On April 29th, 1915, the defendant issued an accident policy to Mr. Hopkins in favor of his *Page 79 wife for $40,000 payable in case his death was caused by the burning or wrecking of a vessel on which he was a passenger. Physically attached to this policy was a rider by which the insured agreed that the policy should not cover any loss caused directly or indirectly by any act of any of the belligerent nations engaged in the present European War. This rider was prepared by an executive officer of the defendant, and the agent who negotiated the policy was authorized to deliver it to Mr. Hopkins if and when he signed the rider. Mr. Hopkins did sign and the delivery of the policy was made. By its terms the policy included the rider and the rider itself stated that it formed part of the policy. The form of the policy itself had been properly filed with the superintendent of the insurance department of the state of New York but the rider had never been filed with him. Mr. Hopkins was drowned when the Lusitania was torpedoed.
This was the contract which the parties made between themselves. It is to be enforced as they made it and understood it unless, because of some statutory provisions, the courts are required to give it a construction or effect which the parties never intended.
We are told that this must be done because of section 107 of the Insurance Law. (Cons. Laws, ch. 28.) This section is entitled "Standard Provisions for Accident and Health Policies." It largely consists of standard provisions with regard to the details of the insurance contract which must be contained in every policy together with certain optional standard provisions both of which are principally for the protection of the rights of the insured. It is not said nor was it the intention to say that the policy should contain only these standard provisions. Unlike the standard form of fire policy prescribed by section 121 of the same law they are not exclusive. There is no statement as in the case of fire policies that no agreement not contained in the standard provisions shall be made. *Page 80 Like the standard provisions in life policies (Section 101) they are to be contained in every contract of insurance but they form simply a part not the whole of such contract. Two rules, however, are laid down. No policy and no rider to a policy shall contradict, vary or alter these standard provisions; and no policy shall be issued until a copy of its form shall have been filed with the superintendent of the insurance department for the purpose of enabling him to determine if it complies with the law.
The rider in question does not contradict or vary any of these standard provisions. But, as we have seen, it was never filed with the superintendent. It is said that in consequence the rider may be ignored and the remainder of the policy, which was duly filed, may be enforced.
The appellant argues that under the statute riders attached to the policies need not be filed. It says that what the statute requires to be filed is a copy of the form of the policy; that running through the statute a distinction is clearly made between the policy itself and indorsements and papers attached to it. We do not think, however, that in requiring the form of the policy to be filed any such distinction was in the mind of the legislature. The rider itself is a part of the policy. The policy itself says so. So does the rider. It affects the risks and the rates which are based upon the extent of the risks assumed. The purpose of the statute is to see to it that the policy itself, of which the rider forms a part, and all its provisions are such as to meet the approval of the superintendent. If it were not so the greater part of the policy might be contained in riders and the object of the statute would be defeated. Nor is the distinction between the form of the policy and the attached papers consistently maintained. Repeatedly in the Insurance Law the legislature refers to "the policy" as meaning the entire contract between the parties. (Sections 59, *Page 81 62, 89.) In the very section before us there is the same lack of discrimination. Subdivision d prohibits the issuing of a policy which contains a provision relative to cancellation at the instance of the insurer except in a fixed form. The word "policy" here must include riders. Subdivision e prohibits the issuing of policies purporting to make any portion of the charter of the insurer a part of the policy by mere reference. Here again the prohibition must refer to a rider as well as to the policy itself. Finally the legislature provides that "this policy includes the endorsements and attached papers." (Subd. c, 1.) This would seem to define what it intended by "a copy of the form" of the policy. Nor is the argument with regard to necessity convincing. The need of issuing riders to meet sudden emergencies is answered by the authority given to the superintendent to consent immediately to the form proposed if it is wise to do so.
What then is the result of the failure to file the rider? The statute provides two classes of remedies. If the violation is willful a fine is imposed and if the company is a foreign one its license may be revoked. Next, the policy is valid but it is to be "construed as provided in this section, and when any provision in such a policy is in conflict with any provision of this section, the rights, duties and obligations of the insurer, the policyholder and the beneficiary shall be governed by the provisions of this section." (Section 107, subd. i.) Here again we understand the word "policy" to mean the entire contract whether it is contained in the policy itself strictly speaking or in agreements attached thereto.
