Court Opinion

ID: 9581573
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:16:23.100716+00
Date Added: 2024-06-11T13:37:05.161513
License: Public Domain

KRUCKER, Judge
(dissenting).
I dissent.
Mr. Wilson went to the Likens Insurance Agency to get automobile liability insurance so that he could drive his car into Davis Monthan Air Force Base. He filled out an application and paid Mrs. Likens $30.80, which was fo be the first payment on a 90 day installment arrangement of premium payment. ‘ He then took his receipt and got admittance to the Base. I believe that from the time he paid his premium and got his receipt Mr. Wilson had interim coverage of insurance, until such time has he was formally accepted or re-j ected by the company.
The majority opinion rejects each of Mr. Wilson’s arguments. They found no written binder existed between the parties. They found sufficient evidence to support the trial court’s finding that there was no meeting of the minds as to the policy of insurance, and they rejected Mr. Wilson’s .argument of estoppel. I believe that none of these conclusions precisely answers the ■only pertinent question. Did Mr. Wilson have temporary terminable, interim cover■age?
I believe the best rule of law is that found in a recent case, Allen v. Metropolitan Life Insurance Company, 44 N.J. 294, .208 A.2d 638 (1965). (Also see extensive citations for its position.) In that case a Mr. Allen agreed to purchase life insurance and filled out an application. Mr. Allen at the same time paid the first premi•um and received a receipt which provided that the premium would relate back to the date of the application if the company approved the application. Mr. Allen died of a coronary occlusion several weeks later and the company a week after the death .declined the application and denied all liability. The court held the policy was in effect, as an interim policy. In so holding the court set forth the reasons which I believe, as a matter of law, dictate liability coverage here.
. While insurance policies and binders for .interim coverage are contractual in nature, they are not ordinary contracts but are . “contracts of adhesion” between parties not equally situated In this case simply because the application form which Mr. • Wilson had to fill out already contained a •conditional clause, did.-not mean he had in ; any way bargained to so offer, or even had ■ read it.
When the company takes an -applicant’s premium it makes its primary error. The very acceptance of the premium in advance tends naturally toward the understanding of immediate coverage however temporary and terminable it might be; any other advantage other than interim coverage is not what the lay applicant is generally seeking by the advance payment. See Simpson v. Prudential Insurance Co. of America, 227 Md. 393,177 A.2d 417 (1962).
I believe that when confronted with such conditional receipts for premiums paid, recognition of interim coverage pending the company’s approval or disapproval is just and equitable and fulfills the applicant’s expectations while avoiding the dubious position that the insured to be must pay and await the company’s good faith determination of insurability. As said in another case, Ransom v. The Penn Mutual Life Insurance Company, 43 Cal.2d 420, 274 P.2d 633 (1954) :
“* * * it would be unconscionable to permit the company, after using language -to induce payment of the premium at that time, to escape the obligation *408which an ordinary applicant would reasonably believe he had undertaken by the insurer.” 274 P.2d at 636.
In this case the expectations were additionally confirmed by the company itself when it wrote a letter to Mr. Wilson, dated just before the accident but received later, that it would have to raise the premium to cover an additional traffic violation but implying that they were still able to give him coverage.
I note that the cases I rely upon are filled with the compelling equities of life insurance cases, but I do not find the difference sufficient to vary the legal principles involved. I likewise believe that this position should prevail whether one considers the pre-paid premium as that inconsistent act which satisfies the principles of equitable estoppel or whether I find the prepaid premium is a form of oral binder which makes conditions of acceptability as conditions subsequent and not conditions precedent. Ransom, supra.