Tonkovic v. State Farm Mutual Automobile Insurance

FLAHERTY, Justice,

dissenting.

I dissent. The appellant in this case purchased insurance coverage which was subsequently limited by the company, and the question which arises is whether the appellant is bound by the limitation. The simple answer should be that he is bound if (1) the original insurance contract allows the company to make unilateral changes in coverage; (2) notice of the changes is given to the purchaser; (3) an uncounseled purchaser of ordinary intelligence would reasonably be able to understand the changes as they are communicated.

Only recently in Gene & Harvey Builders v. Pennsylvania Manufacturers’ Association Insurance Co., 512 Pa. 420, 517 A.2d 910 (1986) this Court reaffirmed the importance of the written insurance contract and the familiar principles of insurance contract interpretation; i.e., that the intent of the parties is manifested by the language of the written instrument; that ambiguities in policies are to be construed against the insurer; that where the language is clear and unambiguous, a court must give effect to that language; and that failure to read the contract is “an *458unavailing excuse or defense and cannot justify an avoidance, modification or nullification of the contract or any provision thereof.” 512 Pa. at 426, 517 A.2d at 913, citing Standard Venetian Blind v. American Empire Insurance, 503 Pa. 300, 469 A.2d 563 (1983).

The majority in the present case, however, ignores these basic and time-tested principles, and relies instead on an approach taken in Hionis v. Northern Mutual Insurance Co., 230 Pa.Super. 511, 327 A.2d 363 (1974), which was expressly rejected in Standard Venetian Blind and Gene and Harvey Builders to the effect that the insurer must prove that the insured was aware of the exclusion or limitation and that he understood its effect. As the majority puts it, "where ... an individual applies and prepays for specific insurance coverage, the insurer may not unilaterally change the coverage provided without an affirmative showing that the insured was notified of, and understood the change, regardless of whether the insured read the policy.” At 455. Thus, the majority promulgates a new Hionis-like rule and goes further, contrary to Standard Venetian Blind and Gene and Harvey Builders, to hold that an insured does not even have to read the policy.

As we stated in Standard Venetian Blind, a court may be required on occasion to deviate from the plain language of an insurance contract, 503 Pa. at 307, 469 A.2d at 567, but such a deviation should be the exception, not the rule. If, as the majority says, an insured need not even look at his policy, why then should insurance companies even issue them? Why, indeed, should they even be admitted at trial? Why should we base our decisions on them? But if writings are not issued and if writings do not memorialize the agreement of the parties, then all contract disputes, insurance and otherwise, would be reduced to conflicting remembrances and assertions of the parties.

If the majority’s concern is that ordinary consumers may not be able to understand a particular policy or provision, the approach which I have proposed would answer that problem: the consumer would be held to understand what a *459person of ordinary intelligence, acting without counsel, would understand from reading the policy or exclusion. If there is an ambiguity or if the language is so complex that such a person would not be likely to understand it, then the policy must be construed against the insurer. Such an approach has the virtue of preserving the importance of concrete evidence of the agreement (the writing), while allowing for the fact that the insurance company drafter may purposely or negligently obscure the meaning of what is written.

I would, therefore, remand for a new trial on the issue of whether unilateral changes were permitted under the original policy, whether the insured was notified of the changes, and if he was, whether a person of ordinary intelligence would have understood the changes.*

In any event the case should be remanded for a new trial, for the trial court gave an instruction based on Monis, which was expressly overruled in Standard Venetian Blind.

Although the majority correctly states that Standard Venetian Blind is distinguishable on the facts from the present case in that here, allegedly, the appellant bargained for a particular coverage which was subsequently eliminated, and Standard Venetian Blind concerned an apparent misunderstanding about the coverage afforded by an insurance policy, this factual difference is not significant. Both cases concern the question of whether an exclusion is to be given effect and the present case could be removed from the rule of Standard Venetian Blind only if it were established that the appellant did not receive a policy.
The instruction in the present case should have been that if the jury found that appellant never received a policy, the limitation was without effect. If, on the other hand, it found that he did receive a policy, the question then, under Standard Venetian Blind and Gene & Harvey Builders, would be whether the language of the contract plainly established a limitation.