Court Opinion

ID: 9527308
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:29:25.217953+00
Date Added: 2024-06-11T13:25:41.911144
License: Public Domain

MR. JUSTICE GOLDENHERSH, dissenting: I dissent. As stated by the majority, the parties are in agreement that this case is governed by Illinois law, and under Illinois law the fact that Mrs. Crawford was not a full-time employee working 32 or more hours per week cannot be raised as a defense. The majority appears to conclude that under the incontestability clause it is only the validity of the policy which may not be contested. This is clearly erroneous. The incontestability clause provides: “[A] nd no statement made by any employee insured under this policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made, after such insurance has been in force prior to the contest for a period of two years during such employee’s lifetime nor unless it is contained in a written application signed by such employee and a copy of such application is or has been furnished to such employee or his beneficiary.” As used in this policy the term “insurability” does not refer solely to the condition of the employee’s health; it means “capable of being insured” or the “quality or condition of being insurable” (Kahn v. Continental Casualty Co., 391 Ill. 445), and the only contention made by defendant of her ineligibility or lack of insurability is her failure to be regularly employed. Defendant accepted premiums covering Mrs. Crawford for 52 months, and admittedly, if she had been afflicted with some incurable malady at the time the policy was issued, her “insurability” could not, after two years, have been contested. Neither logic nor the authorities cited support the drawing of a distinction between noninsurability based on illness and noninsurability based on failure to be employed for a minimum number of hours during each week. Indeed, if any distinction were to be drawn it should serve to more rigidly apply the incontestability clause to the latter situation for the reason that it is so easily discoverable. The reason for the inclusion of the incontestability clause in policies of this type is obvious, and the fixing of the two-year period is clearly for the purpose of providing ample time for the insurer to investigate the veracity of the representations made. It is naive to believe that group insurers are trusting souls who accept, without question, the representations of the groups whom they insure, and the fact is that the policies provide for, and the insurers make, periodic inspections and audits. I cannot share the majority’s apprehension with regard to the hypothetical case of the terminated employee. If the insurer failed to learn of the termination, and accepted premiums for a period of two years after its occurrence, that too should be governed by the incontestability clause. Under the terms of this policy the defendant was entitled to inspect and audit payroll records, and its failure to discover within the two-year period that Mrs. Crawford was not employed should not permit it to invoke a defense in clear violation of the express provisions of its policy. The rationale of Simpson v. Phoenix Mutual Life Insurance Co., 24 N.Y.2d 262, 299 N.Y.S.2d 835, 247 N.E.2d 655, which the appellate court followed, is preferable to the grounds upon which the majority rests its decision, and I would affirm the judgment.