Mundy v. Lumberman’s Mut. Cas. Co. (1986)
Mundy, an assistant district attorney, was robbed of silverware from his home. The insurance policy in effect at the time of the robbery limited recovery for the loss of silverware to $1,000, although an earlier edition of the policy had contained no such limit. A copy of the new insurance policy, which had been sent to Mundy, contained multiple references to changes made from the old policy, including a one-page summary of the changes, each identified in a separate paragraph and set off from the others by added space and black dots. Mundy argued that the insurance company’s notice was inadequate, and thus entitled him to full recovery.
How should a court decide whether changes made to an insurance policy are binding upon the insured?
Where a casual reading of the material would give a party notice of changes in an insurance policy (e.g., written in large print or bold type), the insured is bound by limits of the new policy upon receipt, regardless of whether actual notice is effected.