Court Opinion

ID: 5797575
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:21:24.878019+00
Date Added: 2024-06-11T08:42:24.369588
License: Public Domain

Murphy, J.
The instant action was brought to recover an aggregate sum of $11,500 in double indemnity benefits and *145accrued dividends alleged to be due under two identical converted policies of ordinary life insurance issued by defendant in 1928 and 1930 in the original face amounts of $10,000 and $5,000, respectively.
The essential facts (including decedent’s death by accidental means) are undisputed. After 25 years of continuous, uninterrupted premium payments, decedent, an attorney acting on the advice of his partner, requested conversion of each policy, which contained an accidentál death benefit provision, to paid-up life insurance. In response to each such request, riders were attached to the policies, as follows:
"Premium payments on this policy having been discontinued as of [a certain date] the insurance hereunder is, in accordance with the election made by the owner, reduced to [a specified amount] of non-participating paid-up. life insurance, payable at the same time and under the same conditions as this policy but without further payment of premiums.”
The policies, however, contained only two specified methods for such conversion. The first permitted conversion into a fully paid-up participating whole life policy for the full face amount of the insurance thereunder (including disability and double indemnity benefits) whenever the policy’s reserve plus dividend additions and accumulations equalled the net single premium for such paid-up policy. The second method, listed under "Options on Surrender Or Lapse”, authorized certain defaulting policyholders "to purchase non-participating paid-up life insurance, payable at the same time and on the same conditions as this policy, but without Double Indemnity or Total and Permanent Disability benefits.” (Emphasis supplied.)
Decedent was not in default under either policy; and there was an insufficient cash value or reserve to convert the policies into fully paid-up life insurance. Accordingly, neither conversion option referred to in the policies was available. Nevertheless, and despite the absence of any enabling clause in the policies, decedent sought paid-up life insurance in a reduced amount with double indemnity benefits; and, in our opinion, this is what he received.
In support of its contention that the double indemnity benefits did not survive the conversions, respondent stresses the fact that the policies did not provide for conversion, with double indemnity, at the lesser face amount; and that the use of the word "non-participating” in each rider clearly evi*146denced the parties’ intention to invoke the option available on a default. However, under the circumstances of this case, we believe respondent’s failure to refer to the default option or to inform decedent that the double indemnity benefits would be lost after his requested conversion was effected is fatal to its claim.
Both Cummings v Phoenix Mut. Life Ins. Co. (250 App Div 336), relied on by respondent, and Flandina v John Hancock Mut. Life Ins. Co. (260 App Div 706, affd 286 NY 630), relied on by appellants, are distinguishable from the instant case.
In both cases there was a failure to pay premiums and the sole question presented was whether such default precluded the payment of accidental death benefits under the particular policies there construed.
In Cummings the insurer prevailed because the policy clearly provided for payment of the "face amount” of insurance after the automatic extension clause of the policy became operable; and the beneficiaries succeeded in Flandina because the nonforfeiture benefits under the policy there interpreted required the insurer to pay the "full amount” of the policy if the extended term provision took effect.
In the present case there was no default, no lapse and no need to apply the "Options on Surrender or Lapse.”
Concededly, we should refrain from rewriting insurance policies and give effect to the plain language of unambiguous clauses. (Royce Furs v Home Ins. Co., 30 AD2d 238.) But it is equally fundamental that parties may revise their own insurance contracts and that all ambiguities therein are resolved against the insurer and in favor of the insured. (Gram v Mutual Life Ins. Co. of NY., 300 NY 375; Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44; Levinson v Aetna Cas. and Sur. Co., 42 AD2d 811.) And since, on the facts here presented, the converted policies are clearly not free from ambiguity, we conclude that appellants must prevail.
Accordingly, the judgment of Supreme Court, New York County (Rosenberg, J.), entered November 7, 1973, in favor of defendant, should be reversed, on the law and on the facts, and judgment entered in favor of plaintiffs for the relief sought, with costs.