The perfect bets are these which might be assured winners, as they aren’t actually bets in any respect. Insurance coverage firms would like a state of affairs the place it’s “heads I win, tails you lose.” One doesn’t want an actuarial diploma to grasp that amassing premiums on dangers that may by no means lead to payouts is a worthwhile technique.
What happens when an insurance coverage firm denies protection as a result of situation of a constructing, is conscious that the insured constructing doesn’t qualify for added protection, but continues to simply accept premiums? Does this act of accepting premiums negate the unique grounds for denial?
These details and points had been introduced in a current Mississippi case.1 The unique denial was primarily based on these details:
By letter dated March 23, 2021, Ohio Casualty denied plaintiff’s declare for coverage advantages for the loss, citing the next coverage provision:
COVERAGE LIMITATION
‘We’ solely cowl a vacant ‘current constructing’ for 60 consecutive days from the inception date of this coverage except constructing permits have been obtained and rehabilitation or renovation work has begun on the ‘current constructing’.
The corporate concluded there was no protection for the loss, as its investigation confirmed that on the time of the loss, Sinjel had not commenced renovations nor had constructing permits been issued, and greater than sixty days had handed because the coverage took impact on April 15, 2020.
After the denial, the insurance coverage firm saved billing, and the insured saved paying the premiums. The constructing was vacant and in a fireplace loss situation. The insurance coverage firm by no means returned the premiums.
The policyholder made the next argument:
Sinjel maintains, nevertheless, that Ohio Casualty waived Sinjel’s noncompliance with the emptiness clause or any protection to protection by persevering with to simply accept Sinjel’s premium funds after it was conscious that Sinjel had not well timed obtained permits and commenced rehabilitation/renovation work.
The court docket disagreed and located that no waiver of the exclusion or denial ever occurred:
The truth that Ohio Casualty obtained and retained Sinjel’s premium cost can’t fairly be discovered to function as a waiver in mild of the undisputed undeniable fact that Ohio Casualty not solely had already unequivocally denied Sinjel’s declare for the November 2020 hearth loss earlier than receiving the premium cost but it surely additionally did so once more after receiving the premium cost. Ohio Casualty’s actions plainly don’t ‘proof[e] an intention completely to give up the proper’ to disclaim/defend Sinjel’s declare.
Some might query if the doctrine of waiver didn’t apply, what about estoppel? The court docket made this discovering in a footnote about estoppel:
“Sinjel refers in its memoranda to rules of each waiver and estoppel. There is no such thing as a factual foundation for estoppel. Estoppel, in contrast to waiver, ‘includes some ingredient of reliance or prejudice on the a part of the insured earlier than an insurer is foreclosed from elevating a floor for denial of legal responsibility that was identified at an earlier date.’ Pitts By and Via Pitts v. American Sec. Life Ins. Co., 931 F.second 351, 357 (fifth Cir. 1991) (citing Restatement (Second) of Torts § 894(1) (1977). There is no such thing as a allegation of any factual foundation to help a discovering of such reliance by or prejudice to Sinjel.”
Ohio Casualty seems to be amassing premiums with none danger of ever paying on that wager. How candy that have to be for Ohio Casualty.
Thought For The Day
I’ll wager this, although: in 100 years, folks shall be writing much more dissertations on Harry Potter than on John Updike.
—Brent Weeks
1 Sinjel v. Ohio Cas. Ins. Co., No. 3:22-cv-419 (N.D. Miss. Sept. 14, 2023).