APPEAL from the Circuit Court of Lake County; the Hon. HARRY
D. STROUSE, JR., Judge, presiding.
MR. PRESIDING JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT:
The defendant, Comet Casualty Company, a corporation (Comet), appeals from a declaratory judgment which found that the plaintiff, Charles Davidson (Davidson), was covered by liability insurance issued by Comet when his son Jeffrey was involved in an accident. In question is whether the insured had purchased a six-month or a one-year policy of insurance.
In early August 1976, Davidson went to a local insurance broker, A&A Insurance, to obtain liability insurance for an automobile, a 1967 Chevrolet. The car had been purchased in plaintiff's name, but the principal driver was to be his 17-year-old son, Jeffrey. Plaintiff did not ask for insurance with a particular company. He asked only for "the cheapest" insurance. Rudolph Pavletic, the manager of A&A, was to find an insurance company. Davidson testified that he did not specify a particular term of coverage, but that Pavletic had said it would be a year policy. Pavletic, on the other hand, testified that nearly all of A&A's policies are for six months, and that Davidson asked for a six-month policy.
A written application for an insurance policy with Comet was completed. The application requested coverage for a six-month period running from August 2, 1976, to February 2, 1977. Pavletic determined that the premium for six months would be $199, which amount included a surcharge due to Jeffrey Davidson's previous license suspensions. Davidson was told that the yearly premium would be around $336. Plaintiff tendered the $199 to Pavletic, who gave him a receipt for that amount.
Pavletic called in a binder to the office of the M.E. Pritikin Company, Comet's producer, on the evening of August 2, 1976. He then confirmed the application by forwarding a copy of the written application to Pritikin.
Comet issued an annual policy, naming Charles Danson as the insured, and describing the covered vehicle as a 1961 Chevy, based on the information in the binder form. Upon receiving the policy, Pavletic wrote to Pritikin requesting endorsements to correct the name of the insured and the policy term. Comet issued an endorsement dated September 10, 1976, correcting the insured's name and the model year of the insured's vehicle. Upon receiving the endorsement, Pavletic again wrote to Pritikin regarding the policy term. A second endorsement, dated October 5, 1976, was issued by Comet. It changed the policy term to six months, running from August 2, 1976, to February 2, 1977.
The premium billed by Pritikin for a year policy was $339. When the policy term was changed to six months, Comet issued a $169 credit, and Pritikin in turn issued a credit to Pavletic. Pavletic determined that as the policy was issued without a surcharge, he owed plaintiff a refund of $23, which he testified he sent to plaintiff on approximately October 25, 1976. Although plaintiff testified that he never received a refund, Pavletic stated that the check was never returned as nondeliverable. According to bank records, the check was never presented for payment.
Both plaintiff and his wife denied receiving any notice that the policy was expiring, although both Comet and A&A sent reminders. Plaintiff paid no premium other than the initial $199 payment.
On February 27, 1977, plaintiff's son Jeffrey was involved in an automobile accident, and subsequently he was named as a defendant in two personal injury suits (Michael L. Robertson and Linda F. Murray v. Jeffrey Davidson and Dale Brague v. Jeffrey Davidson) filed in the circuit court of Lake County. Comet was notified about the accident, and on March 22, 1977, sent a letter to plaintiff's attorney which stated that the Comet policy had expired prior to the accident.
Plaintiff filed this declaratory judgment action in the circuit court of Lake County on December 1, 1977, requesting that Comet be ordered to defend and indemnify Jeffrey. In addition to Comet, Michael L. Robertson, Linda F. Murray, Keith D. Arnold and Dale Brague were named as defendants. We are advised in plaintiff's brief that he served only Comet. However, one of the personal injury suits, Robertson v. Davidson, was consolidated with the instant case in the trial court.
The trial court in a bench trial found that "plaintiff had procured a policy of insurance for one year commencing August 2, 1976" and had paid the premium thereon, and therefore that Jeffrey Davidson was covered by liability insurance issued by defendant Comet when he was involved in the accident on February 27, 1977.
Comet contends that the record shows, as a matter of law, that Pavletic was Davidson's agent to procure the insurance and that he requested and eventually procured a six months policy from Comet. We agree.
• 1, 2 An insurance broker has been defined as "one who procures insurance and acts as middleman between the insured and the insurer, and solicits insurance business from the public under no employment from any special company, but, having secured an order, places the insurance with the company selected by the insured, or, in the absence of any selection by him, with the company selected by such broker." (Galiher v. Spates (1970), 129 Ill. App.2d 204, 206-07.) The primary function of an insurance broker is to faithfully negotiate and procure an insurance policy according to the wishes and requirements of his client. (Pittway Corp. v. American Motorists Insurance (1977), 56 Ill. App.3d 338, 346-47.) An insurance broker is the agent of the one who employs him. (Metro Inter-Insurance v. Anthony (1971), 1 Ill. App.3d 612, 614.) Acts and representations made within the scope of a broker's authority as agent for the insured are binding on the insured. (City of Chicago v. Barnett (1949), 404 Ill. 136, 141; see also Anfinsen Plastic Molding Co. v. Konen (1979), 68 Ill. App.3d 355, 360.) Generally, the question of whether an insurance broker is the agent of the insured or insurer is one of fact, to be determined from the particular circumstances of the case. However, where the evidence clearly shows that the insurance broker is the agent of the insured, it becomes a matter of law. Galiher v. Spates (1970), 129 Ill. App.2d 204, 207.
Here, Davidson approached Pavletic to obtain an auto liability insurance policy for him. Davidson testified that he requested Pavletic to obtain the cheapest insurance available. Davidson did not ask Pavletic to write the policy from a particular insurance company. Davidson testified that Pavletic said that it would be a one-year policy. Pavletic testified, however, that plaintiff Davidson asked for a six-month policy, and that nearly all of A&A's policies are for six months. Davidson admitted that he knew that the policy premium for a year policy would be over $330, that he paid only $199 to Pavletic, and that he knew that he had to pay an additional amount for the year policy. It should also be noted that plaintiff ...