No Coverage If Insurance Company Reserves the Right to Approve Application Materials Before Extending Coverage
In Martin v. Government Employees Insurance Co., 206 Ill. App. 3d 1031, 1036-39, 565 N.E.2d 197, 151 Ill. Dec. 926 (1990), the plaintiff brought a cause of action for the breach of an insurance contract against an insurance company. Martin, 206 Ill. App. 3d at 1032-33.
The court held that there was no contract between the parties. Martin, 206 Ill. App. 3d at 1033.
The plaintiff had filled out a form to receive a quote for automobile insurance from the insurance company. Martin, 206 Ill. App. 3d at 1033.
The plaintiff sent the form to the insurance company, and the insurance company then sent the plaintiff a quotation sheet, an application, and a cover letter with instructions for completing the application process. Martin, 206 Ill. App. 3d at 1034.
The plaintiff then assumed that he met the insurance company's underwriting requirements. Martin, 206 Ill. App. 3d at 1034.
Approximately two weeks after the plaintiff had sent in his check and application, his vehicle was stolen. the insurance company returned the check and application to the plaintiff and denied coverage. Martin, 206 Ill. App. 3d at 1034-35.
The appellate court held that there was no contractual agreement between the plaintiff and the insurance company because the insurance company reserved the right to review and approve the application materials before extending coverage. Martin, 206 Ill. App. 3d at 1036.
Based on the language of the documents, the court concluded that the application filled out by the plaintiff was a request by the plaintiff for the insurance company to issue an insurance policy. Martin, 206 Ill. App. 3d at 1036-37.
The language of the application stated that the insurance company would issue an insurance policy after "final approval." Martin, 206 Ill. App. 3d at 1037.