In Mississippi Insureds Have a Mandatory Duty to Read the Policy


Failure to Read a Policy Defeats Malpractice Case Against Insurance Agent

Ladner Investments Inc. (Ladner) and its sister company are in the transportation and logging business. In 2010, Michael Conway Inc. (MCI) sold Ladner an inland marine insurance policy from Shelter Mutual Insurance Company (Shelter Insurance) to cover equipment used in Ladner’s business.

In Ladner Investments Inc. v. Michael Conway Inc., NO. 2019-CA-01111-COA, Court Of Appeals Of The State Of Mississippi (July 21, 2020) the Court of Appeals was called upon to deal with the suit from Ladner against MCI (among other defendants) in tort for damages after the fire loss of an uninsured Caterpillar skidder.

Ladner alleged that MCI negligently represented that it would obtain insurance on the skidder and negligently failed to process or procure that coverage. The circuit court granted summary judgment in MCI’s favor and dismissed Ladner’s lawsuit. The circuit court found that Ladner’s claims were barred by Mississippi’s “duty-to-read” doctrine.


In 2010, MCI sold an inland marine insurance policy from Shelter Insurance to Ladner to cover equipment used in Ladner’s business. Ladner routinely and frequently purchased and sold equipment in the ordinary course of its business. Likewise, Ladner would often would add and remove equipment to and from coverage under its insurance policy. The process of adding equipment to coverage under the policy was initiated by Ladner, or the equipment seller, or the financing company involved in the transaction. MCI would be contacted by a person from one of these entities via telephone, email, text message, or fax with instructions to add a specific piece of equipment on Ladner’s insurance policy.

If MCI received a request to add a piece of equipment to Ladner’s insurance policy from a party other than Ladner, such as the equipment seller, or the financing company, MCI would contact Ladner to gather information needed to procure insurance on the new piece of equipment before submitting the insurance change to Shelter Insurance. For each piece of equipment added or deleted from coverage, Shelter Insurance would issue a new declarations statement and would mail the new declarations statement to Ladner. MCI would send the proof of insurance to the insured, the sales representative, and/or the financing company.

On July 17, 2015, Ladner took possession of a Caterpillar skidder from Puckett Machinery, and on July 30, 2015, Micah Ladner, as president of Ladner, signed an installment-sales contract for the skidder. The skidder’s $203,300.00 purchase price was financed by Caterpillar Financial Services Corporation (Caterpillar Financial). Puckett Machinery forwarded that sales contract, which included an “insurance selection form,” to Caterpillar Financial for financing. Caterpillar Financial testified that Caterpillar Financial faxed the insurance selection form for the new skidder to MCI on July 31, 2015, in order to ensure that Caterpillar Financial was listed as loss payee on the new skidder.

The skidder was not added to the Shelter policy because MCI claimed it never received the fax seeking insurance. The record contains no evidence that there was any communication between Ladner and MCI relating to insuring the skidder.

The Ladners confirmed that no one had contacted MCI prior to the skidder burning to check whether MCI had received the insurance selection form sent via fax from Caterpillar Financial or to ask about evidence of insurance for the new skidder. Before the fire MCI sent Ladner declarations statements that contained itemized lists of equipment insured under Ladner’s Shelter Insurance policy. Four skidders were listed. The Cat skidder was not listed.

The record reflected that if MCI received an insurance request from someone other than Ladner, as alleged, MCI would contact Ladner to gather additional information needed to procure insurance on the new piece of equipment before submitting the insurance change to Shelter Insurance

The skidder burned on November 5, 2015, nearly four months after Ladner took possession of it. Shelter denied Ladner’s claim because the skidder was not listed on its insurance policy.

Ladner sued MCI claiming it was liable to it for negligently failing to procure the insurance coverage on the skidder.

The circuit court found that Ladner’s claims against MCI were precluded by the duty-to-read doctrine, which, as the circuit court explained, is “where knowledge of an insurance property is imputed to an insured regardless of whether the insured read the policy.” Because it was “undeniable” that before the loss occurred Shelter Insurance sent two declarations statements to Ladner that did not include the subject skidder, Ladner was imputed with that knowledge.


Ladner asserted that by accepting requests for insurance via fax through the parties’ five-year course of dealing, MCI gratuitously assumed the duty to process the insurance request to add the subject skidder to the Shelter policy.

Even if a plaintiff can show an assumed duty based on detrimental reliance, the assumed duty is limited to the scope of the gratuitous undertaking.  Any liability incurred by a defendant must be limited to the duty it undertook. According to Ladner, this assumed duty arose from Ladner’s reliance on the parties’ course of dealing with respect to other insurance requests on other equipment in the past.

Although Caterpillar Financial, not Ladner, initiated the insurance request in this case, the court of appeals found no evidence in the record of any communication between MCI and Ladner about insuring the subject skidder that would ordinarily take place.  In short there was no evidence that MCI assumed a gratuitous duty to procure insurance or process the insurance request on the skidder at issue in this case.

Duty to Read

As a matter of law an insured may not neglect or purposely omit acquainting himself with the terms and conditions of the insurance policy and then complain of his ignorance of them. [Gulf Guar. Life Ins. Co. v. Kelley, 389 So. 2d 920, 922 (Miss. 1980)].

In Mississippi insureds are imputed with knowledge of the contents of their insurance policy, whether or not they have read the policy. This “duty-to-read” or “imputed-knowledge” doctrine is firmly rooted in Mississippi precedent and barred Ladner’s claims against MCI.

It was the insureds’ failure to read the policy—not the agent’s breach of duty—that was the proximate cause of their damage. The problem could have been cleared up by reading the policy. Ladner could have ascertained that the subject skidder was not covered by the Shelter Insurance policy simply by reading the October 12, 2015, or the October 30, 2015 policy declarations statements. Ladner’s negligence claims against MCI fails a matter of law.

The issue in this case is MCI’s alleged failure to process an insurance request to procure coverage for the subject skidder under the Shelter Insurance policy. Ladner’s failure to read the policy it purchased to cover the property at issue (the skidder)  proximately caused its damages and precludes Ladner’s claims against its agent, MCI.


I have argued until I have exhausted my ability to speak that is necessary for every insured to read the policy. In Mississippi it is the law. In other states the courts are not as stringent as Mississippi. The Ladner’s simply assumed – because the lender allegedly sent a fax to MCI – that coverage was placed. Then, before there was any damage to the skidder, they were advised in writing by MCI that it was not on the list of covered equipment. Although they were give two times to discover the lack of insurance the Ladners’ did not read nor did they do anything directly to insure the skidder. There was no insurance because of their own negligence, not the failure of the agent to act, resulted in the denied claim. An insured should never assume anything with regard to insurance.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

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