Insurer claims applicant who paid deposit was covered under temporary agreement only: Breach of contract: Lost benefits: Settlement

Law Reporter, Aug 2003

Doe v. Roe Ins. Co., Cal., confidential court and docket no., Mar. 15,2003.

Doe completed an application for a life insurance policy. The application named Doe as "primary proposed insured" and his wife and two children as "other proposed insureds." Doe then paid a sum equal to one month's premium as a deposit. The application referred to a "temporary insurance agreement," which limited coverage to the primary proposed insured only, and limited coverage to $50,000. The agent informed Doe, however, that payment of the deposit served to bind coverage under the policy-for full policy limits-for the entire family.

While Doe's application was under review, his wife and son were killed in an automobile accident. Doe made a claim against the policy. The insurer denied payment. Doe incurred loss of policy benefits of approximately $110,000-the coverage Doe had elected for his wife and son. He also suffered emotional distress.

Doe brought suit against the insurer, alleging breach of contract, breach of the implied covenant of good faith and fair dealing and negligent misrepresentation. Plaintiff contended that the temporary insurance agreement was unenforceable because (1) it unlawfully restricted coverage to the primary proposed insured only, and (2) it was ambiguous as a matter of law.

Defendant contended that because Doe's application had not been approved, he was insured under the temporary insurance agreement only.

The parties settled for $2.1 million.

Plaintiff's Counsel

Craig A. Miller, San Diego, Cal.