Rebuttable Presumption Raised by Payment of Premium Applies to an Insured’s Action Against an Agent for Negligent Failure to Procure Requested Coverage
In Talat Parveen, et al. v. ACG South Insurance Agency, LLC, et al., published December 4, 2020, the Tennessee Supreme Court addressed whether Tenn. Code Ann. Section 56-7-135’s rebuttable presumption that an insured accepts an insurance policy’s terms when the insured pays the premium, applies equally to an insured’s action against an agent for negligent failure to procure requested coverage as it does to an action against a carrier for coverage under the policy.
The issue was one of first impression by the Tennessee Supreme Court. The Court focused on subsection (b) of the statute, which provides: “The payment of premium for an insurance contract, or amendment thereto, by an insured shall create a rebuttable presumption that the coverage provided has been accepted by all insureds under the contract.” The Court found that the statutory language does not limit “subsection (b)’s rebuttable presumption to claims against insurance carriers. It also applies to failure to procure claims against agents.”
Notably, the Tennessee Supreme Court declined to opine on the type or level or proof an insured would need to show to overcome the presumption that the insured accepted the policy when the insured paid the premium in an action against an insured’s agent for failure to procure requested coverage.
by Jack F. Heflin