involving the contract of ineuranca described, is prohIbIted by the 

above quoted provision of the law. 
Hon. Walter C. C;oodwa.rd, ?a.ge 4 Q-24& 

You are thererore respectfully advlsed that group policy aontraots 

gush aa that of the United Travelers Inmranae Company, Xourton 

Texas, under and rubject to which aertlflaatee are lsrrued insuring 

the cutstoner of the Insured, are prohibited by Seation 6, Artlale 

4764a, Vemon~a Civil Statutes, and in the opinion of thlr Department, the writing or ouah tppe 0r lnarururae 18 without the charter 

powers of ruah aorporatlon. 

Youra very truly 

ATTORNEYOENBRALOFTXXAS 

APPROVED AU0 12, 1949 

I/ Orover Sellers 

FIRST ASSISTAXT 

AlToRNxY OENXRAL 

Approved opinion Comlttee By sm ChaIrman 

This Opinion Considered and Approved In llmlted Cmferencc