Read the Fine Print!

It has almost become cliché, but sometimes it is too easy to forget how important the “fine print” can really be when you are signing any sort of contract.  The SD Supreme Court’s decision in Cole v. Wellmark on December 9, 2009 shows why it is so important to carefully read any document or contract you are asked to sign, especially an insurance contract. 

In this case, Dellas and Maggie Cole were attempting to obtain health insurance after an employment change resulted in a loss of coverage.  The contacted an insurance agent, in order to find a new policy.  The agent went through several options with them, and the Coles settled on a policy from Wellmark.  The agent informed them that their youngest son’s allergies would probably be considered a preexisting condition for which an exclusion would be issued.

The Coles signed the policy application, and expected coverage to begin after their check was deposited.  Shortly thereafter, Coles’ daughter had a knee injury, and wound up with $20,000 in medical expenses.  The Coles contacted the agent, and it was then that the agent informed them that the insurance policy was never actually issued.  You see, right above the signature line was language that stated that coverage would not begin unless and until the application was reviewed and approved, and notice of acceptance would be provided in writing. 

Obviously, the Coles weren’t too happy, and they sued Wellmark.  They lost at the trial level, and appealed the SD Supreme Court.  The Coles thought they had a good argument.  After all, Wellmark had deposited their first payment, and the agent had verbally told them that everything was “all set” and “good to go.”  The Supreme Court said no.  The Court held that the limiting language in the application (the “fine print”) trumped any statements made by the agent.  Since Wellmark never approved the application, there was never any coverage. 

So what’s the lesson here?  Well, besides the fact that the Coles might want to sue their agent, the lesson is this: the limitations or conditions that are set out in written agreements, especially insurance policies, will almost always trump any verbal agreements or assurances.  If the cell phone salesman promises free texting, but it’s not in the contract you sign, then you’ll be paying for your texts.  We sign contracts every day.  Cell phone plans, loans, waivers…they are everywhere, and they can be confusing.  Make sure you consult an attorney before signing any document that appears confusing or ambiguous, so you really know what you are getting yourself into.