In American Bankers Ins. Co. v. Tellis, 062615 ALSC 1131514 (June 26, 2015), the Alabama Supreme Court held that policyholders, who did not sign, read, or even receive insurance forms that contained arbitration agreements, nevertheless, had manifested their assent to the arbitration agreements by affirmatively renewing their policies and paying premiums. Accordingly, the court held that the policyholders were required to arbitrate their claims that American Bankers had sold them homeowners’ insurance with a level of coverage that they could never receive even if the covered property was a total loss.

In the case, several policyholders had sued the insurer for breach of contract, fraud, unjust enrichment, and other claims. The insurer moved to compel arbitration based on arbitration agreements contained in two of the forms that constituted a part of the policy. The trial courts denied the motions to compel, and the insurer appealed. Several appeals that arose out of nearly identical facts were then consolidated.

The policyholders stated that the arbitration provision was not contained in the insurance applications that they signed, and that they did not sign, read or receive the two insurance forms in which the arbitration provisions appeared. They argued that, as a result, they never agreed to arbitrate their disputes.

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