Opinion ID: 1337725
Heading Depth: 1
Heading Rank: 1

Heading: accident and sickness indemnity

Text: DEFINITION OF TOTAL DISABILITY: The Insured Debtor shall be considered totally disabled when, as a result of injury occurring or sickness or disease contracted and commencing while this Certificate is in force, he is wholly and continuously disabled and prevented from performing each and every duty pertaining to his occupation for which he is reasonably fitted by reason of education, training or experience. In either event he must be under the regular care and attendance of a legally qualified physician or surgeon, other than himself. THIS INSURANCE SHALL NOT TAKE EFFECT UNLESS THE INSURED IS IN SOUND HEALTH AND BETWEEN THE AGES OF 16 TO 59, BOTH INCLUSIVE, ON THE EFFECTIVE DATE HEREOF. EFFECTIVE DATE OF THE INSURANCE IS THE SAME AS THE DATE OF LOAN IN THE ABOVE SCHEDULE. SICKNESS CAUSED BY PRE-EXISTING CONDITIONS NOT INSURED.       DISABILITY EXCLUSIONS: Disability benefits shall not be payable hereunder if a disability is caused by or results from:    (5) the accident occurred or the sickness or disease was contracted and commenced prior to the effective date stated in the Schedule hereof.       Sharp contended that the terms of the policy were modified by the following Code provision enacted in 1966: § 38.1-361.1. When liability not to be denied because of preexisting disease, physical impairment or defect. No insurer having issued a policy of accident and sickness insurance pursuant to the provisions of this article shall deny liability on any claim otherwise covered under such policy because of the existence of a disease or physical impairment or defect, congenital or otherwise, at the time of the making of the application for such policy, unless it be shown that the applicant knew or might reasonably have been expected to know of such disease, impairment or defect. Sharp maintained that he was in reasonably good health on the effective date of the insurance certificate, that he neither knew nor had reason to know that he had cancer of the brain and that the Insurance Company, having knowledge of his physical condition, was estopped to deny coverage. The Insurance Company took the position that Code § 38.1-361.1 was inapplicable, that coverage for disability from a preexisting condition or disease was expressly excluded in the policy, and that the question was one of coverage rather than of estoppel. In its final decree the court held that no question of estoppel is here involved, that the policy plainly stipulates against coverage where the applicant is not in sound health on the effective date of the policy and that since the evidence showed that the plaintiff was suffering from cancer and had been for some time before the policy was taken out, no coverage ever became effective. By his assignments of error Sharp challenges the action of the court in ruling that the policy did not cover his disability because he was not in sound health on March 25, 1969, and that no question of estoppel was involved. We have construed the terms good health and sound health in applications for insurance policies to import apparent and reasonably sound health without any knowledge on the part of the applicant to the contrary. Gilley v. Union Life Ins. Co., 194 Va. 966, 970, 76 S.E.2d 165, 168 (1953). This rule of construction has now been codified and expanded in Code § 38.1-361.1. The Insurance Company insists that this statute is inapplicable to Sharp's insurance contract. It argues that the words otherwise covered in the statute mean that the prohibition against denial of liability applies only in the absence of express exclusionary language in the policy. We do not agree. We believe that the correct interpretation of the statute is it permits an insurer to limit its liability to risks not specifically excluded (e. g., self-inflicted injury) except that no sound health requirement or exclusion of preexisting illness may be enforced if the applicant did not know or might not reasonably have been expected to know about the insured's condition. Any other interpretation would permit an insurer to nullify the effect of the statute. Hence the court committed reversible error in failing to determine whether Sharp knew or might reasonably have been expected to know of his preexisting illness or impairment within the meaning of the statute. We agree with the court that the Insurance Company is not estopped to deny that Sharp was covered by the policy. It is true, as Sharp contends, that Liddle wrote the insurance contract with considerable knowledge of Sharp's physical condition. But this knowledge of its agent, imputed to the Insurance Company, may not be used to make a new contract for the parties covering risks specifically excluded under the policy. Crowder v. General Accident, Etc. Co., 180 Va. 117, 21 S.E.2d 772 (1942). The general rule, which we approve, is that the coverage of an insurance contract may not be extended by estoppel or implied waiver to include risks expressly excluded. Annot., 1 A.L.R.3d 1139, 1159 (1965); 43 Am.Jur.2d, Insurance, § 1184, p. 1102 (1969); Insurance Co. of North America v. Atlantic Nat. Ins. Co., 329 F.2d 769 (4th Cir. 1964). But see Columbia Fire Ins. Co. v. Boykin, 185 F.2d 771 (4th Cir. 1950). Considering the provisions of the policy together we conclude that the sound health provision should be construed as an exclusion for preexisting conditions rather than a forfeiture. So the question is one of coverage which the Insurance Company is not estopped to deny. But coverage depends upon whether Sharp knew or might reasonably have been expected to know of his condition and to make this determination a new trial is required. Reversed and remanded.