Many times, for a life insurance lawyer, the question is, When did the life insurance coverage take effect.
This question was partially answered in a 1980 opinion from the Eastland Court of Appeals. The opinion is styled, Durham Life Ins. Co. v. Cole.
Kim Cole, a widow, individually and as next friend for her two minor children, sued Durham claiming benefits under a group life insurance policy written by Durham. A trial resulted in a judgment against Durham for $10,000 together with penalty of $1,200 and attorney fees of $5,000. Durham appealed and this Court ruled in favor of Durham.
Kim’s husband, Robert Cole, was an employee of K A Motors of Breckenridge. He was killed in a motorcycle accident on August 17, 1979. On or about July 27, 1979, K A Motors had made an application for group insurance with Durham which included the name of Robert Cole. The application requested an effective date of August 1, 1979 but contained a provision that “no insurance will become effective without the written approval of the insurer.” The written approval was given August 20, 1979 for an effective date of September 1, 1979.
Randy Howell, an insurance agent for Durham, contacted Jim Markle regarding the coverage for K A Motors. It is conceded that Jim Markle is the general agent of Durham. Howell discussed the desired effective date of the insurance coverage and believed that if all matters pertaining to the application for insurance were received by the tenth of the month coverage would be effective from the preceding first. The application together with all paper work necessary for the insurance coverage including a check for the premium was mailed to Markle’s office on July 30, 1979. The check was deposited by Markle on August 7, 1979.
On August 20, 1979, following Cole’s death, Howell contacted Markle’s office to determine the effective date of the policy. An unidentified person in the office told Howell August 1 was the effective date. He requested claim forms, since there had been a death. Shortly thereafter, Markle called Howell and stated that coverage had been approved on August 13, 1979 for an effective date of September 1, 1979 and, therefore, the death of Cole was not covered. This lawsuit resulted.
On appeal, Durham argues that as a matter of law no policy of insurance was in effect on the date of Robert Cole’s death and there is no evidence to support the finding the coverage was effective as of August 1, 1979.
As with any business contract, life insurance contracts do not become binding until there is complete agreement between the parties evidenced by an offer and an acceptance. Absent such offer and acceptance, no obligations arise. The application for insurance in this case clearly stated that there was only one method of acceptance: “written approval of the insurer.” It is undisputed that the only written approval given by the insurer was dated three days after Cole’s death. Therefore, no insurance was effective on the date of Cole’s death unless the requirement of written approval was waived.
The only indication that Durham caused the policy to be effective on August 1, 1979, is the hearsay testimony of Randy Howell to the effect that he was told by an unidentified female in Markle’s office that August 1, 1979, was the effective date. There is no evidence as to the identity of this female, the capacity in which she was employed or what records she checked to obtain her information. The record is void of any fact which could form the basis of an exception to the hearsay rule. Therefore, no evidence exists to support the finding that Durham caused the policy to be effective August 1, 1979.