Do Marketing Brochures Broaden Coverage?The possibility of an insured using a marketing piece to obtain coverage broader than what their insurance policy actually provides is addressed. Agencies must make it clear to readers that brochures, pamphlets, newsletters, or other publications are not insurance policies. Disclaimers should be included on any brochure or pamphlet instructing readers to refer to the actual policy for a complete statement of coverage. Court decisions in response to this issue are discussed.
Our agency and many of the companies for whom we write business offer brochures, pamphlets, and newsletters for marketing purposes. These items a not intended to be substitutes for the policies themselves. Is it possible for an insured to use a marketing piece that is not the policy to obtain coverage broader than what the policy itself provides? Mark Holloway, JD, AIC, practices with the law firm of Stephenson Daly Morow and Kurnik in Indianapolis. He concentrates in insurance and tort defense. Prior to attending law school, he was a claims representative for seven year. He prepared the following material which previously appeared in the Indiana Insurance News published by the PIA of Indiana. A Courts have responded to this question two different ways, so let us concentrate on the factors which make the difference between liability and no liability. In Palsce v. Guarantee Trust Life Insurance Co., 588 N.E. 2d 525 (Ind.App. 1992 David Palece was a student who brought home a brochure from his school offering student accident insurance. The brochure stated in bold print, "Policy Maximum of $ 25,000 for Each Accident!" The brochure explained that "the policy maximum per accident, for loss resulting directly and independently of all other causes from accidental bodily injury, covered under the Plan was $ 25,000." The brochure listed covered medical expenses as well as exclusions and limitations. There was a disclaimer which stated that the brochure was not the contract and that the master policy was on file at the school. The Palsces filled out an application and paid the premium. David was injured the following summer in an accident which resulted in permanent blindness in his right eye. His medical expenses totaled about $ 12,000. The insurer was willing to pay $ 1,000 citing the master policy's limit for specific types of loss: $ 1,000 for loss of an eye. The court stated that "where a conflict exists between a master policy and other informational resources prepared and distributed at the insurer's behest, courts have not hesitated to hold that insureds are not bound by more restrictive provisions in the policy." In short, the court said that since there was a conflict between the brochure and the policy, the insurer was held to the broader coverage provisions of the brochure. In a recent case handed down by the Indiana Court of Appeals, the decision was not in the insured's favor as it related to policy/brochure "confusion." In Ramirez v. American Family Mutual Insurance Company, 652 N.E. 2d 511 (Ind. App. 1995), the deciding factor was whether or not the Ramirezes established that there was conflict between the brochure and the policy that would entitle them to broader coverage. The insureds suffered a loss when a severe ice storm struck, causing a power outage. The loss of power disabled their sump pump, allowing water to accumulate in their basement, which in turn caused water damage to their personal property. American Family denied coverage based on the policy's exclusion for damages resulting from the failure of a sump pump. The Ramirezes maintained that the brochure referring to a "Gold Star Policy" created an ambiguity because the title of their renters policy was "Indiana Homeowners Policy--Renters Form 4." They argued that there were two separate policies providing different coverage, i.e. the brochure and the Renters Form 4. The brochure listed several covered perils with a written description of each peril along with a pictorial. The brochure contained a statement which said that the actual policy should be consulted to determine coverage and exclusions. In the Palace case, the court found that the brochure and the master policy were in conflict. In the Ramirez case, the court said that it was not reasonable to believe the brochure was the policy or that the policy was the brochure or that there was another policy to which the brochure referred that would have provided broader coverage. Their claim of ambiguity was dismissed. What can we learn from this? Make it clear to the reader that the brochure, pamphlet, newsletter, or other publication is not the policy. Put a disclaimer on any brochure or pamphlet stating the reader should refer to the actual policy for a complete statement of coverage. Make the actual policy accessible. Don't make the brochure so complete with coverage details that it appears to be an insurance policy. Most importantly, make sure what is stated in the brochure is not in conflict with the policy or policies to which it refers. |