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Reforming Insurance Policies

A policy can be reformed if it can be proved that there was a mutual mistake about its terms. In granting reformation based on mutual mistake, a court does not create a new agreement, it only enforces the terms of the policy as the parties intended.

By staff Writer | Updated on October 11, 2010

A policy can sometimes be reformed if it can be proved that there was a mutual mistake about its terms. In granting reformation based on mutual mistake, a court does not create a new agreement or increase the scope of coverage, but only enforces the terms of the policy as the parties originally intended.

In Caliber One Indemnity Co. v. Wade Cook Financial Corp., 491 F3d 1079 (9th Cir. 2007), the insured disputed the dollar amount of coverage under a commercial property policy that provided earthquake coverage. The original policy provided a $5 million earthquake coverage limit. The policy renewed in 1999 with the insured, through its insurance agent, requesting the exact same terms as the previous policy.

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