South-Western Legal Studies in Business

Party Must Be Informed of Exclusions in Policy Coverage for Exclusions to Be Effective
Description Wisconsin appeals court held that a drunk-driving exclusion in personal accident insurance purchased at the time of renting a car was not enforceable because the purchaser, who was killed when driving drunk, was not informed of the exclusion or given a copy of the policy. Hence the death benefit must be paid to the renter’s estate.
Topic Insurance
Key Words Rental Car; Personal Accident Insurance; Alcohol Exclusion; Coverage
C A S E   S U M M A R Y
Facts Leverance rented cars from Enterprise Rent-a-Car a number of times. He always signed up for personal accident insurance (PAI), which included accidental death benefits. The insurance was provided by Gulf Insurance. Leverance was killed in an accident while driving an Enterprise car. He was drunk at that time. Gulf refused to pay the death benefit because the policy excluded benefits if the renter was driving while intoxicated. Leverance’s estate sued to recover the benefits. The trial court ordered the benefits be paid. Gulf appealed.
Decision

Affirmed. The rental agreement did not include a copy of the terms and conditions of the insurance policy. Leverance rented the car, but there was no agreement in his possession, only a notation that his signature was on file from previous rentals. The insurer may not deny coverage based on limitations or exclusions if the insured was not informed of a coverage limitations in the policy.

Citation Kozlik v. Gulf Insurance Co., 673 NW2d 343 (Ct. App., Wisc., 2003)

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