Paying Premium is Presumptively Acceptance of Policy
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The trial court found that it was undisputed that the insureds had paid the premium for the policy in effect and applied Tennessee Code Annotated section 56-7-135(b), which provides: “The payment of premium shall create a rebuttable presumption that the coverage provided has been accepted ... under the contract.” In Talat Parveen, Et Al. v. ACG South Insurance Agency, LLC, Et Al, No. E2018-01759-SC-R11-CV, Supreme Court Of Tennessee At Knoxville (December 4, 2020) the Supreme Court was asked to decide the application of the statute to insurance agents and brokers.
Insurance is not free. By definition it is a contract that only comes into effect when consideration – payment of a premium – is provided to the insurer. The plaintiffs paid nothing for excess underinsured motorist coverage and accepted, by paying the premium, for three years running a policy that did not provide that coverage. By paying the premium based on a policy without the excess coverage the insured accepted the policy provided not the policy – after an accident – it claimed it ordered.