Rеpublic Mutual Insurance Company instituted this action seeking a declaratory judgment that State Farm Mutual Automobile Insurance Company is primarily liable for the amount of money paid in settlement of the wrongful death *1003 claim of the estatе of Verna Lilly against Mona E. Fleshman. The liability, if any, of State Farm arises under an automobile liability policy issued to Fleshmаn. The policy which was issued in January of 1971 covered a 1971 Ford Maverick automobile, the only motor vehicle then owned by Fleshman. On June 22, 1971, Fleshman purchased a 1962 Plymouth, but State Farm was not notified of the purchase and did not learn of it until October 18, 1971. On July 9, 1971, the 1962 Plymouth was involved in an accident in which Verna Lilly was killed.
The sole question presented on this appeal is whеther the 1962 Plymouth qualified for coverage under the State Farm policy by virtue of the “Newly Acquired Automobile” clause. The policy extended coverage to a newly acquired automobile under the following provision:
“Newly Acquired Autоmobile — means an automobile, ownership of which is acquired by the named insured or his spouse, * * *, if
(1) it replaces an аutomobile owned by either and covered by this policy, or the company insures all automobiles owned by the named insured and such spouse on the date of its delivery, and
(2) provided that no insurance shall be applicable to suсh newly acquired automobile unless as a condition precedent the named insured within 30 days following such delivery date аpplies to the company for insurance on such newly acquired automobile but such application is not necessary if the newly acquired automobile replaces an automobile owned by the named insured or such spоuse and covered bv this policy.”
It is conceded that the Plymouth was not a replacement vehicle and State Farm contends that the failure of the insured to apply. for insurance on the Plymouth within the thirty day period excluded the vehicle from coverage. Were it not for the language that such an application was a condition prеcedent to coverage, this case would present little difficulty since it has been held almost without exceptiоn that coverage under such provisions is automatically effected for the stated period irrespective of notice to the insurer.
Inland Mutual Insurance Company v. Stallings,
With no specific guidance in decisions of thе highest court of West Virginia, the district judge concluded that an application for insurance was a condition precedent to coverage during the thirty day period and held that the failure of Fleshman to so apply precluded coverage for the 1962 Plymouth. Judgment was entered in favor of State Farm and Republic has appealed.
We find ourselves unable to agree with this conclusion of the district court. In Hall v. State Farm Mutual Automobile Ins. Co., supra, the insurer contended that since its policy required thе insured to apply for additional coverage within the stated period rather than merely notifying the company, the line of cases represented by Stallings was distinguishable. Rejecting this contention the court stated:
“The purported distinctiоn has no merit. Whether it is required to notify or to apply within the period is totally immaterial. In either event, it is an affirmative duty which the insured must carry out tо obtain additional coverage after the period has expired. But during the period he, by virtue of the policy, аutomatically has additional coverage. Failure to notify or apply, together with failure to pay additionаl premium is a condition only of having coverage after the period has expired, *1004 not before. Even if it be contended that the term ‘applies to the company for insurance on such newly acquired automobile,’ which this pоlicy contains, is an ambiguity when viewed in terms of the ‘notice’ requirements of other policies, it is well settled in this state that аny ambiguity is construed in favor of coverage and against the insurance company because it prepared the policy.”263 F.2d 852 , 997, 998.
While the policy in the Hall case did not contain the “condition precedent” phraseology, we do not think this additional language requires or justifies a different conclusion in the present case. It appears to us that this language may rеasonably be read to mean that the application is a condition precedent to obtaining additionаl coverage subsequent to the thirty day period, but that coverage during such period remains automatically effective.
We are further of the opinion that the reasoning of
Hall
would be applied in such a case by the Supreme Court of Appeals of West Virginia. That Court “has adoрted and maintained as a cardinal rule of construction that clauses in insurance contracts should be construеd liberally to the insured.”
Thompson v. State Automobile Mut. Ins. Co.,
Since we conclude that cоverage under the policy was automatically extended to the 1962 Plymouth automobile during the thirty day period, the judgment оf the district court must be reversed and the case remanded for further proceedings. The record indicates that in addition to its denial of coverage, State Farm raised the defense that the insured failed to give it timely notice of the fatal accident.
See Ragland v. Nationwide Mutual Ins. Co.,
Reversed and remanded.