Court Opinion

ID: 9679385
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:51:34.308079+00
Date Added: 2024-06-11T13:15:34.485432
License: Public Domain

COFFEY, J.
(dissenting). I agree with the legal analysis contained in Mr. Justice STEINMETZ’ dissent to the majority opinion and dissent separately to point out that the majority opinion completely fails to consider whether Barbara Terry is a “policyholder” as defined in sec. 600.03(37), Stats. Based upon the facts of this case, I would conclude that she was not a policyholder and, therefore, was not entitled to ten days’ written notice regardless of whether the binder issued to her is considered to be an insurance policy governed by sec. 631.36(2) (c). I also dissent separately to indicate the adverse ramifications of the majority opinion on Wisconsin insurance law.
I believe that the majority has erred in its decision by failing to consider whether Barbara Terry was a “policyholder” as defined by sec. 600.03(37), Stats. It cannot be disputed that the ten-day notice requirement of sec. 631.36 (2) (c) only applies to the “policyholder.” The term “policyholder” is defined by the insurance statutes in the manner set out below:
*590“600.03 Definitions, usages and synonyms. In chs. 600 to 646, unless the context indicates otherwise:
“ (37) ‘Policyholder’ means the person who controls the policy by ownership, payment of premiums or otherwise. See also ‘insured.’ ”
In the case at bar, all communications concerning Terry’s application of insurance were between the Mon-gin Insurance Agency representing Terry and Economy Fire and Casualty Company. In addition, Economy never received any premium for the insurance of the binder. The first quarter’s premium was paid to Mongin by Terry and retained by Mongin for the entire time period that the binder was in effect. Under these facts, Barbara Terry cannot be considered a “policyholder” under the statutory definition of that term. She neither paid any money to Economy for the binder nor did she control the binder as evidenced by the fact that all communications concerning it were between Mongin and Economy. In fact, it was Economy that controlled the binder during the period of time relevant to this dispute.
Thus, even in light of the majority’s construction of the term “policy” as including the binder issued in this case, it is clear that Barbara Terry was not entitled to ten days’ notice of cancellation as she was not a policyholder as defined in the insurance statutes. For this reason, the result reached by the majority opinion is erroneous regardless of the construction of the term “policy.”
Independent of my belief that Barbara Terry was not a policyholder and, therefore, not entitled to the statutory notice of cancellation is my conviction that the majority opinion will have adverse ramifications on Wisconsin insurance law. Among these adverse effects is that the majority’s construction of sec. 631.36(2) (c), Stats., will bind an insurer to provide coverage for at *591least a ten-day period after the insurer discovers that the prospective insured deceived it concerning information that was a material part of the insurance contract. Specifically in the case at bar, the insurer is being required to provide insurance for a driver whose application it refused and who was only granted coverage under a binder because the application for insurance contained a false statement as to the potential insured’s driving record.
An insurance binder was designed to allow the insurer to provide temporary coverage to a potential insured while the insurer verified the information contained in the application for insurance. The binder furthered the public policy of having drivers continually insured during the period required to process insurance applications. The majority’s construction of sec. 631.36(2) (c), Stats., however, changes the insurance binder to a policy of insurance extending at least ten days past the insurer’s rejection of the potential insured. Because the majority’s construction of sec. 631.36(2) (c) requires extended insurance coverage beyond the time that the insurer rejects an insurance applicant, the construction may have the adverse effect of causing insurers to decrease the use of binders and, thus, frustrate the policy goal of having drivers insured pending the acceptance of their application.
It is a reality of life that many persons allow their insurance coverage to lapse before applying for a new insurance policy. These same people continue driving, although uninsured. If insurers are reluctant to issue binders, these persons will expose other users of the roadways to an increased danger of being harmed by an uninsured and financially irresponsible driver.
Where binders are still used by insurers, I believe the majority’s opinion will have the adverse effect of causing the insurers to raise the cost of an insurance policy, *592either through a charge for the binder or a raise in insurance rates. This increased cost will be passed on to all insureds, although only drivers whose insurance applications are rejected receive the benefit of the extended binder coverage.
Considering each of the adverse effects of the majority decision, I believe that it is eminently clear that the legislature did not intend to require an insurer to give ten days’ statutory notice to cancel a binder. Because of the short term and temporary nature of the insurance afforded by a binder, common law reasonable notice is both fair and adequate as it was in the case at bar. The longer statutory notice was intended to apply only to insurance “policies” which establish a greater contractual commitment between the parties than do “binders.”
The fallacy of the majority’s construction of sec. 631.-36(2) (c), Stats., is apparent from the fact that they declined to hold that the term “policy” as used throughout the Wisconsin Insurance Statutes always includes binders. In the several different statute sections referred to in Justice Steinmetz’ dissent, it is apparent that it would be incorrect and illogical to construe the term policy to include binders. The fact that the majority’s construction of “policy” as including “binders” cannot be applied consistently throughout the insurance statutes clearly demonstrates that this construction is contrary to that intended by the legislature. This is especially true where the legislature has indicated its intent that the term “policy” be applied consistently throughout the insurance statutes, (see: sec. 600.03(35) (a), Stats.)
For the above stated reasons and those stated in the dissent of Justice Steinmetz, I would reverse the decision of the court of appeals.
I am authorized to state that Mr. Justice WILLIAM G. CALLOW joins in this dissent.