Allstate Ins. Co. v. Tarrant

After an automobile accident between Insured's van and a motorcycle, Insurer filed a declaratory judgment action to determine whether the van was covered under a commercial policy or a personal policy with lower liability limits. Insurer alleged that before the accident Insured had instructed his insurance agent to transfer the van from the commercial policy to the personal policy. Insured denied this and alleged that he had instructed the agent to retain the van on the commercial policy. The trial court ruled that because Insurer had sent Insured a letter and premium bills showing the change in coverage and Insured had paid the bills without objection, Insured had ratified the transfer and the van was covered under the personal policy. The court of appeals reversed. The Supreme Court affirmed the court of appeals but on different grounds, holding (1) the action of the insurance agent in transferring the van to the personal policy was not subject to ratification by Insured because the insurance agent was not acting in Insured's stead or for his benefit when it made the transfer; and (2) Insurer was estopped from denying coverage under the commercial policy.