When Does Life Insurance Coverage Terminate?

Life insurance lawyers will tell you that the answer to the titled question is dependent on the wording of the insurance policy and the facts of the case.

This issue was discussed in the 1979, Fort Worth Court of Appeals opinion styled, Leach v. Eureka Life Insurance Company of America.

This case involved a credit life insurance policy.  The deceased in Tommy Leach and the executrix of the estate is Mary Leach, the Plaintiff here.

Tommy borrowed money from Electra bank and gave the bank a promissory note in the amount of $7,000 that was payable on demand 180 days from the date of March 17, 1977.  The due date was September 13, 1977.  In connection with this loan a credit life policy was purchased and Tommy paid the premiums as required.  The effective date of the policy was “3/17/77” and the termination date was “9/13/77”.

Leach was killed in an auto accident at or around midnight September 3, 1977.  The death certificate shows the time of injury and death as 12:45 A.m., September 14, 1977.  There were no witnesses.  Mary demanded the insurance company pays the proceeds of the policy in satisfaction of the promissory note and the insurance company refused.

The insurance company alleged that Leach was killed September 14, 1977 and the insurance certificate that was the basis of Mrs. Leach’s cause of action had terminated and was not in force at the time of his death. It relied on several provisions in  the group policy as evidenced by the insurance certificate in support of its contentions.

Mrs. Leach contended in her pleadings that her husband was killed before midnight, Central Daylight Saving Time, September 13, 1977.  Alternatively, she contended that if her husband died September 14, 1977 (Central Daylight Saving Time), she was still entitled to recover under the terms of the insurance certificate because it was “patently ambiguous in its form”.  In her brief she states that the issues to be decided on appeal are whether the term of insurance was six months, with an expiration date of September 16, 1977, or, whether the term of insurance and the due date of the promissory note should be determined by Central Standard Time, the time system in effect when the promissory note was executed and the insurance certificate was issued.

Without an allegation of accident, mistake, or fraud, the plain and unambiguous statement in the policy of its termination date could not be disregarded.  There were no allegations of fraud, accident or mistake here so the parties are bound by the express terms of the policy.  The evidence supports the trial court’s implied finding that coverage ended September 13, 1977. Therefore, the date of Leach’s death is not only material but the ultimate fact issue in this case.

She reasons that her husband was undeniably dead prior to 1:00 a. m., Central Daylight Time, September 14, 1977.  The time of death would have been prior to 12:00 midnight Central Standard Time, September 13, 1977, had not Daylight Saving Time intervened.  She alleges that the promissory note contemplated 180 full twenty-four hour days and to allow Daylight Saving Time to determine the alleged termination date of the insurance contract means that one hour out of a twenty-four hour day was lost sometime between March 17 and September 13, 1977.  She argues that it is a universal principle of law that when it concerns a legal duty, time must be computed by a certain, unvarying and uniform standard, and to allow Daylight Saving Time to intervene after a contract has been entered into violates this standard.

She requested at trial that the court take judicial notice of 15 U.S.C. § 260a (1966), the federal statute providing for Daylight Saving Time.  The court did so and she now argues that she has established as a matter of law that Central Standard Time is that certain, unvarying and uniform standard which must control the date of termination of the insurance contract and the date on which the note became past due.

The court was free to conclude that the parties contracted in contemplation of existing law.  The federal statute was in existence at the time the parties entered into their contract.  Even though the statute provides that a state might exempt itself, unless the legislature had chosen to pass a new law, § 260a would remain the standard time authority, even though the time period changed twice a year.

There was a fact issue as to the time of Leach’s death and there was evidence in the record enabling the trial judge to decide that question in defendants’ favor.  In addition to the death certificate showing the time of injury and death to be 12:45 a. m., September 14, 1977, the court also had before it the accident report received by the Bowie, Texas, police department about the incident.  It shows that a truck driver advised the department of a major accident at 12:20 a. m., September 14, 1977.

It was stipulated that the clock in Leach’s vehicle stopped at 12:07 a. m.  An engineering report made for plaintiff was entered into evidence by defendants.  It stated that tests showed that the clock lost approximately six minutes in a twenty-four hour period and that it would run an average of 94.2 seconds after removal of power.

The evidence supports the trial judge’s implied findings that Leach died September 14, 1977 and that the parties contracted in contemplation of the time change caused by Daylight Saving Time.

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