Legal contracts can be interpreted in various different ways. That is why business owners must be sure that the legal language in contracts is properly chosen. However, this is still not a guarantee that a business will be able to completely avoid contract disputes in California. One life insurance company is now finding this out after being sued for breach of contract by one of its former policy holders.
The plaintiff sued the defendant insurance company in early December. The legal complaint filed with the court alleges that the insurance company is in breach of contract because it denied disability coverage to the defendant. The legal complaint also alleges breach of fiduciary duty, fraud, bad faith as well as other counts.
The defendant initiated a disability insurance policy in 1985 with the defendant life insurance company. The man was 27 years old at the time the policy was signed. The defendant claims that the contract entitled him to receive coverage until he reached 65 years of age. However, in 2012 the man claims he received a notice from the insurance company stating that his policy would expire in 2013 when he would be only 55 years old.
On the other hand, this is just one interpretation of the legal contract. There are two sides to each story, and just like any other contract disputes in California, a defendant company has the right to a legal defense in the court of law. The insurance company will be able to offer its own interpretation of the legal contract formed with the insured, which could result in the lawsuit being dismissed in many instances.
Source: pennrecord.com, “Man sues New York Life Insurance, others alleging breach of contract“, Carrie Bradon, December 15, 2015