Waiver and Estoppel in Insurance Law

Abstract

The twenty-two years that have passed since the Supreme Court of the United States handed down its opinion in the case of Northern Assurance Co. v. Grand View Building Assoc. have done little to clear away the wordy fog which that famous case did so much to raise about the doctrines of waiver and estoppel in insurance law. Stripped of trappings, the main point determined by that case was that an insurance company might deliver to an honest applicant for insurance a piece of paper having the appearance of an insurance policy, take from him the price of a sound contract, and leave him under the belief that he had actually secured the protection for which he had applied and paid, and still be allowed in an action at law to show that, by reason of the breach of a condition precedent, known all the time to its officiatinga gent, it had assumedn o obligationt o pay. Incidentally, in assessing the fireside equities, one recalls that in practice the insurer would not be required to return the premium unless the occurrence of a loss should afford unhappy occasion to the duped applicant to learn that he had received no consideration for his premium payment. The essential inequity of this result was recognized when in a later appeal in a case involving the same transaction and the same parties, the Supreme Court held that the insured was entitled to his money if only he went about getting it in the right way, viz.,. by a bill in equity to reform the contract