Opinion ID: 1347933
Heading Depth: 1
Heading Rank: 4

Heading: reformation or estoppel

Text: ¶ 9 Wynn's position is that the policy should be reformed to provide full coverage including in-flight damage to the aircraft. Wynn alleges that he requested full coverage, and Avemco never told him that he did not have full coverage. An insurance company may be bound by statements of its agents with apparent or ostensible authority to bind the insurance company. Gentry v. American Motorist Ins. Co., 1994 OK 4, ¶ 12, 867 P.2d 468, 471; Atlas Life Ins. Co. v. Eastman, 1957 OK 245, 320 P.2d 397, 403; see Okla. Stat. tit. 36, § 1423 (1991). Based on a theory of constructive fraud, an insurance contract may be reformed to reflect the agreement between the agent and the insured. Gentry, 1994 OK 4, ¶ 9, 867 P. at 471. Even though the renewal of an insurance policy is a new contract, Gov't Employees Ins. Co. v. U.S., 400 F.2d 172, 175-76 (10th Cir.1968); 13A John Alan Appleman & Jean Appleman, Insurance Law and Practice § 7648 (1976), it is presumed, unless a contrary intention appears, that the parties intended that the renewal policy cover the same terms, conditions, and exceptions as the original policy. Gov't Employees Ins. Co., 400 F.2d at 176; Appleman, supra, § 7648; 91 A.L.R. 546 (1963). Thus, it is the duty of the insurance company to call attention to any changes in the policy. ¶ 10 The facts of the present case are similar to the facts in Gov't Employees Ins. Co. v. United States, 400 F.2d at 172. In Gov't Employees Ins. Co., the insurer sent the insured a cover letter with a renewal policy containing an additional exclusion in clear and conspicuous language and advising the insured to carefully read the policy. The Tenth Circuit Court of Appeals held that the insurer had sufficiently called the insured's attention to the change in coverage. Thus, the exclusion was incorporated into the renewed policy. ¶ 11 Another factually similar case is Mundy v. Lumberman's Mut. Cas. Co., 783 F.2d 21 (1st Cir.1986). In Mundy, the renewal policy contained a reduction in coverage written in readable English in good-sized print. The policy also admonished the insured to carefully read the policy and notify the company of any questions. The court held that the notice of changes in coverage was sufficient to alert the insured to the reduction in coverage and, thus, the limitations were incorporated into the renewed policy. ¶ 12 In the present case, Wynn was sent a notice of the expiration of the old policy and renewal application. The application for renewal instructed Wynn to check the coverage for accuracy. On the front page, the renewal application conspicuously showed that the policy did not cover in-flight damage to the aircraft. Wynn completed the application and returned it to Avemco without commenting on the in-flight exclusion. ¶ 13 Standing alone, an instruction to check for accuracy may be insufficient to call attention to an exclusion. However, when coupled with the fact that the in-flight exclusion is clearly and conspicuously stated on the front page of the renewal application and the policy, there can be no misconception that the policy excludes in-flight damage to the aircraft even if covered under the original policy. Wynn answered the questions on the application, signed it, and returned it to Avemco. While an insured is not required to search the fine print for changes in the terms of an insurance policy, it is not inequitable in this case to require Wynn to be aware of the in-flight exclusion when it was clearly stated on the front page of the renewal application and on the front page of the policy. See Gov't Employees Ins. Co., 400 F.2d at 176; Mundy, 783 F.2d at 22. ¶ 14 Even if the agent represented to Wynn that the policy was for full coverage, the renewal application and the policy should have put Wynn on notice of the in-flight exclusion. Thus, there is no genuine issue of material fact that the policy in effect at the time of the accident did not cover in-flight damage to the aircraft.