Kimmel v. Western Reserve Life Assur. Co. of Ohio
627 F.3d 607
7th Cir.2010Background
- Richard Kimmel applied for a $500,000 life insurance policy on Nov 13, 2006 and paid a premium, receiving a conditional receipt.
- The conditional receipt and application stated the coverage would terminate after 60 days if the company did not act on the application.
- The 60-day period expired Jan 12, 2007 with no decision by Western Reserve Life; Richard died Feb 26, 2007.
- Western Reserve refunded the premium in July 2007 and denied the claim for benefits under the conditional receipt.
- The district court granted summary judgment for Western Reserve; June Kimmel appealed arguing the appearance of coverage and/or bad faith.
- The Seventh Circuit affirmed, holding the 60-day expiration controlled and that the claim was moot on misrepresentation; bad faith claims were not recognized for applications by non-policyholders under Indiana law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the 60-day termination clause control? | Kimmel argues the policy should extend despite timing due to public policy. | Western Reserve argues express 60-day termination controls and Barr/Hornaday support termination. | Yes; express 60-day term controls. |
| Are misrepresentations moot after expiration? | If coverage expired, misrepresentation voids are irrelevant. | Dispositive to decide misrepresentation later if coverage existed. | Moot; no coverage to void. |
| Whether insurer's handling of application can support bad faith claims against an applicant (non-policyholder)? | Western Reserve's handling shows bad faith toward applicant. | Indiana law does not recognize bad-faith duty to applicants; only to insureds. | No duty recognized to applicants; bad-faith claim rejected. |
Key Cases Cited
- Kaiser v. National Farmers Union Life Insurance Co., 339 N.E.2d 599 (Ind. Ct. App. 1976) (recognizes unpaid coverage cannot be terminated if denial/return not given in lifetime)
- Monumental Life Insurance Co. v. Hakey, 354 N.E.2d 333 (Ind. App. 1976) (confirms Kaiser principle on conditional receipts)
- Hornaday v. Sun Life Insurance Co. of America, 597 F.2d 90 (7th Cir. 1979) (express termination in receipt controls when no policy delivered)
- Barr v. The Insurance Co. of North America, 61 Ind. 488 (Ind. 1878) (written contract of assurance expires by its own limitation before loss)
- Brady v. Metropolitan Life Insurance Co., 174 N.E.2d 99 (Ind. App. 1930) (tort duty to act within reasonable time discussed prior to modern good-faith doctrine)
- Hickman v. Erie Insurance Co., 622 N.E.2d 515 (Ind. 1993) (implied duty of good faith and fair dealing in insurance contracts)