Burne v. Franklin Life Insurance Co.

Brief Fact Summary.

Plaintiff’s husband died from an accidental automobile accident. Plaintiff’s husband had an insurance policy with Defendant that stated if Plaintiff’s husband died from an accident within ninety days, Plaintiff would receive $15,000. Here, Plaintiff’s husband only survived the accident because Plaintiff put her husband on life support machines. About four years later, Plaintiff removed the machines, and Plaintiff’s husband died. Plaintiff requested the $15,000 from Defendant, and Defendant refused to provide the money because Plaintiff’s husband’s death occurred after the ninety-day period. Plaintiff brought suit, and the trial court ruled for Defendant. Plaintiff appealed.

Synopsis of Rule of Law.

An insurance policy provision that is not capable of reasonably being applied to a specific factual scenario should not be enforceable, but rather, discarded.

Facts.

Burne’s, Plaintiff, husband purchased a life insurance policy and listed Plaintiff as a beneficiary. Under Plaintiff husband’s, Decedent, policy with Franklin Life Insurance Co., Defendant, if Decedent’s death resulted from an accident, an extra $15,000 would be paid to Plaintiff within ninety days of the accident. Specifically, Decedent’s death resulted from being struck by an automobile accident. After the accident occurred, Decedent only survived due to the life support machines. Plaintiff chose to keep Decedent alive for four and a half years. When the life support machines were removed, Decedent died. Neither party disagrees that Decedent’s death was a result of his injuries or that Decedent’s death was a result of an accident. Nevertheless, Defendant refuses to pay Plaintiff the $15,000 because Decedent’s death did not occur within the ninety-day period. Plaintiff brought suit on the grounds that Defendant should abide by the policy. The trial court held for Defendant, and Plaintiff appealed.

Issue.

Whether an insurance policy provision that is not capable of reasonably being applied to a specific factual scenario should not be enforceable, but rather, discarded.

Held.

Yes, insurance policy provision that is not capable of reasonably being applied to a specific factual scenario should not be enforceable, but rather, discarded.

Dissent.

The majority erred in requiring Defendant to pay Plaintiff because the party’s intent in the agreement was that the death must occur within the ninety-day period. The terms are clear an unambiguous, and those terms should govern.

Discussion.

An insurance policy provision that is not capable of reasonably being applied to a specific factual scenario should not be enforceable, but rather, discarded. Specifically, if a condition on an insurance policy would cause in an arbitrary result, in favor of the insurance company escaping liability, the condition is discarded and the rest of the agreement stands. Here, the insurance policy provided financial coverage within ninety days to Decedent’s beneficiary, Plaintiff, in the event that Decedent’s death was a result of an accident. The time period in the agreement, ninety-days, was created to ensure that the $15,000 was solely to be paid if the accident was truly an accident. Neither party disputes that Decedent’s death was an accident. Further, neither party disputes that the only reason Decedent survived longer than ninety-days was due to the life support machines. Therefore, the application of the ninety-day period would cause an arbitrary result, and the condition should be discarded. Defendant must pay Plaintiff the $15,000 and the trial court’s holding is reversed.