## Facts

- Robin L. Hinkle and her then-husband bought a vehicle from a dealership in West Virginia and financed most of the purchase through a lender.
- At purchase, they paid $495 for a “GAP” product marketed as coverage for any deficiency remaining on the auto loan if the vehicle became a total loss.
- In 2011, the vehicle was totaled; the primary auto insurer paid the vehicle’s actual cash value to the lienholder, leaving a remaining loan deficiency of about $4,698.81.
- Hinkle submitted a GAP claim to Safe-Guard Products International, LLC, which administered the GAP product offered through the dealership.
- Safe-Guard denied the claim based on contract provisions it asserted limited or excluded coverage due to late or deferred payments on the loan.
- Hinkle sued for breach of contract and bad faith and sought partial summary judgment that the GAP product was “insurance” under West Virginia law.
- The circuit court granted partial summary judgment, ruling the GAP product was insurance.
- Safe-Guard sought an original writ of prohibition to prevent enforcement of the partial summary judgment order.

## Issues

1. Whether the circuit court clearly erred as a matter of law in classifying Safe-Guard’s GAP product as “insurance” under West Virginia law.
2. Whether prohibition should issue to prevent enforcement of the partial summary judgment order where the alleged error concerned an asserted excess of authority rather than lack of jurisdiction.
3. How West Virginia law distinguishes non-insurance debt-cancellation contracts from insurance contracts in the GAP context.

## Decision

- The Supreme Court of Appeals of West Virginia denied the writ of prohibition.
- Applying the discretionary prohibition factors for claimed excess of authority, the Court gave substantial weight to whether the challenged order was clearly erroneous as a matter of law.
- The Court held the GAP product was not a lender-provided debt-cancellation agreement; it was a third-party undertaking to indemnify the lender upon a specified loss event.
- Because the product constituted insurance, the circuit court’s partial summary judgment was not clearly erroneous, and extraordinary relief was unwarranted.

## Legal Principles

- In non-jurisdictional prohibition cases alleging a tribunal exceeded legitimate powers, issuance is discretionary and turns in significant part on whether the challenged order is clearly erroneous as a matter of law.
- A debt-cancellation contract is not insurance when it is directly provided by the lending institution to the purchaser/borrower.
- A contract requiring a third party to indemnify a lender upon a specified event that prevents repayment by the borrower is not a debt-cancellation contract; it is an insurance contract governed by West Virginia insurance law.
- A GAP provider’s assumption of risk for consideration, where the provider rather than the lender bears the loss triggered by a covered contingency, supports insurance classification and corresponding regulatory and common-law obligations.

## Conclusion

The court refused to block enforcement of a partial summary judgment ruling that Safe-Guard’s third-party GAP product was insurance, holding that third-party indemnification of a lender upon a covered loss is governed by West Virginia’s insurance laws rather than treated as non-insurance debt cancellation.


State ex rel. Safe-Guard Prods. Int’l, LLC v. Thompson, 235 W. Va. 197, 772 S.E.2d 603 (W. Va. 2015)