Opinion ID: 512864
Heading Depth: 2
Heading Rank: 2

Heading: Doctrine of Temporary Insurance

Text: 16 Lewis argues that Kansas City Life was obligated to provide insurance coverage immediately when it accepted Mr. Card's premium payment. He contends that Mr. Card complied with all requests from the insurance company and that Renshaw failed to explain that tendering payment was not sufficient to provide immediate coverage. 17 Acceptance of a premium payment when coupled with other circumstances may obligate an insurer to provide coverage for losses occurring while the application is pending. See Toevs v. Western Farm Bureau Life Ins. Co., 94 Idaho 151, 483 P.2d 682 (1971). In Toevs, the Idaho Supreme Court adopted the doctrine of temporary insurance to prevent insurance companies from denying coverage unfairly when they created circumstances that would lead reasonable people to believe they were covered. The court relied on several factors to justify the doctrine: (1) the insurance agent did not explain the effective date of the insurance; (2) language in the application referring to the effective date was complex, legalistic, and ambiguous; (3) and the insurer accepted premium payments conditioned on approval of the application. See 483 P.2d at 685-86. 18 As we understand the doctrine, if the insurer accepts advance premium payments, creates uncertainty as to the effective date by ambiguous language in the application, and uses a conditional premium receipt, the law implies a contract of temporary insurance that is effective until the insurer notifies the applicant of acceptance or rejection. See Permann v. Nationwide Ins. Co., 108 Idaho 192, 697 P.2d 1206, 1207 (Idaho Ct.App.1985); Dunford v. United of Omaha, 95 Idaho 282, 506 P.2d 1355, 1358 (1973) (temporary insurance continues in force until applicant notified of rejection). Mere acceptance of payment and failure to explain the effective date, however, have not been sufficient to invoke the doctrine except where the applicant was not provided with a written explanation of terms. See Foremost Ins. Co. v. Putzier, 102 Idaho 138, 627 P.2d 317, 322 (1981). 19 The application and TIA explained the terms of coverage. We conclude as a matter of law that the language referring to effective date is unambiguous. See Permann, 697 P.2d at 1208 (ambiguity is a question of law). It makes clear that the insurance will not take effect until the policy is delivered to the applicant, except as provided in the TIA. Nothing in the application contradicts that information. The temporary insurance agreement provided that interim coverage will take effect on the date of the temporary agreement, but in bold type indicated that no coverage will be provided if the applicant answered yes to either of the health questions. 20 There is a conspicuous and refreshing absence of legalese in both documents. The language is plain. There should be no doubt that an applicant is not covered until the policy is delivered, unless qualified for interim coverage under the TIA. The principal rationale for the rule, ambiguity as to effective date, is not present here. 21 Absent also is the use of a conditional premium receipt. The potential unfairness of accepting an applicant's payment without providing coverage is not present. Kansas City Life provided express interim coverage if the applicant met health qualifications and tendered the advance payment. 22 The fact that Kansas City Life accepted payment although Mr. Card was not qualified for temporary insurance does not justify application of the doctrine. Had Mr. Card indicated his prior bout with skin cancer, he would have realized that interim coverage was not available.