About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

1958 Ins. L.J. 172 (1958)
Waiver and Estoppel in Insurance Policy Litigation

handle is hein.journals/inslj20 and id is 174 raw text is: Waiver and Estoppel in Insurance Policy

The author is professor of (aw, Uni-
versity of Pennsylvania. This article is
reprinted from the University of Penn-
sylvania Law Review for May, 1957.
66rHE TENDENCY on the part of the
Tcourts to treat insurance contracts as
standing in a class by themselves and to
protect against forfeitures invoked in de-
fense of honest claims has led to much
subtlety. As Profesior Woodruff says ...
'What do they know of the law of the insur-
ance contract who only the law of contract
know?' '
Indexes to the great nineteenth century
insurance texts do not list waiver and
estoppel  But times have changed. The
1951 third edition of Vance on Insurance
enfolds an excellent and important 76-page
Waiver &    Estoppel chapter-about a
fourteenth of the book's bulk. What has
fostered this growth in the last hundred
years? My thesis is that waiver and estoppel
are two of several guises that cloak the
courts' part in changing insurance from a
service safely bought only by sophisticated
businessmen to a commodity bought with
confidence by untrained consumers. Judges,
at the urging of policyholders' advocates,
have used waiver and estoppel to convert
insurance from a custom-made document
designed in part by knowing buyers to a
brand-name staple sold over the counter
by mine-run salesmen to the trusting public.
Seventeenth and eighteenth century marine
insurance contracts were handwritten; hull
and cargo owners and their brokers knew
insurance as thoroughly as the underwriters.
When a marine policy buyer entertained a
proposal of a warranty, he bargained for
important premium concessions and knew
the courts would construe tile warranty
strictly against him. American draftsmnen-
lawyers, sometimes in the hire of fly-by-
'Satz v. Massachusetts Bonding d insurance
Company, 243 N. Y. 385. 393. 153 N. E. 844. 848
2See, for example. Angell. Fire and Life
Insurance (1854): Annesley. Marine Insurance
(1808); Arnould, Marine Insurance (1848).
Sm, tor example, De Helhn v, Hartley, I
T. R. 343, 99 Eg, Rep. 1130 (K, B, 1786). In

night companies, proliferated fine print in
the nineteenth century fire and lile insurance
policies. Companies, spurred by competition,
debased their product (as the Germans did
their linen). Restrictions on coverage, not
noticed or not understood by policyholders
at the time of issue, became painfully clear
after uncovered losses which policyholders
would have paid to cover. The insurance
market might have soured had not the law
stepped in and afforded consumer protection
greater than companies intended to sell.
Of course this process of favoring con-
sumers can be carried too far. Insurance
companies need and are entitled to reason-
able limits on their responsibilities; the
public is prejudiced when company liabilities
are by generous caprice stretched over risks
that cannot be profitably underwritten at a
just premium. By and large, however, the
courts have not been overgenerous to the
public. Judges have limited their use of
the doctrines of waiver and estoppel because
of their awareness of important underwriting
Underwriting cannot be discussed intelli-
gently when cases involving unrelated prob-
lems are lumped together because of abstract
legal similarities. I shall avoid this difficulty
by classifying cases according to kinds of
insurance, rather than technical types oi
legal problems.
Fire Insurance
Sole-ownersh;p clauses.-Before 1943 most
fire insurance policies stipulated that unless
the policy expressly provided otherwise, it
was void if the policyholder owned less
than an unniortgaged, undivided fee. Oi
course much insured property is mortgaged.
and often a co-owner insures only his in-
terest in property. Ownership warranties
became harnless by the terms of the policy
which the court strained at a technicality to
find breach of marine insurance warranty-a
breach which could not possibly have increased
the hazards of the insured voyage.
4 See Jherlng. Law as a Means to an End
(Modern Legal Philosophy Series. Vol. 5, Hu-
sick Translation, 1913), p. M54

I L J - March, 1958

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.

Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most