Opinion ID: 1858140
Heading Depth: 1
Heading Rank: 2

Heading: The Plaintiffs Agreed to Arbitration

Text: The plaintiffs argue that they never agreed to arbitrate their claims against Liberty National. Rager completed and signed an application for insurance. After approving Rager's application, Liberty National mailed Rager a copy of the policy that it was issuing to him. Attached to the policy from the outset was an endorsement that contained an arbitration clause. The plaintiffs argue that they should not have to arbitrate because the application did not mention arbitration. They also argue that they never signed the endorsement that requires arbitration. Liberty National argues that the endorsement was a valid portion of the policy, and, therefore, that the arbitration clause should apply. We agree with Liberty National. An unsigned endorsement is valid if it is attached to the policy and is referenced therein. See Greene v. Hanover Insurance Co., 700 So.2d 1354 (Ala.1997). It is undisputed that the endorsement containing the arbitration clause was attached to the policy from the outset. Also, the policy contains the following clause referring to the endorsement: This policy with any attached papers is the entire contract between you and the Company. Therefore, we hold that the endorsement is a valid part of the policy and must be enforced. Also, the policy that Liberty National issued included this clause allowing Rager 10 days to cancel the policy, with no cost, if he did not approve of its terms: Please examine your policy carefully. Within ten days after this policy is first received, it may be returned to us or the agent through whom it was purchased. If returned, the policy will be as though it had never been issued. Any premiums paid will be returned. If Rager did not approve of the arbitration clause found in the policy, he should have objected within the 10 days allowed. The objection to the arbitration clause is untimely. Liberty National gave Rager ample time to examine the policy. By not returning the policy, he agreed to its terms. The plaintiffs' argument that the application should have mentioned arbitration is also without merit. Many parts of an insurance policy are not mentioned in the application. If we accepted this argument, then any part of an insurance policy that was not specifically mentioned in the application would be automatically invalid, even if the insured did not object within the time permitted. Such a result would be inequitable to the insurance company. An application for insurance is an offer to enter into an insurance contract, and if the insurer issues a policy materially different from that applied for, the policy is a counter offer which becomes binding only when accepted by the applicant. Connell v. State Farm Mutual Auto. Ins. Co., 482 So.2d 1165, 1167 (Ala.1985). Even if the inclusion of the arbitration provision was a material alteration of the policy applied for  and we would say it was not  the petitioners would have accepted the counter-offer by not returning the policy and, instead, paying the premiums on it. Therefore, it does not matter that the application did not mention arbitration. The trial court did not abuse its discretion in determining that Rager and Armistead had agreed to the arbitration clause.