Mortgage Life Insurance Attorney Needed

Fort Worth life insurance attorneys need to know about this case. It is an opinion issued by the U.S. 5th Circuit Court of Appeals in 2005. It is styled, Monumental Life Insurance Company v. Hayes Jenkins.
Here are some facts:
In November 2000, the insureds, husband and wife, purchased a house executing a mortgage note and an escrow agreement with the lender. Two months later the lender, by agreement with the insurer, mailed an unsolicited application for a mortgage life insurance policy underwritten by the insurer. All the enclosed materials promised a payoff of the mortgage balance up to $300,000 in the event of one of the insured’s death and emphasized a “no risk” 30 day trial period. The insureds promptly completed and mailed the application. The husband died four days after the policy became effective, but before the mortgage company issued the first month’s premium payment and the wife demanded that the proceeds of the mortgage life policy be applied to liquidate the remaining loan balance pursuant to the terms of the policy. The insurer refused and filed a declaratory judgment action seeking a ruling that at the time of the husband’s death the policy was not in force for failure by the insureds to pay the required premium. The wife counterclaimed against the insurer for breach of contract and violations of the Texas Insurance Code and DTPA. She also filed a third party complaint against the mortgage lender asserting claims for breach of the escrow agreement, negligence, and violations of the DTPA and Insurance Code. The district court granted the insurer and the lender’s motions for summary judgment, dismissing all of the wife’s counterclaims and third party claims and this appeal followed.
The 5th Circuit reversed, finding that genuine fact issues existed. After examining a cover letter from the mortgage company, the insurer’s marketing materials, and the policy itself and considering the “totality of these writings,” the court concluded that fact issues existed as to whether the insurer waived the requirement that the first premium be paid before coverage could be effective. Agreeing with the insured that Texas law did not recognize waiver as a means to “enlarge the risks” or to “create a new and different contract,” the court held that an insurer can waive a “condition precedent” to coverage such as the prepayment of the first premium as in this case where it unconditionally approved the insured’s application with an effective date “prior to receiving … first premium payment … and in the full knowledge that — under its arrangement with the mortgage company — the Jenkin’s could not possibly have been invoiced until sometime after the effective date of the policy.” Similarly, the court found that the insurer may be estopped to deny coverage prior to receipt of the first premium payment because the insureds may have relied to their detriment on the insurer’s numerous and consistent representations in their letters and promotional materials that the insureds would be “fully covered” during the 30 day “no risk” policy examination period.
This case serves as a reminder that “no matter what reason the insurance company uses to deny your claim” that you must seek the advice of a life insurance attorney, in order to find out whether or not the assertions by the insurance company are proper and legal.