Commercial Casualty Insurance v. Webb

Hammond, J., delivered the opinion of the Court. We are called upon in this case to construe an accident and health insurance policy issued for the term of one year and renewable from term to term at the option of the in ¹⁰ sured, which pays $50.00 a week during disability from any one accident or from the same sickness. The appeal is by the insurance company from a declaratory summary judgment: (a) that the policy, truly construed, requires the company to continue to pay the weekly benefits as long as disability from the same sickness continues if the insured renews from term to term, although the policy contains the limitation that such disability payments will not be continued for longer than fifty-two weeks; and (b) for the sums due and presently unpaid, and to become due, under that reading of the policy. The theory of the appellee, adopted by the lower court was that each renewal creates a new term, and continuance of the disability during that term causes a new maximum period of fifty-two weeks to begin during that term.

In 1947 the Maryland State Bar Association made arrangements to afford its members the benefits of group accident and health insurance. On February 24, 1947, the appellee, a well known member of the Bar, made written application for a policy which was issued to him on April 1, 1947. There is a recital of the coverage of the policy in large type at the top of the first page as follows: “This Policy Provides Indemnity for Loss of Life, Limb, Sight, Speech, Hearing or Time caused by Accidental Bodily Injury, and for Loss of Time by Sickness to the extent herein provided.” At the bottom of the first page, in similar large type, is recited: “This Policy Does Not Cover the First Seven Days of Sickness Disability.” The policy at its beginning provides that: “In consideration of the statements in the Application for this Policy, a copy of which is attached and made a part hereof” and the payment of the premium, the company insures the appellee “from 12 o’clock noon * * * on the day this contract is countersigned, and for such time thereafter as the premiums paid by the Insured, as herein agreed, shall maintain this policy in force.” The protection afforded and benefits granted are defined in the insuring clause: “This policy insures against — (1) loss or disability resulting * * * from accidental Bodily injury sustained during the life of this policy * * * said bodily ¹¹ injury being hereinafter referred to as ‘such injury’ and (2) disability sustained during the life of this policy, resulting from sickness, hereinafter referred to as ‘such sickness’. The Principal Sum of this Policy is $5000.00.

The Weekly Indemnity is $50.00.” The principal sum is payable for loss of life and loss of specified members of the body. The weekly indemnity is payable under Part II of the policy if “such injury shall wholly and continuously disable and prevent the Insured from performing any and every duty pertaining to his or her occupation * * and under Part III, “If such sickness shall wholly and continuously disable and prevent the Insured from performing any and every duty pertaining to his or her occupation * * * but for a period not exceeding fifty two weeks of disability for any one sickness.” There is a provision for the payment of medical treatment of minor injuries, and other stated benefits. The policy in its body provides: “This policy may be renewed subject to all its provisions from term to term, only with the consent of the Company, and by the payment of the annual premium * * By a rider of even date with the policy, the company may decline to renew the policy on the following grounds only: “A. Non-payment of premium. B. When the insured becomes seventy years of age.

C. If the insured retires or ceases to be actively engaged in the LEGAL profession. D. If the insured ceases to be an active member of the Maryland State Bar Association.” The rider further provides that “Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, agreements or limitations of the undermentioned Policy other than as above stated.” By another rider of even date with the policy, the weekly indemnity for total loss of time from accidental injury is extended “from the original limit of Fifty-Two Weeks, to a maximum limit of Five Years for any one Accident.” The weekly sickness indemnity for total loss of time, which ran from the eighth day of disability under the policy, was extended by the rider to run from that day “or from the First Day of Hospital ¹² Confinement; whichever shall occur first.” This rider has this further proviso: “These extended benefits apply only to disability commencing on or after the countersignature date of this rider. Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, agreements or limitations of the undermentioned Policy other than as above stated.” There is no dispute as to the facts. About November 26, 1953, during a renewal term of the policy, the insured was stricken with hypertrophic arthritis and since has been wholly and continuously disabled within the meaning of the policy.

The disability which afflicts the appellee continuously has been and now is the result of the arthritis that began in November, 1953. The appellee has not retired from the legal profession nor ceased to be an active member of the Maryland State Bar Association. He is less than seventy years of age and has paid the original premiums on the policy and all renewal premiums, save that due in 1955. By then the company had paid him $2,600.00 — $50 a week for fifty-two continuous weeks — and would not accept the premium because the appellee tendered it on the basis that its acceptance meant that the insurer agreed that he was entitled to weekly sickness benefits as long as he continued the policy in force by renewals, and remained disabled.

The lower court found the language in the body of the policy limiting the right to benefits for disability from any one sickness to a maximum period of fifty-two weeks, to be clear, concise and unambiguous, and sufficient if read alone, to deny the insured payment for more than fifty-two weeks. He concluded, however, that the riders caused an ambiguity in the meaning of the policy “for they seemingly contradict the limitation provision heretofore mentioned by stating that the policy may be renewed from ‘term to term’ upon the payment of the annual premium specified. The latter provision states that the policy may be cancelled for certain specific and different reasons, none of which exist in this case. It does not by clear and concise language, limit the benefits to be derived during the renewal period.

Because of this ambigú ¹³ ity, the Court feels constrained to hold that the policy is from ‘term to term’ and the limitations set forth is for each term only, rather than the total liability which may be created thereunder.” We think the lower court attributed to the words of the riders a meaning and effect they do not have. The policy clearly and precisely insures the appellee from 12 noon on April 1, 1947, against disability resulting from accidental injury thereafter occurring and disabling sickness thereafter contracted. The appellee does not contend that the insurer agreed to insure against an injury already incurred or a sickness in existence when the policy first went into effect and the policy provisions make it plain that they did not. The statements in the application are a consideration for the issuance of the policy and are made a part of it.

In the application the appellee stated that he was in sound condition, mentally and physically, and agreed that the policy applied for would not go into effect unless he was regularly attending to all of the usual duties of his occupation “on the countersignature date of the policy.” The disability covered by the policy is only that resulting from an accidental bodily injury “sustained during the life of this policy.” The disabling sickness against which protection is given is that “sustained during the life of this policy.” The extended benefits given by the rider “apply only to disability commencing on or after the countersignature date of this rider.” Provision No. 3 of the standard provisions of the policy states that if there is a default in payment of premium, the subsequent acceptance of a premium by the insurer shall reinstate the policy “but only to cover accidental injury thereafter sustained and such sickness as may begin more than ten days after the date of such acceptance.” To have entitled the assured to weekly benefits during the first term of the policy, the injury or sickness causing the disability would have to have happened or come about during that first year. If such injury or such sickness did occur during the first term of the policy, whether in the first or the last minute, the insurer would be obligated to pay the stipu ¹⁴ lated weekly benefits during the continuance of the disability for the number of weeks specified. Thus, if an injury resulting in disability occurred during the first term, under the rider the company would have to pay up to two hundred sixty weeks, regardless of whether the insured exercised his option to renew the policy or not. Similarly there is no doubt that a disabling sickness sustained during the first term would call for payments during the disability, with a limit of fifty-two weeks, whether or not the insured renewed the policy.

The occurrence of the injury or disabling sickness during the term of the policy is the event which calls into play the liability of the insurer, and this liability continues during disability for the number of weeks specified, but this number is not decreased or increased as to any one injury or the same sickness by buying protection against another injury or sickness that may occur during the new term. Part VIII of the policy says: “The Insured shall not be entitled to indemnity for two disabilities at one and the same time, resulting respectively from sickness and accident.” Part II, as has been noted, limits liability for disability from injury “for any one accident”, and Part