Richard Zeller, Jr. v. AAA Insurance Company
40 N.E.3d 958
| Ind. Ct. App. | 2015Background
- Zeller bought a homeowners policy from AAA with a reinstatement provision if a late premium was paid and the policy reinstated; reinstatement voids if any payment isn't honored or if a claim arises from an event between cancellation and payment receipt.
- Zeller paid after the due date but AAA accepted the payment; policy remained canceled during the period between cancellation and receipt if reinstatement didn’t occur.
- Two days after AAA accepted the payment, Zeller’s garage burned; the claim was denied as the policy was not in force.
- Trial court ruled for AAA, holding no evidence of reinstatement.
- Zeller appealed arguing AAA reinstated the policy by accepting the late payment and the claim should be covered; court agreed to reverse and remand.
- The appellate opinion interprets the policy as a whole and determines that acceptance of payment constitutes reinstatement absent voiding conditions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AAA’s acceptance of late payment reinstated the policy | Zeller | AAA | Yes, policy reinstated upon acceptance of payment |
| Whether the contract language requires a formal reinstatement notice to effect coverage | Zeller | AAA | No separate notice required; reinstatement occurs upon adequate payment and acceptance |
| Whether the policy was in effect at the time of loss | Zeller | AAA | Policy was in effect on the loss date due to reinstatement |
| Relation between the expiration notice and reinstatement provisions | Zeller | AAA | Expiration notice form not incorporated; reconcile with reinstatement provision |
| Whether bad-faith and damages claims should be addressed on remand | Zeller | AAA | Remand for consideration of bad faith and damages |
Key Cases Cited
- Wright v. Am. States Ins. Co., 765 N.E.2d 690 (Ind. Ct. App. 2002) (interpret policy terms and as ordinary policyholder would)
- Vann v. United Family Mut. Ins. Co., 790 N.E.2d 497 (Ind. Ct. App. 2003) (interpret policy to avoid rendering terms meaningless; interpret against insurer)
- Keckler v. Meridian Sec. Ins. Co., 967 N.E.2d 18 (Ind. Ct. App. 2012) (cannot rewrite policy terms; enforce as written)
- Terre Haute First Nat’l Bank v. Pac. Empl. Ins. Co., 634 N.E.2d 1336 (Ind. Ct. App. 1993) (read policy as a whole; harmonize conflicting provisions)
- Bain v. Bd. of Trs. of Starke Mem. Hosp., 550 N.E.2d 106 (Ind. Ct. App. 1990) (formation of contract upon acceptance of offer)