James N. Karras appeals from a summary judgment granted by the Montgomery County Court of Common Pleas to Nationwide Life Insurance Company.
James' father George applied for life insurance through Nationwide, designating James as beneficiary.
Nationwide never issued a policy, although Nationwide did issue a temporary insurance receipt to George which stated in part:
"Temporary insurance is for the amount shown in Question 4a of this application which has the same date and number as this receipt. It is defined below.
"Temporary insurance for any person proposed for coverage will be in force on the date of this receipt, subject to the terms of the policy applied for in 4a. It will end on the earliest of:
"1. The date a policy is issued. (The policy will replace the temporary insurance.)
"2. The date the Company returns the premium deposit and mails a written notice to the Owner that said insurance has ended for the Proposed Insured(s).
"3. Seventy days after its effective date; unless it has been earlier replaced or ended as noted in 1 and 2. Materialmisrepresentations in this application may cause the Company todeny liability under the agreement. In such cases the Company's only liability is for refund of the payment made." (Emphasis added.)
George Karras died and a claim was made under the temporary insurance receipt. Nationwide denied the claim due to "material misrepresentation."
After James began suit, Nationwide moved for summary judgment, on the basis of George's material misrepresentations in his application. *Page 19
James responded by contending that R.C. 3911.06 applied to the situation and, assuming the application of R.C. 3911.06, argued that material issues of fact existed.
The trial court held that R.C. 3911.06, by its very terms, did not apply to the situation, and that George's material misrepresentations relieved Nationwide of liability for benefits pursuant to the language of the temporary insurance receipt.
The single assignment of error contends:
"The trial court erred in ruling that the provisions of Section 3911.06 of the Ohio Revised Code do not apply to a temporary or conditional insurance receipt."
R.C. 3911.06 provides:
"No answer to any interrogatory made by an applicant in his application for a policy shall bar the right to recover upon anypolicy issued thereon, or be used in evidence at any trial to recover upon such policy, unless it is clearly proved that such answer is willfully false, that it was fraudulently made, that it is material, and that it induced the company to issue the policy, that but for such answer the policy would not have beenissued, and that the agent or company had no knowledge of the falsity or fraud of such answer." (Emphasis added.)
James concedes that there are material issues of factonly if R.C. 3911.06 applies to this situation.
The trial court correctly held that it did not. The statute unequivocally pertains only to those situations where a policy has been issued.
There are compelling reasons, ably discussed in Nationwide's brief, why an insurance company should not be subject to the rigor of R.C. 3911.06 as to insurance agreements contained in a temporary insurance receipt.
In short, in determining whether to extend temporary coverage, an insurer should be able to rely on the information furnished by the proposed insured to a greater extent than after the insurer has issued a policy, which only occurs after the insurer has had the opportunity to investigate its potential risk on the basis of information from sources other than just the proposed insured.
Jones v. John Hancock Mut. Life Ins. Co. (S.D.Mich.1968),20 Ohio Misc. 227, 48 O.O.2d 284, 289 F. Supp. 930, affirmed (C.A.6, 1969), 416 F.2d 829, does not actually hold, as James contends, that R.C. 3911.06 applies to temporary insurance. Jones involved facts far more favorable to the beneficiary of the proposed insured than the facts of this case. The insurer claimed that the deceased had misrepresented his flying hours. The evidence established that the deceased had estimated his flying hours with the knowledge of the *Page 20 insurance agent that he was merely estimating, and that the deceased agreed to pay a higher premium than that quoted by the agent if required to do so by the insurer.
The district court in Jones stated:
"Mr. Jones did not intend to attempt to willfully or fraudulently understate his flying hours. If a policy had been issued based on his estimates it is clear under Ohio law that the defendant would not be able to deny coverage on this ground." Id., 20 Ohio Misc. at 242, 48 O.O.2d at 292,289 F. Supp. at 939.
After quoting R.C. 3911.06, the trial court concluded:
"We see no reason why a stricter test should be applied where an applicant agrees to pay a higher premium if the company determines it is necessary.
"Under such circumstances the discrepancy with respect to Mr. Jones' flying hours was immaterial and is not a defense to this action." Id., 20 Ohio Misc. at 242-243, 48 O.O.2d at 293,289 F. Supp. at 939-940.
Even if Jones did hold, as James contends, that R.C. 3911.06 applies to temporary insurance, we are, of course, not bound byJones. Nothing in the facts of the case now before us remotely suggests that we should ignore the clear language of R.C.3911.06 which confines its application to situations where a policy has been issued.
The assignment of error will be overruled. The judgment will be affirmed.
Judgment affirmed.
BROGAN, J., concurs.
GRADY, J., dissents.