In disagreeing with the majority I wish to point out that I do not disagree with the authorities upon which they rely but with the majority’s application of those authorities to a situation in which there is a cancellation of an insurance policy.
In Dahlhjelm Garages v. Mercantile Insurance Co., 149 Wash. 184 (1928), the seller insisted upon placing the insurance with the finance company’s related companies. The insured then pointed out that he wished coverage for the “for hire” use of the automobile and that suc.h coverage was not readily available in most companies. However the seller with this knowledge exacted, the premium and did obtain coverage (apparently for a one }rear term) as requested by the insured. When time came, the finance company to whom the contract had been assigned purchased insurance which excluded “for hire” coverage. Under those circumstances I will agree that the seller or lender who had collected the premium and undertook to place the insurance but did so negligently should be held to the same liability that exists in the case of an insurance agent or broker. This was the effect of the Washington decision and also the Illinois decision in Minor v. Universal C.I.T. Credit Corp., 27 Ill. App. 2d 330 (1960).
The foregoing situation, however, differs greatly from the situation in which a cancellation occurs. Here it is admitted that the appellants knew of the policy cancellation and that they made no demand upon the bank to refund the premium or to purchase new insurance. The authorities generally hold that an insurance agent or broker would not be liable in the circumstances in which the bank here finds itself; see 43 Am. Jur. 2d Insurance § 177 and 29 A.L.R. 2d 171, 201, § 27.
The reason for not holding au insurance agent or broker liable for not procuring other insurance upon a cancellation is obvious. Cancellations come about because of an increased risk which the insurer is unwilling to cany. Such cancellations ordinarily occur as the result of the insured’s own conduct. It is common knowledge that when a cancellation occurs new insurance can only be obtained at a greatly increased premium rate. In recognition of this, our legislature has provided for assigned risk plans, see Ark. Stat. Ann. § 75-1486 (Repl. 1957). Therefore the majority opinion, by holding the lender, Worthen Bank & Trust Co., liable for failure to acquire additional insurance upon the cancellation of Harvey’s policy, is placing a burden upon Worthen that it did not obligate itself to undertake and holding it to a duty greater than it would hold an insurance agent or broker under the same or similar circumstances.
As I view the record here Worthen or its assignor complied with its obligation of procuring the insurance but the policy was cancelled without any fault of Worth-en. In all of the cases relied upon by the majority the lender only partially complied with its obligation by acquiring coverage for a portion of the term and liability resulted from the failure to renew or the lender’s negligence in doing so. That is not the situation here.
Therefore I respectfully dissent.