Credit Life Insurance policies always list specific termination times. Here is a 1985, San Antonio Court of Appeals opinion that deals with credit life insurance and the issue of when the policy terminated. The opinion is styled, Eagle Life Insurance v. G.I.C. Insurance Co.
This lawsuit was tried before the Judge and the judgment was in favor of G.I.C. Eagle filed this appeal. This Court reversed the trial Court and stated as follows:
The agreed undisputed facts are as follows. G.I.C. and Eagle Life, entered into a reinsurance treaty. Under the terms of this treaty, G.I.C. wrote credit life insurance policies which were re-insured with Eagle Life. Eagle was given most of the insurance premiums and in turn agreed to reimburse G.I.C. “for all losses arising under the specific terms and provisions of the policies and certificates of insurance re-insured hereunder.” Under the terms of the reinsurance treaty, G.I.C. retained the first $5,000.00 of each policy written, so Eagle Life’s obligation to reimburse G.I.C. was limited to amounts above $5,000.00 which G.I.C. properly paid out on valid claims.
On January 4, 1978, James Hampton and his wife, Margaret, executed a promissory note for $23,629.38 to the Bank. This note was due on December 31, 1978. In connection with said promissory note, James purchased a level term credit life insurance policy from G.I.C. in the amount of $23,629.38. The premium was payable on a single premium advanced payment basis. This policy was for a term commencing on January 4, 1978, and ending twelve months thereafter.
The debtor’s indebtedness was never discharged. Nor did the debtor ever cancel the insurance by written request.The “scheduled maturity date of the indebtedness for which insured” was December 31, 1978, the day on which the promissory note was due. James died on January 3, 1979. This was after the scheduled maturity date of the indebtedness which was being insured. His death, however, took place less than twelve months after he purchased the credit life insurance policy.
G.I.C. paid the claim in the full amount of $23,629.38 to the policy’s beneficiary, the Bank. Eagle Life, however, refused to reimburse G.I.C. on the ground that the claim was not properly payable under the terms of the policy.
Eagle argues that there can be no doubt that if the termination provision in the policy is considered by itself the credit life insurance policy in question expired on December 31, 1978. The termination clause provided, inter alia, that the insurance would terminate on the scheduled maturity date of the indebtedness for which insured. The indebtedness which was insured by the credit life insurance policy was a promissory note date January 4, 1978, from Hampton and his wife to the Bank. The note plainly provides the maturity date of the debt is December 31, 1978. Since the insurance policy provides that the insurance on the debtor automatically terminates on the scheduled maturity date, the insurance automatically terminated on December 31, 1978. G.I.C., however, contends that the credit life insurance policy on the life of Hampton is ambiguous, because of another provision of the policy which appears on the first page of the policy. That provision states, “term of insurance commencing 1-4-1978 and ending twelve months thereafter.” Twelve months after January 4, 1978, is January 4, 1979. It is appellee’s position that the term of insurance clause contradicts the language of the termination clause and that the two provisions construed together are ambiguous. G.I.C. then argues the long established rule that if an insurance policy is ambiguous, such ambiguity will be resolved in favor of insurance coverage. It is the position of appellant that the two policy provisions can be reconciled with each other so that both are given effect.
Initially, an insurance contract is to be construed on the same basis as any other contract. The appellant does not dispute that any ambiguity found within an insurance policy is to be construed in favor of insurance coverage; however, this rule of law does not come into effect until after it has been initially determined that the insurance policy is in fact ambiguous. In deciding that issue, the courts apply the same rules of construction which they apply to all other contracts. Courts look to the plain language of the insurance policy and give effect to that language if the parties’ intent may be discerned from it. The courts are reluctant to decide that a contract is in fact ambiguous. If a contract is so worded that a court may properly give it a certain or definite legal meaning, it is not ambiguous. One of the first rules of contractual construction is that the entire contract must be considered in determining its meaning and no individual provision within the contract should be considered in isolation. Accordingly, the preferred interpretation of a contract is one which provides meaning to every provision therein and does not read any provision contained within the contract out of the contract. Thus, under these rules, when this court decides whether the insurance contract at issue in the instant cause of action is in fact ambiguous, it should first attempt to reconcile the “term of insurance” provision on the first page of the policy with the “termination” provision on the second page of the policy. With regard to insurance contracts specifically, the supreme court has held that a contract will not be construed as to render some of its terms meaningless.
It was argued at the trial court by appellee that the fact that the “term of insurance” provision appears on the first page of the insurance policy means that it should prevail over the “termination” provision which appears on the second page. Unless the two provisions are inconsistent in the first place, the question of which provision governs over the other never arises. Courts are not at liberty to rewrite the contract between the parties without pleading and proof of fraud or mutual mistake. Neither fraud nor mutual mistake has been pled in the instant cause of action.
When the applicable rules of contractual interpretation are applied to the insurance policy at issue, it becomes clear that the appellee’s interpretation of the insurance policy is inconsistent with the rules of contractual interpretation. Eagle’s interpretation is that coverage was for a term of twelve months beginning January 4, 1978, and normally expiring on January 4, 1979. If, however, any of the events listed in the “termination” provision occurred earlier than January 4, 1979, then the insurance policy would terminate on such earlier date. This interpretation gives meaning and effect to both the twelve month term of the policy and the policy’s termination clause. The policy would have expired in any event on January 4, 1979, however, the policy’s termination clause created the possibility that the policy might terminate earlier than its normal expiration date. Thus, both policy provisions are given meaning and effect. G.I.C.’s interpretation of the meaning of the insurance policy which contends that the policy could in no event expire prior to January 4, 1979, completely disregards the termination clause and reads it out of the policy all together, in contravention of the rules stated above.
We reverse the judgment of the trial court and here render judgment that the appellee, G.I.C., take nothing by its cause of action.