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Insurance Policy – Knowledge of individual signing insurance application

Posted on Aug 1 2012 7:37AM by Attorney, Jason A. Lee

Brief Summary:  T.C.A. § 56-7-135 is a new Tennessee statute that provides a rebuttable presumption that any applicant or party to an insurance contract or application expresses understanding and accepts all the terms of the contract with the signature.  Further, the signature creates a rebuttable presumption that all insureds have accepted and understood the terms of the insurance contract.

 

Analysis:  The Tennessee legislature adopted a new statute governing the knowledge of an individual who signs an insurance application or contract.  T.C.A. § 56-7-135 was adopted by Public Chapter No. 913 and was signed by Governor Bill Haslam on May 10, 2012 (the effective date of the statute).  T.C.A. § 56-7-135 provides as follows: 

 

(a) The signature of an applicant for or party to an insurance contract on an application, amendment, or other document stating the type, amount, or terms and conditions of coverage, shall create a rebuttable presumption that the statements provided by the person bind all insureds under the contract and that the person signing such document has read, understands, and accepts the contents of such document.

(b) The payment of premium for an insurance contract, or amendment thereto, by an insured shall create a rebuttable presumption that the coverage provided has been accepted by all insureds under the contract.

 

As a result, this bill creates a rebuttable presumption that by signing an application, amendment or other insurance document:

 

            1) The statements provided by the signor are binding on all insureds;

            2) The person signing the document has read the document;

            3) The person signing the document has understood the document; and

            4) The person signing the document has accepted the terms of the document;

 

This statute also provides that when an insured pays the premium for an insurance contract or an amendment to the contract, a rebuttable presumption is created that all insureds have accepted the coverage provided in the contract.  This is significant because if there are multiple insureds and one insured attempts to claim they were not aware of the terms of the contract, this statute now provides a rebuttable presumption that all insureds had knowledge of the contract and accepted the terms and coverage in the insurance contract. 

 

It will be interesting to see the impact of this statute in cases where when insureds assert they did not have knowledge of the specific coverage or specific terms in an insurance contract.  The presumption in this statute can be rebutted; however, this statute makes it more difficult for insureds to claim a lack of knowledge or understanding of the provisions in an insurance contract.  The Tennessee Supreme Court has held that “a presumption is prima facie proof of the fact presumed, and unless the fact thus established, prima facie, by the legal presumption of its truth is disproved, it must stand as proved.”  Braswell v. Tindall, 294 S.W.2d 685, 690 (Tenn. 1956).


TAGS: Miscellaneous, Contracts, Insurance
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Author

Jason A. Lee is a Member of Burrow Lee, PLLC. He practices in all areas of defense litigation inside and outside of Tennessee.

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Tennessee Defense Litigation Blog
Jason A. Lee, Member of Burrow Lee, PLLC
611 Commerce Street, Suite 2603
Nashville, TN 37203
Phone: 615-540-1004
E-mail: jlee@burrowlee.com

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