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Burial Insurance Policy
La. State Supreme Court: Burial Insurance Policy is Limited to
Face Amount
On May 22, the Louisiana Supreme Court waded into a controversial
area of insurance by deciding whether a funeral home's burial
insurance policy obligates it to provide all of the funeral services
and merchandise contracted under the policy regardless of the
policy's face value. The court decided, under the particular facts
in this case, that the funeral home's obligation to perform the
contract was limited to the face amount of the policy.
The decedent purchased two policies in 1958 and 1963 respectively,
each with a face amount of $500. "Both policies provided
that upon the death of the insured, funeral benefits in the face
amount of the policies will be furnished, which shall include
the following: casket and outside case, burial garments if requested,
preparation of the body, funeral coach, arrangement and transportation
of flowers, conducting of the funeral, furnishing information
to newspapers, cemetery equipment, chairs, use of funeral home..."
Following the insured's death in 2003, his widow presented the
policies to the funeral director, who applied the total $1,000
in benefits to offset the total cost of the funeral of $5.998.39.
The widow sued the funeral home in a class action for breach of
contract and infliction of emotional distress claiming that the
entire funeral contract should have been performed for the face
value of the policies.
The court analyzed the policies using basic contract law stating,
"An interpretation of the policies to provide for a complete
funeral, at no additional expense, regardless of the amount of
coverage purchased, is not reasonable and would lead to absurd
consequences."
The plaintiff also challenged as unconstitutional a 2004 state
law that clearly limits the liability of burial policies to their
stated face amounts.
However, the court reasoned that it was unnecessary to review
the statute for its constitutionality due to the clear language
in the policies at issue in the case. The decision, Sims v. Mulhearn
Funeral Home, Inc. can be viewed on the ICCFA web page at www.iccfa.com/docs/wireless060507.doc.
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