Opinion
40292.
DECIDED SEPTEMBER 24, 1963.
Action on insurance policy. Wilkes Superior Court. Before Judge Norman.
James H. Moore, Walton Hardin, Harry L. Greene, for plaintiff in error.
Wilbur A. Orr, Jr., contra.
A consideration is necessary for a valid modification restricting the coverage of an insurance policy.
DECIDED SEPTEMBER 24, 1963.
There was a decision in this case by this court in October 1962, in which a judgment of the superior court overruling a general demurrer to the petition was reversed. The report of that case is Utica Mutual Ins. Co. v. Dunn, 106 Ga. App. 877 ( 129 S.E.2d 94). There it was held that the indorsement to the insurance policy in question, dated May 9, 1958, restricted coverage to use of the insured vehicle while hauling for R. G. Foster Co., and the policy afforded no coverage at the time of the collision, when the vehicle was being used in hauling solely for Wilkes County. After that decision the plaintiff amended the petition and alleged that the rider dated May 9, 1958, was issued without consideration and was void for want of consideration; that no premiums were refunded or reduced on the policy as a result of the rider being attached. The defendant filed a general demurrer to the petition as so amended, and the trial judge sustained the demurrer and dismissed the petition. The plaintiff assigns error on this judgment.
The policy was issued on May 5, 1958, to become effective on June 6, 1958, for a period of one year. It covered generally the insured's legal liability arising out of the ownership, maintenance or use of the insured automobile. The indorsement dated May 9, 1958, restricted this coverage to use of the automobile when hauling for one named concern. The indorsement stated it was effective from June 6, 1958. A consideration is necessary for the valid modification of the coverage provisions of an insurance policy, whether the effect of the modification is to extend or limit the risks against which the insurance affords protection. Wackerle v. Pacific Employers Ins. Co., 219 F.2d 1 (8th Cir. 1955); Bassi v. Springfield Fire Marine Ins. Co., 57 Cal.App. 707 ( 208 P. 154); Rice v. Provident Life Ins. Co., 231 Mo. App. 560 ( 102 S.W.2d 147); 29 Am. Jur. 700, § 336; 52 ALR2d 826, 827; 44 CJS 1120, § 281.
In some cases where the indorsement restricting coverage, or the evidence, has shown that the insurer declined to exercise its right to cancel or to reject a renewal of the policy in consideration for the insured's agreement to a restrictive indorsement, the forbearance by the insurer has been held to be a sufficient consideration for the indorsement. Johnson v. Central National Ins. Co. of Omaha, 210 Tenn. 24 ( 356 S.W.2d 277); Federal Life Cas. Co. v. Robinson, 28 Ala. App. 1 (178 S 549); Ellis v. Southern Farm Bureau Cas. Co., 233 Miss. 840 ( 103 So.2d 357). Such facts do not appear in the pleadings before this court in the present case.
The defendant contends that this case presents an exception to the principle that a consideration is necessary to the validity of a modification of an insurance contract because, while the indorsement was issued after the original contract, it was issued before the date coverage was to be afforded by the original policy and bore the same effective date. This contention is contrary to our understanding of contract law generally applicable to insurance contracts. The insurance policy shows that it was issued on May 5, 1958. Its terms were established on that date, and consideration would be essential to make a modification after that date binding on the parties. Accord Metropolitan Life Ins. Co. v. Thompson, 20 Ga. App. 706 ( 93 S.E. 299); Life Cas. Ins. Co. of Tenn. v. Palmer, 48 Ga. App. 380, 381 ( 172 S.E. 823).
The trial judge erred in sustaining the general demurrer and dismissing the petition.
Judgment reversed. Bell, P. J., and Pannell, J., concur.