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In Mississippi, insured persons have a mandatory obligation to read the policy



Ladner Investments Inc. (Ladner) and its sister companies are in the transportation and logging industry. In 2010, Michael Conway Inc. (MCI) Ladner sold a domestic insurance policy from Shelter Mutual Insurance Company (Shelter Insurance) to cover equipment used in Ladner's operations.

Year Ladner Investments Inc. v Michael Conway Inc ., NO. 2019-CA-01111-COA, Court of Appeals of the State of Mississippi (July 21, 2020), the Court of Appeal was asked to deal with Ladner's lawsuit against MCI (among others defendants) in damages following the injury loss of an uninsured Caterpillar. The district court granted a summary judgment in favor of MCI and dismissed Ladner's trial. The district court found that Ladner's claims were ruled out by the Mississippi "doctrine" doctrine.

FACT PRINT

In 201

0, MCI sold an internal marine insurance policy from Shelter Insurance to Ladner to cover equipment used in Ladner's business. Ladner bought and sold equipment routinely and often during normal business. In the same way, Ladner would often add and remove equipment to and from coverage according to his insurance. The process of adding equipment to coverage under the policy was initiated by Ladner, or the seller of the equipment, or the finance company involved in the transaction. MCI is contacted by a person from one of these devices by phone, email, text message or fax with instructions for adding specific equipment to Ladner's insurance.

If MCI received a request to add equipment to Ladner's insurance policy from a party other than Ladner, such as the equipment dealer, or finance company, MCI would contact Ladner to gather information needed to obtain insurance for the new equipment before it leaves the insurance change to Shelter Insurance. For each piece of equipment added or deleted from the coverage, Shelter Insurance would issue a new statement and send the new statement to Ladner. MCI sent the insurance certificate to the insured, the sales representative and / or the financing company.

On July 17, 2015, Ladner took possession of a Caterpillar haulier from Puckett Machinery and on July 30, 2015, Micah Ladner, as president of Ladner, signed an installment sale contract for the haulier. The jumper's $ 203,300.00 purchase price was funded by Caterpillar Financial Services Corporation (Caterpillar Financial). Puckett Machinery forwarded that sales agreement, which included an "insurance selection form," to Caterpillar Financial for financing. Caterpillar Financial testified that Caterpillar Financial faxed the insurance policy for the new carrier to MCI on July 31, 2015, to ensure that Caterpillar Financial was listed as the loss recipient for the new carrier.

The skier was not added to the Protection Policy because MCI claimed that it never received fax insurance. The document does not contain any evidence that there was any communication between Ladner and MCI about the insurance of the rider.

Ladners confirmed that no one had contacted MCI before the skier burned to check if MCI had received the insurance selection form via fax from Caterpillar Financial or to ask for proof of insurance for the new skier. Prior to the fire, MCI sent out Ladner declarations that included specified lists of equipment insured under Ladner's Shelter Insurance policy. Four spiders were listed. The cat slider was not noted.

The records reflected that if MCI received an insurance claim from anyone other than Ladner, as alleged, MCI would contact Ladner to gather additional information needed to obtain insurance for the new equipment before submitting insurance change to Shelter Insurance [19659002] The jumper burned on November 5, 2015, almost four months after Ladner took over. Shelter denied Ladner's claim because the skier was not listed in his insurance policy.

Ladner sued MCI, claiming that it was liable to it for negligent failure to obtain insurance coverage on the skier.

The district court found that Ladner's claims against MCI are excluded from the doctrine of compulsory education, which, as the district court explained, is "where knowledge of an insurance property is added to an insured regardless of whether the insured read the insurance." Since it was "undeniable" that before the loss occurred, Shelter Insurance sent two declarations to Ladner that did not include the subject of the skier, Ladner was provided with that knowledge.

DISCUSSION

Ladner argued that by accepting the request for insurance by fax through the parties' five-year course of action, MCI satisfactorily assumed the obligation to process the insurance claim to add the subject skidder to the Shelter policy.

Although a complainant may show an assumed obligation based on damaging trust, the duty taken is limited to the scope of the undertaking given. All liability imposed must be limited to the obligation it assumes. According to Ladner, this alleged obligation arose from Ladner's dependence on the parties' conduct in handling other insurance claims on other equipment earlier

Although Caterpillar Financial, not Ladner, initiated the insurance claim in this case. , and the Court of Appeals found no evidence in the minutes of any communication between MCI and Ladner regarding the insurance of the subject skidder that would normally take place. In short, there was no evidence that MCI assumed an insufficient obligation to obtain insurance or process the insurance claim of the skier in question in this case.

Obligation to read

As a legal issue, an insured may not neglect or intentionally omit acquaintance with the insurance terms and then complain about his ignorance of them. [ Gulf Guar . Life Ins . Co . v . Kelley 389 So. 2d 920, 922 (Miss. 1980)].

In Mississippi, insureds are insured with knowledge of the contents of their insurance, whether or not they have read the insurance policies. This "compulsory reading" or "imputed knowledge" doctrine is firmly rooted in the Mississippi precedent and excludes Ladner's claims against MCI.

It was the insured's failure to read the policy – not the agent's customs offense – that was the immediate cause of their injury. The problem could have been cleared up by reading the policy. Ladner could have stated that the subject of skidding is not covered by the Shelter Insurance policy simply by reading statements of 12 October 2015 or statements of 30 October 2015. Ladner's claim of negligence against MCI fails with a legal issue.

The problem in this case is MCI's alleged failure to process an insurance claim to obtain coverage for the subject skidder under the Shelter Insurance policy. Ladner's failure to read the policy it purchased to cover the property in question (the skier) almost caused its damage and precludes Ladner's claims against its agent, MCI.

I have argued until I have exhausted my ability to speak that is necessary for all insured to read the insurance. In Mississippi, that's the law. In other states, the courts are not as strict as the Mississippi. Ladner simply assumed – since the lender allegedly sent a fax to MCI – that the coverage was placed. Then, before the skier was injured, they were informed in writing by MCI that it was not on the list of covered equipment. Although they were given twice to detect the lack of insurance, Ladners also did not read anything directly to insure him. There was no insurance because of their own negligence, not the agent's failure to act, resulting in the denied claim. An insured person should never take on anything with regard to insurance.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant focusing on insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurance companies. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and attorney handling attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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