Opinion ID: 1659203
Heading Depth: 2
Heading Rank: 2

Heading: whether the incorrect premium provision governs?

Text: In the alternative, Gulf Guaranty argues that, if its interpretation of the policy is incorrect, then this situation is governed by the Incorrect Premium provision of the policy. That provision states: Incorrect Premium: If the premium charge for either life or disability insurance in connection with any loan is less than the premium which should have been charged according to the rates specified above, then the maximum amount of insurance for which the company will be liable will be reduced to the amount which the premium that was actually charged would have purchased under the premium rate specified according to the term of insurance. If any excess premium is inadvertently charged, the amount of the excess shall be refunded promptly as soon as the excess is discovered. To refute this argument, Tammy cites Standard Life Ins. Co. of Indiana v. Veal, 354 So.2d 239 (Miss. 1977), in which the insurance company argued that a spouse was not covered on a joint policy because the premium charged was that charged for a single coverage policy. The Veal court held that: the error in the premium was an error of the agent of defendant and an insured may not be prejudiced by the mistake of an insurance agent if the agent made a mistake in computing the premium. In case of a mistake in the premium being charged, defendant would be entitled to have the contract reformed to reflect the proper premium. Veal, 354 So.2d at 246 (emphasis added). Gulf Guaranty argues that this case can be distinguished from Veal because there was no incorrect premium provision in Veal and because Billy Duett agreed to the contract, which included this provision in the master policy. Indeed, this Court respects the right of insurer and insured to contract freely one with the other (except as limited by the public law). In re Koestler, 608 So.2d 1258, 1263 (Miss. 1992) (overruled on other grounds) in Nationwide Mut. Ins. Co. v. Garriga, 636 So.2d 658 (Miss. 1994)). However, Tammy argues that Gulf Guaranty should be equitably estopped from asserting that the premium charged was the incorrect premium. Equitable estoppel precludes a party from denying a material fact which he has previously induced another to rely upon, whereby the second party changed his position in such a way that he would suffer injury if denial was allowed. Christian Methodist Episcopal Church v. S & S Const. Co., Inc., 615 So.2d 568, 571-72 (Miss. 1993). Tammy argues that Gulf Guaranty represented to Billy that the proper premium had been paid, and that Billy relied on that representation to his detriment. In the light of the language of the contract as analyzed above, Tammy's equitable estoppel argument has merit. An insurance company which represents that certain coverage is being purchased and that the premium charged is the appropriate premium can not later deny that the premium was sufficient. See Veal, 354 So.2d at 246.