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Hartford Fire Ins. Co. v. W. Fire Ins. Co. - 226 Kan. 197, 597 P.2d 622 (1979)

Rule:

With respect to renewals of existing insurance policies, a binding contract of renewal must be clearly established, and must have all the essentials of a valid contract, as in the creation of the contract in the first instance. Thus a renewal cannot be effected or consummated without the mutual assent of the parties and a meeting of the minds of the parties on all the essentials of the contract, and a new consideration. A mere custom of companies or their agents in certain localities to renew, without request, is not sufficient to establish a renewal, unless it is of such a nature as to be binding on insured as well as on insurer. 

Facts:

Freeman Construction Company (“Freeman”) maintained insurance on equipment with Western Fire Insurance Company (“Western”). The policy insured a bulldozer that was owned by intervenor lessor, Manley Leasing Company, Inc. (“Manley”). Western's policy contained various loss payable clauses, including one in favor of Manley. The bank had a person oversee Freeman's financial affairs who determined Freeman would benefit by changing to another insurance company. Through a series of events, Western's agent sent a renewal policy to lessee's office and Hartford Fire Insurance Company (“Hartford”) issued a new policy to lessee. The bulldozer was damaged by fire and lessee filed a claim with Freeman. A premium was not paid to Western for renewal. Hartford paid Freeman and filed suit against Western. At trial, the court entered a judgment in favor of Hartford finding that the receipt and retention by lessee of a policy sent to him by Western without objection was binding as an acceptance. Western and Manley appealed.

Issue:

Were the receipt and retention by Freeman of a policy sent to him by Western without objection binding as an acceptance?

Answer:

No

Conclusion:

The court reversed in favor of Western as delivery of the renewal policy by Western constituted an offer of insurance that was not accepted by Freeman.

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