The violation of the section referred to may occur in various ways: (1) By issuing a policy before a copy of its form is filed; (2) unless certain statements are made therein; (3) unless it is printed in a particular manner; (4) if it attempts to insure more that one person; *Page 82 (5) unless it contains certain standard provisions; (6) if it contains clauses contradicting the standard provisions; (7) if it attempts to incorporate its charter and by-laws in the policy without setting them out in full. However, the section may be violated the policy is still valid. Only it is to be construed as provided in the section, and whenever its provisions conflict with the section the latter is to govern the rights of the parties.
What is intended is in part clear. No corporation issuing a policy may escape liability because of its failure to obey the law. But what is the position of the insured? Clearly as to him the standard provisions are a part of his contract. If it contains clauses contradicting them they may be ignored. So if the company attempts to incorporate its charter by reference. So possibly of clauses or exceptions printed indistinctly. But it does not follow that where the whole or a part of a policy has not been filed, the insured may recover upon a contract never made by him and which the statute does not say he shall be held to have made. The statute says the contract is valid — not simply valid as against the insurer. It is to be construed in a certain way, but the question of construction has no relation to this particular default. Nor have the rights and obligations of the parties. They are fixed by the standard provisions and by the regulations as to what the policy shall or shall not contain and the regulations as to the form required so the insured may have notice of its contents. They are not determined by the decision of the superintendent as to whether the policy complies with the law. This is not the case for an application of the rule that illegal or prohibited contracts are void, even when the statute does not expressly so declare. Here the statute itself says they shall not be void but valid. Neither as we have said is there conflict between the provisions of the rider and the provisions of the section. True, it is suggested that the *Page 83 statute provides that the classification of risks mentioned in the policy shall mean only those last filed with the superintendent and that this rider changes this classification without authority. This is not the meaning of the term "classification of risks" in insurance practice. That relates not to the perils insured against nor to the amount to be paid, but in fire insurance to the nature and situation of the articles insured; in accident insurance to the occupation of the applicant. So in this policy it is said "Albert Lloyd Hopkins, under classification referred by occupation as President." This classification was in no wise altered by the rider. The policy which is valid is the contract as the parties have agreed upon it so far as it is consistent with the statute — not the contract as changed and altered by the excision of some of its provisions. What if no part of a policy defining the risks insured against had been filed? Are only the standard provisions which the law says shall be inserted in every policy to be enforced? In themselves they form no complete contract.
The respondent also questions the validity of the rider under the standard clause that "No change in this policy shall be valid unless approved by the executive officer of the insured and such approval be endorsed thereon."
There are two answers to this claim. This clause is for the benefit of the company and may be and was waived by it. (Belt v. American Central Ins. Co., 29 App. Div. 546-552; affirmed,163 N.Y. 555.) Further, the policy was not changed. At its inception it included the rider. All the papers together constitute the policy and it is as agreed upon by the parties. This is the agreement which the agent was expressly authorized to make and he was prohibited from making any other. The policy never had any existence except as it contained the agreement in the rider. (Wood v. American Fire Ins. Co., 149 N.Y. 382 -386.) *Page 84
A further objection is made that under the statute it is provided that no policy shall be issued unless such portion of the policy as purports by reason of the circumstances under which a loss is incurred to reduce any indemnity promised therein to an amount less than that provided for the same loss occurring under ordinary circumstances, shall be printed in bold-face type and with greater prominence than any other portion or text of the policy. It is said that the rider comes within this clause and is not printed in bold-face type. We cannot agree with this contention. The rider does not in any sense reduce an indemnity provided for in the policy. It speaks of a case in which the policy does not apply. It is simply a limitation of the risk. Such is evidently the construction adopted by the insurance department for a rider regarding hernia is in the same type and as it was filed it must have met the approval of the superintendent.
The judgment appealed from should be reversed and that of the trial court affirmed, with costs in this court, and in the Appellate Division.
HISCOCK, Ch. J., CHASE, HOGAN, CARDOZO and POUND, JJ., concur; MCLAUGHLIN, J., not sitting.
Judgment accordingly.