In re the Arbitration between State Farm Mutual Automobile Insurance & Wynns

OPINION OF THE COURT

Herbert A. Posner, J.

Can an insurer be held liable to a third party for an accident involving a motor vehicle for which it has no record of ever authorizing a binder, ever receiving a premium, ever issuing a policy, and the accident occurred more than two months after the alleged binder was issued by the motorist’s broker? The answer to this question, of apparent first impression, is — Yes! However, I hasten to add the qualification— provided the binder issued by the broker was not for the insurer, but for the Assigned Risk Plan.

This unexpected conclusion resulted from a…