Cases of Note
Watson v. Pilot Life Ins. Co., 741 S.W.2d 342 (Tenn. Ct. App 1987), cert. denied 1987.
OVERVIEW: Plaintiff's husband was employed by a company that insured him under a group life insurance program. The company let the policy lapse and, as a result, defendants denied coverage when he was killed in a car wreck. Plaintiff argued that defendants had a contractual relationship with her husband entitling him to notice of policy cancellation and that this lack of notice violated Tenn. Code Ann. § 56-7-601. The court noted that defendant agents had no obligation to give the deceased husband notice that the policy had lapsed, and affirmed summary judgment as to those defendants. The court found that Tennessee law provided that where an employee contributed nothing to the payment of premiums for a group insurance policy, no contractual relationship arose between the employee and the insurer. Plaintiff's husband did not participate in paying premiums on defendant insurer's policy. The court also found nothing in the policy or statute requiring defendant insurer to give notice that the group policy had lapsed, and defendant insurer had not deprived plaintiff's husband of any statutory right to convert his group policy to an individual policy.
OUTCOME: Summary judgment was affirmed because the court found that defendant insurer and agents were not contractually or statutorily obligated to notify plaintiff's husband that his employer had allowed his group insurance policy to lapse and that he was entitled to obtain an individual policy to cover his death. Plaintiff was not entitled to death benefits under the policy because her husband died after the policy lapsed. (Click here for opinion)