Opinion ID: 883670
Heading Depth: 1
Heading Rank: 1

Heading: issues

Text: Did the District Court err in granting summary judgment in favor of Westland and Seitz on Watts's breach of contract claim? Watts argues that his signing of the binder on June 28, 1993, resulted in his cantaloupe crop being insured as of 12:01 a.m. on June 29, 1993. Watts claims Westland could only cancel this policy after ten days written notice. Watts contends that the cantaloupe hail insurance described in the binder was in effect at the time of the July 18, 1993, hail storm because he had not received sufficient written notice of cancellation. He maintains that neither the oral notification by Seitz on July 2 or his July 12, 1993, receipt of the insurance policy with the cantaloupe coverage provision deleted was sufficient to cancel the insurance coverage of his cantaloupe crop. Westland and Seitz argue that a binder never went into effect. By its own terms, the binder does not go into effect if the crop to be insured suffers any damage before the effective hour of the insurance. Westland and Seitz claim that the hail storm on the evening of June 28, 1993, voided the binder before it became effective. Watts insists that while a hail storm took place on his farm on June 28, his cantaloupe did not suffer any damage at that time. Because there exists a disputed issue of fact as to whether the cantaloupe crop was damaged on June 28, we cannot affirm the District Court's granting of summary judgment on these grounds. Westland and Seitz also argue that even if the binder went into effect on June 29, the binder was not in effect at the time of the July 18 hail storm. They maintain that, unlike an insurance policy, a binder is a form of temporary insurance coverage that is in effect only from the time the applicant signs the binder until the insurance carrier either accepts or rejects the application for insurance. They contend that the ten-day written notice requirement does not apply to temporary binders. Section 33-15-1103, MCA, requires ten days written notice for midterm cancellation of an insurance policy. The ten-day written notice requirement of § 33-15-1103, MCA, was incorporated into the crop insurance policy issued to Watts by Westland. This provision reads, in part: We may cancel all or any part of the insurance provided by us at any time during the first 60 days during which the policy is in effect by notifying you in writing at least 10 days before the date and hour cancellation takes effect. Notices of cancellation will be mailed 1st class or delivered to you at your address shown in the declaration. Proof of mailing will be sufficient proof of notice. [Emphasis added]. The ten-day notice applies only to midterm cancellation of insurance coverage. Cancellation, as used in this section, means the decision by the insurer to terminate an insurance policy prior to the expiration of its terms. Section 33-15-1102(2), MCA. Section 33-15-411, MCA, defines a binder as follows: Binders for temporary insurance. (1) Binders or other contracts for temporary insurance may be made orally or in writing and shall be deemed to include all the usual terms of the policy as to which the binder was given, together with such applicable endorsements as are designated in the binder, except as superseded by the clear and express terms of the binder. (2) No binder shall be valid beyond the issuance of the policy with respect to which it was given or beyond 90 days from its effective date, whichever period is shorter. [Emphasis added.] By the express language of § 33-15-411(2), MCA, the term of a binder expires when the policy for which the binder applies is issued. This interpretation of Montana's statutory scheme is supported by other authority. Generally a contract of temporary present insurance is terminated by the issuance, delivery, and acceptance of a policy, or by a rejection of the application, but if no policy is issued, delivered, and accepted, and the contract is not otherwise terminated, it continues until the time fixed thereby for its termination or a reasonable time has expired. 2 Couch on Insurance 2d § 14:3. Watts applied for insurance by signing a binder on June 28, 1993. The policy that related to this binder was issued on July 12, 1993. The policy included coverage of Watts's grain crop but did not include coverage of his cantaloupe crop. Pursuant to § 33-15-411(2), MCA, the binder was automatically void upon the issuance of the policy. No notice other than the issuance of the policy was required. We conclude as a matter of law that the expiration of a binder upon the issuance of the insurance policy is not a cancellation within the meaning of Title 33 and therefore the ten-day notification provision is inapplicable. Therefore the District Court did not err in granting summary judgment in favor of Westland and Seitz on the breach of contract claim.