Notice not required when policy lapses for non-payment
Notice not required when policy lapses for non-payment
In Bank of Oklahoma v. Monumental Life, Case No. 06-6137, the Tenth Circuit affirmed a summary judgment in favor of the insurance company. The claim involved a mortgage life policy from Monumental that was supposed to pay off the mortgage in case the insured/homeowner died. The insured never paid any premiums for the policy, and died three years later. His widow sought coverage and brought claims against the bank and the insurance company. The widow settled with the bank and assigned any right of recovery to the bank as against the insurance company. The court held that because there were no premiums paid for the coverage, that there was simply no coverage in effect at the time the insured died. The court states, “The Policy's provision along these lines - allowing for the cessation of contractual obligations when payment is not forthcoming despite a reasonable grace period - is treated as valid, enforceable, and, indeed, essential under Oklahoma law for obvious and equitable reasons. See Gen. Am. Life Ins. Co. v. Brown, 56 P.2d 809, 812 (Okla. 1936).
There was nothing in the agreement between the Bank and Monumental which required Monumental to tell the Bank or the insured that it had not received any premiums or that the policy lapsed. Thus, there could be no coverage by promissory estoppel. While the insured may have been a third party beneficiary of the contract between the Bank and Monumental, the issue was waived on appeal.
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In Bank of Oklahoma v. Monumental Life, Case No. 06-6137, the Tenth Circuit affirmed a summary judgment in favor of the insurance company. The claim involved a mortgage life policy from Monumental that was supposed to pay off the mortgage in case the insured/homeowner died. The insured never paid any premiums for the policy, and died three years later. His widow sought coverage and brought claims against the bank and the insurance company. The widow settled with the bank and assigned any right of recovery to the bank as against the insurance company. The court held that because there were no premiums paid for the coverage, that there was simply no coverage in effect at the time the insured died. The court states, “The Policy's provision along these lines - allowing for the cessation of contractual obligations when payment is not forthcoming despite a reasonable grace period - is treated as valid, enforceable, and, indeed, essential under Oklahoma law for obvious and equitable reasons. See Gen. Am. Life Ins. Co. v. Brown, 56 P.2d 809, 812 (Okla. 1936).
"[I]t is quite generally held that the provisions of an insurance policy requiring prompt payment of the premiums, and the provision for lapse or cessation of the policy for nonprompt payment are valid, essential, and enforceable provisions of the contract." (internal quotation omitted)).”
There was nothing in the agreement between the Bank and Monumental which required Monumental to tell the Bank or the insured that it had not received any premiums or that the policy lapsed. Thus, there could be no coverage by promissory estoppel. While the insured may have been a third party beneficiary of the contract between the Bank and Monumental, the issue was waived on appeal.
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