Titus v. West American Insurance Company

362 A.2d 1236 (1976)

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Nature of the Case

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Facts

P operates his own auto body repair shop and has been an auto body mechanic all his working life. P purchased a used 1966 Mustang convertible for a purchase price of $472.50 (including $22.50 in sales tax). About three weeks later he contacted his insurance broker, Robert Herdman, and requested that this vehicle be added to his current insurance policy underwritten by D. The coverage was for liability only. P enjoys working with automobiles and wanted to make his 1966 Mustang something special. P did extensive work on the automobile. During the first seven months he owned the car he repainted it, added new tires, installed a new canvas top, and added several other small items to the automobile. Evidence was submitted showing that during these seven months, he spent approximately $350 on parts alone, exclusive of his own labor. In September 1972 P contacted his insurance broker again and requested that 'comprehensive' (theft and property damage) coverage be added to his policy. When this coverage was added P never mentioned to the broker that the car was in the process of being extensively remodeled or customized. The broker admitted that he knew from casual observation that the car had been repainted and that new tires had been added. The broker duly purchased this additional coverage at a cost of $9.18 a year. P continued to improve and customize his vehicle. P rebuilt the engine at a cost of $156.10 (including labor). In May 1973 he purchased a second set of tires and a set of 'mag wheels' at a total cost of $293.52 (including wheel locks). He also spent nearly $450 on other parts and equipment. P's automobile insurance policy was automatically renewed semi-annually. At no time did P inform D or his broker of the extensive modification he made to the automobile. On February 23, 1974, the car was stolen. P filed a claim and lengthy negotiations ensued which resulted in the instant suit and the failure of the appraisers and the umpire to agree upon the standard upon which value should be determined. The policy had a dispute procedure to be followed that allowed each party to appoint an expert and present evidence to an umpire to decide on the value of an asset. At trial, each side adduced expert testimony regarding the question of value and the method of evaluating auto insurance losses. The experts were in substantial agreement regarding the market value of P's customized 1966 Mustang convertible. P's car would have sold for $2,000 on the date of the theft.