The opinion of the court was delivered by: KATZ
On November 12, 1996, fifteen year old Anthony Tartaglione was visiting in the home of John and Patricia DiDomenic, and at noon that day he fell off a kitchen stool and hit his head. At 12:01 p.m., Mrs. DiDomenic called the police to report the incident. Anthony was taken to the hospital, where he was pronounced dead within the hour.
Anthony's parents, the interested parties in this suit,
have prepared to file suit in state court against the DiDomenics to recover for their son's death. In this declaratory judgment action, the DiDomenics' homeowners' insurer, American Equity, seeks a ruling that it is not required to provide coverage for the accident because the accident occurred between the time the DiDomenics applied for coverage and the time that the policy was bound by the company later that day. Before the court are cross-motions for summary judgment. For the reasons that follow, the court finds that the occurrence is covered under the policy, and therefore plaintiff's motion will be denied and the interested parties' motion will be granted.
On November 12, 1996, at around 9:30 a.m., Patricia DiDomenic went to the office of Gina Burke, and independent insurance broker. Mrs. DiDomenic completed an application for homeowners' insurance from American Equity. (See Pl. Mot. Ex. B.) The application consisted of a standardized pre-printed form with boxes and spaces to be filled in by the applicant. The boxes indicating the dates of coverage applied for were filled in from "11/12/96" to "11/12/97," and pre-printed language under the boxes said, "12:01 AM STANDARD TIME." Above the boxes, the form said, "Effective date may not be earlier than postmark of FAX date." Further down the page, the form said, "This is an application for insurance only. No Binding Authority is extended to the Producer, nor is coverage bound until received and approved by the Insurance Underwriters." In the section labeled "Underwriting Questionnaire," Mrs. DiDomenic answered "no" to the question, "Has the applicant suffered any losses during the last 3 years?"
Mrs. DiDomenic left Ms. Burke's office, did some other errands, and returned home later that morning. At noon, Anthony Tartaglione's accident occurred as described above.
At the time of Anthony's accident, the application for homeowners' insurance Mrs. DiDomenic had completed that morning had not yet made its way through the approval process. At 1:35, Ms. Burke faxed the application to American Equity's agent, Insurance Innovators. Insurance Innovators approved the application and bound the policy sometime that afternoon. The front page of the policy states that the policy's coverage period is from 11/12/96 to 11/12/97, "At 12:01 A.M. Standard Time." (See Pl. Mot. Ex. C.)
The Tartagliones argue that the accident is covered by the policy, because the policy states that coverage began at 12:01 a.m. 11/12/96, and the accident occurred after that time. American Equity argues that the accident is not covered by the policy, because by the time the application was actually received and evaluated by Insurance Innovators in the afternoon, it contained incorrect information, and therefore the accident was not covered.
In support of its position, American Equity cites Carroll v. Preferred Risk Insurance Co., 34 Ill. 2d 310, 215 N.E.2d 801 (Ill. 1966), in which the Illinois Supreme Court held that the insurance company was not required to cover an accident that occurred between the time of the application and the actual issuance of the policy three days later, because the applicant failed in his good faith duty to update his application. Certainly Carroll is not binding precedent, but this court finds the dissent in that case persuasive. The dissent points out that because the policy at issue provided for coverage beginning at a specified antecedent time, it was not bad faith for the applicant not to inform the company about the accident, but rather the insurance company entered into a binding contract and should be held to it: "The majority overlooks the crucial difference between the duty to notify of changed conditions under an ordinary application and the duty that exists when predated insurance is involved." 215 N.E.2d at 805. The dissent explained:
In these circumstances it seems to me singularly inappropriate to speak of a lack of good faith on the part of the applicant for the insurance policy. In this case the applicant sought insurance coverage from the day he made the application. He applied for a policy that would be effective beginning 12:01 A.M. June 22, 1962. The company was not required to accept that application, but it did so. To permit the company to repudiate its contract thereafter seems to me to sanction bad faith on the part of the insurance company.
Id. Simply put, the application form and policy language (drafted by the insurer, it is worth noting) clearly state that coverage begins at 12:01 a.m.; and once the company so contracts, it must perform accordingly when an ...