Opinion ID: 2163380
Heading Depth: 1
Heading Rank: 2

Heading: modification of insurance contract.

Text: An insurance contract may be modified by endorsement. The parties to the contract may make such modifications thereof as they may mutually agree upon. An endorsement proposed by one party only, and not consented to by the other, will not effect a modification of the insurance policy. It is essential for a valid modification of a contract of insurance that all elements of contract be present which were initially necessary to make a binding insurance contract. Consent or acquiescence by the silence of an insured to a modification of an insurance policy will result only if the insurer was injured or influenced in its conduct by the silence of the insured. The burden of persuasion is upon American Standard to prove that it was so injured or that its actions were influenced by the silence, if such there was, of the insured which signified his consent to the proposed modification and resulted in a misleading of the insurer. We believe that the foregoing jury instruction was a correct statement of the law in North Dakota. An insurance contract is essentially the same as any other type of contract. It is composed of the same elements and can be modified by the same means. We conclude that because Anderson received notice that there was a balance owing on the policy and because the company reserved broad cancellation rights under the policy, American Standard was within its rights to modify the policy by changing the expiration date to conform to the amount of premium actually paid. Anderson acquiesced in the modification of the expiration date by his silence because his silence influenced the conduct of American Standard in shortening the term of the policy. See 17 Couch on Insurance § 65.:23 (2d Ed.1967). His acquiescence in the modification of the policy is also illustrated by the fact that he attempted to renew his policy on June 5, 1976 (one day before it expired as modified) for a period of one month and attempted to tender a $15 payment. We note here that the policy did not include a grace period providing for renewal within a given time after its expiration. We note the importance of the fact that Anderson received three different notices from American Standard relating to the fact that he still owed $6 on his premium. Any one of these notices, standing alone, may have been inadequate notice as a matter of law. However, the totality of the facts in this case indicate that Anderson should have been aware of some problem with his premium payment and the jury was justified in finding no coverage because of Anderson's failure or refusal to take steps to alleviate the problem. We do not condone American Standard's policy of informing an insured of the reasons for an inadequacy in premium paid by its utilization of a standardized form marked with cryptic notations. It would be much more effective and take only a little more time for the insurer or its agent to write a letter to the insured specifically explaining any defects in the agreement and how to correct them, especially in a case such as the instant case where the mistake on the application was caused by the insurance agent. We also conclude that the trial court did not err in denying Anderson's motion for a judgment notwithstanding the verdict or, in the alternative, for a new trial because the evidence supports the jury verdict of no coverage. Nokota Feeds, Inc. v. State Bank of Lakota, 210 N.W.2d 182 (N.D.1973) [judgment notwithstanding the verdict]; and Hoge v. Hoge, 281 N.W.2d 557 (N.D. 1979) [new trial]. Judgment affirmed. ERICKSTAD, C. J., and PEDERSON, VANDE WALLE and SAND, JJ., concur.