Gallant Ins. Co. v. Isaac
Indiana Court of Appeals
732 N.E.2d 1262 (Ind. App. 2000)
Christina Isaac (defendant) contacted her insurance agent, Thompson-Harris, about adding full coverage for a new car on the day her old policy expired; the agent told her the new coverage would immediately "bind" and that she could pay on the following Monday, consistent with the agent's common (if technically unauthorized) practice of orally confirming coverage before payment, a practice insurer Gallant Insurance Company (plaintiff) knew about and had repeatedly allowed to stand. The agent faxed in the policy change adding the new car on December 3, noting Isaac would pay on Monday; Isaac was in an accident on December 4, paid the premium and reported the accident on December 5, and Gallant's formal policy stated coverage took effect December 6. Gallant sued Isaac and another accident party seeking a declaration the policy wasn't in effect at the time of the accident; summary judgment was granted for the defendants, and Gallant appealed.
Whether a principal is bound by its agent's oral confirmation of insurance coverage, made under the agent's inherent authority, even though it exceeded the agent's actual written authority and preceded the insurer's own formal effective date.