Chicago Title Insurance v. AMZ Insurance Services, Inc.

Introduction

A binder is a contract of insurance that provides coverage pending the issuance of the insurance policy. (Adams v. Explorer Ins. Co. (2003) 107 Cal.App.4th 438, 451 [ 132 Cal.Rptr.2d 24 ] (Adams).) The central issue in this case is whether a document entitled “Evidence of Property Insurance” (EOI) issued by AMZ Insurance Services, Inc. (AMZ), was an enforceable binder of homeowners insurance extending coverage from appellant Pacific Specialty Insurance Company (PSIC) for a fire loss incurred by Cheryl Mustain.

After obtaining an assignment of rights, respondent Chicago Title Insurance Company (Chicago Title) brought this lawsuit asserting the EOI was an enforceable binder and alleging PSIC and its owner, The McGraw Company doing business as McGraw Insurance Services (McGraw), breached the terms of the EOI and engaged in bad faith by denying coverage for Cheryl Mustain’s loss. The trial court determined the EOI was an insurance binder as a matter of law. The court so instructed the jury, subject to the jury’s determinations whether AMZ had actual or ostensible authority to issue binders on behalf of PSIC and whether the EOI was lawfully cancelled before…