Don't Sign It Until You've Read It: Signature of Subscription Documents Binds Insured to Undesirable Policy Terms

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United States Court of Appeals for the Seventh Circuit

In National Production Workers Union Ins. Trust v. Cigna Corp., ___ F.3d ___, 2011 WL 6880650 (7th Cir. (Ill.) Dec. 30, 2011), the U.S. Court of Appeals for the Seventh Circuit held that an insured (the "trust") was bound by the terms of an insurance policy despite a conflict between the actual policy terms and those the insured sought when procuring the policy.

The trust had sought group accident and group life insurance with terms that designated it as both the owner of the policy and a beneficiary entitled to 50 percent of a union member's death benefit.  The trust's insurance broker omitted the required terms during the procurement of coverage and secured coverage through defendant Life Insurance Company of North America ("LINA") that did not contain the required terms.  The trust's chairman signed a group insurance application and subscription agreements accepting LINA's offer of coverage.

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