Klos v. Mobil Oil Co., 55 N.Y.2d 110 (1982)
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In interpreting group insurance policies, courts must consider the policy as a whole and resolve apparent ambiguities by considering the policy’s overall purpose and the reasonable expectations of the insured within the context of the group.
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Summary
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This case addresses the issue of ambiguity within a group disability insurance policy, specifically conflicting provisions regarding the duration of benefits. The policy stated benefits would be paid for up to “10 years” in the event of sickness but also specified that “No [sickness] benefits shall be paid after the Insured’s seventy-second birthday.” The insured, who was 67 when he bought the policy, became disabled a year later and received benefits only until age 72. The court held that no ambiguity existed because the “10 years” provision applied to the entire group, and the policy reasonably limited benefits to the earlier of 10 years or age 72. The court reversed the Appellate Division’s order and reinstated the Civil Court’s grant of summary judgment to the insurer.
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Facts
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The insured, Klos, purchased a group disability insurance policy through his affiliation with Mobil Oil Co. The policy’s cover stated sickness benefits would be paid up to “10 years.” Part G of the policy stipulated that no benefits would be paid after the insured’s 72nd birthday. Klos was 67 years old when he acquired the policy and became disabled at 68. Mobil Oil Co. paid him sickness benefits until he reached the age of 72.
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Procedural History
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Klos sued Mobil Oil Co. in the Civil Court of the City of New York, arguing that the policy was ambiguous and that he was entitled to benefits for the full 10-year period. The Civil Court granted summary judgment to Mobil Oil Co. The Appellate Division reversed, finding the policy ambiguous. Mobil Oil Co. appealed to the New York Court of Appeals.
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Issue(s)
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Whether an ambiguity exists in a group disability insurance policy when one provision states benefits are payable for up to 10 years, while another provision limits benefits to the insured’s 72nd birthday, especially when the insured purchased the policy at age 67.
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Holding
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No, because the “10 years” provision was a standard term applied to all members of the group, and the policy reasonably limited sickness benefits to the earlier of 10 years or the insured’s 72nd birthday.
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Court’s Reasoning
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The court reasoned that the policy must be read as a whole. If the