Backdating insurance law policy state
I guess what makes me uneasy is the feeling that it seems clear what was intended, even if that is not what the policy says.
The upshot is that because of the sloppy draftsmanship of the manuscript endorsement, the insurer was unable to assert and rely on a policy coverage restriction that it thought had been agreed upon but that in fact was not memorialized in the actual policy language.
Long story short, they only have to repay the portion of your premium that extends past the cancellation date; i.e.
you paid your bill on the 1st and cancelled on the 5th, then they would refund you from the 5th through the end of the month.
Moreover, as Judge Staton also noted, the endorsement cross-references Item 6, which explicitly refers to “Full Prior Acts.” The insurer drafted the endorsement, so its complaints that the endorsement doesn’t say what had been agreed upon or what was intended ring hollow.
Just the same, there is something about this dispute that makes me uncomfortable.
Insurance companies in Illinois are legally required to issue refunds for “unearned premium”, but you didn’t prepay your bill.If nothing else, this case is an important cautionary tale for anyone at an insurance company responsible for drafting policy language, particularly in the form of manuscript endorsements.I know from experience, particularly when in a hurry, that sometimes the mind will play tricks and will substitute words and meanings that are not in fact there on the printed page.The endorsement doesn’t say that the increased limit does not apply to acts or omissions that took place before the policy period.
As Judge Staton herself noted, the endorsement does not refer to acts or omissions that took place before the policy period, it refers to Claims made against the Insured before the policy period.In reading Judge Staton’s account of the pre-renewal communications between the insurer and the law firm’s broker, using terminology that is very familiar to me from my involvement in many similar exchanges, it seems clear that as far as the participants in the process were concerned, the past acts date for the million increased limit would be at the inception date of the renewal policy.