In Nielson v. Allstate Ins. Co., 784 S.W.2d 735 (Tex. App. 1990), in November 1978, a named insured purchased an automobile insurance policy, which, by its written terms, could not be assigned without the insurance company's written consent. Id. at 736.
Upon the insured's death, however, coverage would extend to the legal representative until the end of the policy period. Id.
The named insured died in March of 1979. Id. The insurance company "received renewal premiums for the policy and automatically renewed the policy in November of 1979 and 1980, but . . . was not apprised of the named insured's death." Id. in July of 1981, a driver was involved in an accident while operating the decedent's vehicle with permission from the decedent's personal representative. Id.
The court in Nielson held that, even if the driver was covered in the initial policy period as an extension of the personal representative, the section of the insurance contract granting such coverage concludes by stating that coverage will only be provided until the end of the policy period. Where the terms of an insurance policy are plain, definite, and unambiguous, the courts cannot vary these terms. Id.
In that case, it was argued that "by accepting premiums subsequent to the death of the named insured and renewing the policy, the insurer has waived its right to deny coverage." 784 S.W.2d at 737.
The Nielson court rejected that argument, reasoning that "waiver and estoppel cannot enlarge the risks covered by a policy and cannot be used to create a new and different contract with respect to the risk covered and the insurance intended." Id.
The court distinguished the case before it from cases in which the insured seeks not "to create a new and different contract with respect to risk coverage, but rather . . . to avoid a forfeiture of a policy." In forfeiture cases, the insured "may prevent an insurance company from avoiding payment when the insured fails to comply with some requirement of the policy." Id.