Opinion ID: 1098529
Heading Depth: 1
Heading Rank: 2

Heading: insured's copy

Text: We note that this binder contains language and certain ambiguities that we believe may distinguish it from the typical binder issued in the normal course of business in the insurance industry. First of all, a binder was traditionally considered to be [a] written memorandum of the important terms of contract of insurance which gives temporary protection to insured pending investigation of risk by insurance company or until formal policy is issued. Black's Law Dictionary 153 (5th ed. 1979) (citing Turner v. Worth Insurance Co., 106 Ariz. 132, 472 P.2d 1 (1970)) (emphasis added). The binder in the instant case, however, expires upon receipt of the policy, not upon its issuance, and we also note that no specific insurance company or underwriter appears to be bound by this particular binder, although the facts are unclear on this point at this stage of the proceedings. True, the binder purports to bind Lloyd's of London. However, it is our understanding that Lloyd's is not itself an underwriter, but rather is an association of persons who underwrite risks as individuals. W. Freedman, Richards on the Law of Insurance ß 11, at 40 (5th ed. 1952). Though there is a Corporation of Lloyd's ..., it does no underwriting. Rather, it is an organization that regulates the operations of the underwriters and provides various services, including the gathering and publication of data useful to the underwriters.... R. Keeton, Basic Text on Insurance Law 20 (1971). Consequently, on the current state of the record, we cannot delineate with certainty all the legal obligations that are entailed by this document. We do think it clear, however, that this binder presents a scintilla of evidence that Mead & Charles contracted with Montz to provide a year's worth of insurance with some insurer, and, if there is a scintilla of evidence that Mead & Charles's obligations in this regard had not been cancelled at the time of the loss, Montz has sufficiently alleged the existence of a contract to defeat the motion for a summary judgment by Mead & Charles. In regard to this latter issue, we find that there is at least a scintilla of evidence that Mead & Charles was still under a contractual obligation to provide insurance from an insurer at the time of the loss. As noted above, the binder expires upon receipt of the policy. It also provides: Coverage considered bound pending completion/receipt of policy and/or endorsement. There is no evidence in the record that Gulf Agency, Mead & Charles, or Sovereign Marine mailed the policy to Montz or otherwise delivered it to him before the accident occurred. Montz denies having received the policy. There is evidence that a notice of cancellation of the policy was mailed to Montz prior to the accident; however, there was no evidence that a cancellation of the binder was delivered to Montz before the accident. [2] The binder shows that the coverage was to expire July 13, 1984. The collision loss occurred before that date. Accordingly, the issue of whether Mead & Charles served as Montz's agent to provide insurance coverage and inexcusably failed to do so should not be taken from the jury on the basis that no contract was in force at the time of the loss. The binder presents a scintilla of evidence that such a contract was indeed in force, especially when considered in conjunction with the fact that Mead & Charles had also retained Montz's premium payment well past the time of the purported cancellation and approximately two weeks after the time of loss. Likewise, we think that one of Montz's specific grounds for his contract claim should not have been disposed of on this motion for a summary judgment. Montz contends that Mead & Charles served as his agent to procure insurance coverage and that, as his agent, Mead & Charles had both a contractual and a fiduciary duty to provide the necessary underwriting information, e.g., his date of birth and driver's license number, to Gulf Agency or Sovereign Marine. Montz argues that Mead & Charles breached its contractual duty by failing to provide the necessary information to Gulf Agency or Sovereign Marine and that this resulted in the cancellation of his policy. Seeberg v. Norville, 204 Ala. 20, 85 So. 505 (1920). At the least, a disputed factual situation was presented as to whether Montz was requested to provide additional information to Mead & Charles. Two letters addressed to Montz, which requested this information, were made exhibits to Montz's deposition. Montz denied receiving these letters, and there is no evidence in the record that these letters were mailed or otherwise delivered to Montz prior to his collision loss. In Highlands Underwriters Ins. Co. v. ElegantÈ Inns, Inc., 361 So.2d 1060 (Ala. 1978), we wrote: The law in regard to the duty that insurance agents or brokers owe to their principals, the insureds, is stated as follows: `... when an insurance agent or broker, with a view to compensation, undertakes to procure insurance for a client, and unjustifiably or negligently fails to do so, he becomes liable for any damage resulting therefrom. (See annotation at 29 A.L.R.2d 171.)' Timmerman Ins. Agency, Inc. v. Miller, 285 Ala. 82, 85, 229 So.2d 475, 477 (1969). Once the parties have come to an agreement on the procurement of insurance, the agent or broker must exercise reasonable skill, care, and diligence in effecting coverage. Crump v. Geer Brothers, Inc., 336 So.2d 1091 (Ala.1976); Waldon v. Commercial Bank, 50 Ala. App. 567, 281 So.2d 279 (1973). When the agent or broker has failed in the duty he assumes, the principal may sue either for breach of the contract or, in tort, for breach of the duty imposed on the agent or broker. Waldon v. Commercial Bank, supra . (Emphasis added.) 361 So.2d at 1065. We cannot say that Montz cannot recover on his contract claim against Mead & Charles. With the present state of the record, we cannot say that there is no genuine issue as to any material fact as to this contract claim. Rule 56, A.R.Civ.P. Therefore, the trial court erred in granting summary judgment in favor of Mead & Charles.