The greatest bets are these which might be assured winners, as they aren’t really bets in any respect. Insurance firms would like a situation 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 can 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 just accept premiums? Does this act of accepting premiums negate the unique grounds for denial?
These information and points have been introduced in a latest Mississippi case.1 The unique denial was based mostly on these information:
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 ‘existing building’ 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 ‘existing building’.
The firm 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 for the reason that coverage took impact on April 15, 2020.
After the denial, the insurance coverage firm stored billing, and the insured stored paying the premiums. The constructing was vacant and in a hearth loss situation. The insurance coverage firm by no means returned the premiums.
The policyholder made the next argument:
Sinjel maintains, nonetheless, that Ohio Casualty waived Sinjel’s noncompliance with the emptiness clause or any protection to protection by persevering with to just 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 proven fact that Ohio Casualty obtained and retained Sinjel’s premium fee can’t fairly be discovered to function as a waiver in mild of the undisputed proven fact that Ohio Casualty not solely had already unequivocally denied Sinjel’s declare for the November 2020 fireplace loss earlier than receiving the premium fee however it additionally did so once more after receiving the premium fee. Ohio Casualty’s actions plainly don’t ‘evidence[e] an intention permanently to surrender the right’ to disclaim/defend Sinjel’s declare.
Some could 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 principles of both waiver and estoppel. There is no factual basis for estoppel. Estoppel, unlike waiver, ‘involves some element of reliance or prejudice on the part of the insured before an insurer is foreclosed from raising a ground for denial of liability that was known at an earlier date.’ Pitts By and Through Pitts v. American Sec. Life Ins. Co., 931 F.2d 351, 357 (5th Cir. 1991) (citing Restatement (Second) of Torts § 894(1) (1977). There is no allegation of any factual basis to support a finding 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, individuals will likely 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).