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Brief Summary: T.C.A. § 56-7-135 is a new Tennessee statute that provides a rebuttable
presumption that any applicant or party to an insurance contract or application
expresses understanding and accepts all the terms of the contract with the signature. Further, the signature creates a rebuttable
presumption that all insureds have accepted and understood the terms of the
insurance contract.
Analysis: The Tennessee
legislature adopted a new statute governing the knowledge of an individual who
signs an insurance application or contract.
T.C.A. § 56-7-135 was adopted by Public
Chapter No. 913 and was signed by Governor Bill
Haslam on May 10, 2012 (the effective date of the statute). T.C.A. § 56-7-135 provides as follows:
(a) The
signature of an applicant for or party to an insurance contract on an
application, amendment, or other document stating the type, amount, or terms
and conditions of coverage, shall create a rebuttable presumption that the
statements provided by the person bind all insureds under the contract and that
the person signing such document has read, understands, and accepts the
contents of such document.
(b) The
payment of premium for an insurance contract, or amendment thereto, by an
insured shall create a rebuttable presumption that the coverage provided has
been accepted by all insureds under the contract.
As a result, this bill creates a rebuttable presumption
that by signing an application, amendment or other insurance document:
1) The
statements provided by the signor are binding on all insureds;
2) The
person signing the document has read the document;
3) The
person signing the document has understood the document; and
4) The
person signing the document has accepted the terms of the document;
This statute also provides that when an insured pays
the premium for an insurance contract or an amendment to the contract, a
rebuttable presumption is created that all insureds have accepted the coverage
provided in the contract. This is
significant because if there are multiple insureds and one insured attempts to
claim they were not aware of the terms of the contract, this statute now provides
a rebuttable presumption that all insureds had knowledge of the contract
and accepted the terms and coverage in the insurance contract.
It will be interesting to see
the impact of this statute in cases where when insureds assert they did not
have knowledge of the specific coverage or specific terms in an insurance
contract. The presumption in this
statute can be rebutted; however, this statute makes it more difficult for
insureds to claim a lack of knowledge or understanding of the provisions in an
insurance contract. The Tennessee
Supreme Court has held that “a presumption is prima facie proof of the fact
presumed, and unless the fact thus established, prima facie, by the legal
presumption of its truth is disproved, it must stand as proved.” Braswell v. Tindall, 294 S.W.2d 685, 690 (Tenn. 1956).
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