ALLSTATE INSURANCE COMPANY v. Diana Lynn TARRANT Et Al.
2012 Tenn. LEXIS 213
| Tenn. | 2012Background
- Allstate sought declaratory judgment to determine whether the van was covered under a $500,000 commercial policy or a $100,000/$300,000 personal policy.
- The Tarrants, Blue Ribbon Cleaning, Inc., and Allstate’s agent allegedly moved the van from the commercial to the personal policy in March 2005 for premium savings.
- Trial court held that Mr. Tarrant ratified the transfer by paying premiums after receiving notices reflecting the change.
- Court of Appeals reversed; the Tennessee Supreme Court affirmed on different grounds, holding the agent’s transfer was not ratified and Allstate was estopped from denying commercial coverage.
- The Jones Agency’s actions were deemed to be those of the insurer, not the insured, under Tenn. Code Ann. § 56-6-115(b); estoppel applied because of agent’s mistake benefiting the insurer.
- Remanded for determinations of additional premiums due for the commercial coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of ratification on transfer | Tarrant ratified by paying premiums after notices. | Jones Agency acted as insurer’s agent, not Tarrant’s; no ratification by Tarrant. | No ratification by Tarrant; agency mistake cannot be ratified. |
| Estoppel from denying coverage | Insurer should be estopped from denying commercial coverage due to agent’s mistake. | Policy terms and mutual assent issues govern; estoppel not applicable. | Insurer estopped from denying coverage under the commercial policy. |
| Agency relationship and authority | Ms. Smith acted as Tarrant’s agent to change coverage. | Ms. Smith acted as insurer’s agent; changes bind insurer, not insured. | Ms. Smith was insurer’s agent; Tarrant could not ratify her actions. |
| Mutual assent to replacement coverage | Tarrant’s instruction to place vans on the commercial policy constituted acceptance. | Mutual assent failed due to miscommunication about “vans.” | Mutual assent failed; replacement coverage not binding on Tarrant. |
Key Cases Cited
- McTyier v. Maryland Casualty Co., 266 S.W.767 (Tenn. 1924) (agency extends to renewal; insurer as agent for policy issued and renewal)
- Henry v. S. Fire & Cas. Co., 330 S.W.2d 18 (Tenn. App. 1958) (insured relied on insurer’s agent; estoppel for agent’s mistake)
- Vulcan Life & Accident Ins. Co. v. Segars, 391 S.W.2d 393 (Tenn. 1965) (insurer bears consequences of agent’s mistake)
- Richmond v. Travelers’ Ins. Co., 130 S.W.790 (Tenn. 1910) (renewal as offer; acceptance or rejection by insured)
- Woodfin v. Neal, 65 S.W.2d 216 (Tenn. 1933) (mutual assent and contract formation in insurance)