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Question

Homeowners Les and Linda Wheiler live in Missouri. Working with Magnanimous Insurance Co. agent Dell, the Wheilers submitted an application for property insurance on their home. At the time they submitted their application, the Wheilers assumed that when Magnanimous issued them a policy, the policy would furnish coverage for losses stemming from floods. Magnanimous approved the Wheilers' application and issued them a written policy covering their house. The written policy's terms excluded coverage for flood-related losses. Three months after they received their policy from Magnanimous, the Wheilers' house sustained damage as a result of a flood. When the Wheilers submitted a claim to Magnanimous, the insurance company denied the claim because flood coverage was not provided by the policy. The Wheilers have sued Magnanimous in an effort to obtain reformation of the written policy (so that it would provide flood coverage). Under which of the following alternative scenarios would the Wheilers stand the best chance of obtaining a court order of reformation?

A. If Dell informed the Wheilers, after the loss but before submission of their formal claim to Magnanimous, that the policy did not furnish flood coverage, but urged the Wheilers to submit their claim anyway.

B. If the Wheilers' assumption that the policy would furnish flood coverage stemmed from the fact that floods have occurred every few years in the Missouri area.

C. If Dell told the Wheilers at the time of the application that the policy would furnish flood coverage.

D. If the Wheilers did not read their policy after receiving it from Magnanimous and therefore first learned that their policy did not provide flood coverage when their claim was denied by Magnanimous.

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