To Obtain Coverage Insured Must Pay a Premium

Erie Insurance Exchange (Erie Insurance) claims that the trial court
erred in granting partial summary judgment in favor of Icon, d/b/a
Allure on the Lake (Icon), on Icon's complaint for breach of contract.
Erie Insurance contends that the trial court improperly determined as a
matter of law that the commercial insurance policy (the Policy) it
issued to Icon was ambiguous and entitled Icon to additional income
protection coverage after a fire had destroyed Icon's building.

In Erie Insurance Exchange v. Icon, Inc., d/b/a Allure on the Lake, et
al., No. 23A-PL-664, Court of Appeals of Indiana (January 12, 2024) the
Court of Appeals interpreted the entire policy.

FACTS

On June 3, 2019, a fire in Chesterton, Indiana destroyed a banquet hall
(the Hall) that Icon owned. At the time of the fire, the Hall was
insured by Erie Insurance. The Policy stated that "in return for your
timely premium payment, your compliance with all of the provisions of
this policy . . . [Erie Insurance agrees] to provide the coverages you
have purchased." [emphasis added]

The Declarations page specifically directed the insured to refer to the
Supplemental Declarations to find additional information about included
coverages under the Policy.  Income protection coverage-as identified in
"Coverage 3" of the Declarations-is defined as loss of "income" and/or
"rental income" you sustain due to partial or total "interruption of
business" resulting directly from "loss" or damage to property on the
premises described in the "Declarations" from a peril insured against.
"Loss" or damage also includes property in the open, or in a vehicle, on
the premises described in the "Declarations" or within 1,500 feet
thereof.

The Supplemental Declarations specifically indicate what "amount of
insurance" the Policy provides for by displaying a dollar amount under
the "amount of insurance" column.

The Policy further provided that when additional income coverage is not
purchased by the insured, a minimal, i.e., "standard" protection
coverage is provided as part of the basic package.

CLAIM PAYMENTS

Erie Insurance paid both the property damage and building contents
portion of Icon's claim, it maintained that the maximum income
protection afforded under the Policy was $25,000 and not $1 million
because Icon did not pay a premium for additional income protection
coverage.

REFUSAL TO PAY INCOME LOSSES


breach of contract and bad faith.

The trial court granted Icon's cross-motion for partial summary
judgment, concluding that the Policy was ambiguous as to the available
amount of income protection coverage to which Icon was entitled.

DISCUSSION AND DECISION

Insurance policies are contracts subject to the same rules of judicial
construction as other contracts. Insurance policies must be read as a
whole.

The trial court’s conclusion was reversed and the trial court was
instructed to enter partial summary judgment for Erie Insurance and to
conduct further proceedings consistent with this opinion.

ZALMA OPINION

Insurance contracts must be read before accepting the offer from an
insurer to insure. In this case the insured, Icon, either failed to read
the coverages provided or decided to not purchase income coverages. The
Court of Appeals found that since Icon did not pay a premium for the
income coverage it had no coverage. Regardless of why it did not pay the
premium by not doing so Icon recovered the minimal coverage for Income
but not the coverages they wanted after a real loss.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos
and let them subscribe to the blog and the videos.

Subscribe to my substack at
https://barryzalma.substack.com/publish/post/107007808

Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01

Go to the Insurance Claims Library –
http://zalma.com/blog/insurance-claims-library.

---

Support this podcast: https://podcasters.spotify.com/pod/show/barry-zalma/support