The Importance of Knowing When a Renewable Life Insurance Policy Expires

The factors that impact an insured rights under a policy can be complex, ambiguous and confusing.  Some rights that an insured is entitled to under one type of policy might not be available under other types of coverage.  The confusing range of factors that impact a policyholder’s rights make it important that an insured review all policies and be aware of such critical issues as covered perils, policy limits, and expiration dates.  Because a life insurance policy may be in place for years before any benefits are paid, it can be easy to overlook a renewal date.  This is why keeping a summary of important information and calendaring key dates even if they are far in the future can be a good idea.

The 1st District Court of Appeals decision in Jackson National Life Insurance Company v. Lovallo demonstrates the importance of being aware of such information.  Lovallo became the equitable owner of a ten-year renewable life insurance policy.  The insured was granted equitable ownership of the policy as part of a divorce settlement with her husband.  When the policy was about to expire, Lovallo did not renew the policy nor did she receive notice from her husband that the policy was about to expire even though the policy was renewable. 

The trial judge concluded that Lovallo had the same rights in the policy as her former husband who surrendered his rights as part of the division of property during the couple’s divorce.  Based on this assumption, the trial judge concluded that she was entitled to notice of her right to renew the policy as the date of expiration approached.  The trial judge pointed out that Lovallo advised the insurance company regarding her rights in the life insurance policy based on the marital settlement agreement between the couple.  The trial judge granted summary judgment in favor of Lovallo on the issue of her right to notice prior to expiration of the life insurance policy.

On appeal, the 1st District Court of Appeals assumed that the trial court was correct that the marital settlement agreement granted all rights in the policy to Lovallo that previously belonged to her ex-husband.  While the policy could have been renewed, the premiums were dramatically higher than when the policy was originally purchased.  The insurance company notified Lovallo’s ex-husband that the policy was expiring, and he elected not to renew the policy.  He died a few months after the expiration of the policy.

The appellate court conceded that Lovallo had rights as an owner of the policy, but the court indicated she had no right to notice of expiration of the policy.  The court observed that there was no language in the life insurance policy that imposed a duty on the insurance company to provide notice to a policyholder of a pending expiration or right of renewal.  Because the policy imposed no such duty, the court considered statutory provisions that might impose such an obligation.  The court observed that Florida insurance statutes did impose a duty on an insurance company to notify a policyholder of a pending expiration of auto insurance, workers’ compensation insurance, property coverage, casualty and employer liability insurance.  However, the court observed that no comparable statute applied to life insurance.  The court applied the principle of expression unius est exclusion alterius, which means “the mention of one thing implied the exclusion of another.”

Based on this reasoning the court found the insurance company had no duty to provide Lovallo, as owner of the policy, with notice regarding the approaching expiration of the policy term.  The loss of benefits under this life insurance policy could have greatly compromised the fairness of the marital settlement agreement between the parties.  Lovallo might have given up her interest in the family home or her husband’s retirement in exchange for ownership of the insurance policy.  The point to take away is that a policyholder must be sure to note important issues about insurance coverage, which encompasses expiration dates.  This is especially important if you obtain ownership of an insurance policy in a divorce because the insurance company records might continue to list your ex-spouse as the owner of the policy.

If you have concerns or questions about a life insurance policy or you are being denied benefits as a beneficiary, my law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM. 

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