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I recently signed a car insurance policy. The actual policy is large at about 40 pages. After signing it I was curious about specific information, such as who can be considered a "permissive driver". If there were age restrictions, to be specific.

Soon I plan on going on a road trip with my brother that's only 21, but very mature for his age. I wanted to see if he would be covered so I emailed the insurance company's online support. They said he would be covered.

Hypothetically, if the insurance policy said "no one under 25 is allowed to be a permissive driver", would they be allowed to deny coverage? This question is really about a signed contract vs what the company said in writing at a later time. This is completely hypothetical, as there is no provision in my policy that says that.

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The parties to a contract may pretty much always modify it by mutual agreement (short of an agreement to commit a crime, or one specifically prohibited by law), provided that there is consideration for the modification or the contract provides for its own modification. However, when a corporation has a standard agreement (such as an insurance policy), it often includes language saying that only a limited set of authorized persons may modify the agreement, and any purported modification by anyone other than such an authorized person is not valid, and does not change the original agreement.

So if a company's policy included a provision limiting coverage to people over 25, a reservations agent would probably not be authorized to change that, and any attempted change by such a person would not be valid.

However, if you asked the agent if the policy would cover a person aged 21, and were incorrectly told that it did, and if under the circumstances it was reasonable for you to rely on that statement, and if you would have not entered into the transaction had you been correctly informed of the policy's terms, then a court might hold that the company was prohibited by promissory estoppel from denying coverage on that basis. But if you had read the provision with the 25-year-old limit on coverage, and the provision saying that only authorized officers could change the terms, it would probably not be reasonable for you to relay on the agent's statement, and promissory estoppel would not apply.

A ruling applying promissory estoppel would not be automatic, but would depend on the detailed circumstances, and to some extent on the exact law in the local jurisdiction as well.

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    Variation of a contract is itself a contract (unless the contract provides for its own variation) and must meet the requirements of a contract including consideration by both parties – Dale M Jul 2 at 22:54
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    @daleM yes, but if the customer requires the modification as a condition of entering into, or not canceling, the deal, that is consideration. – David Siegel Jul 3 at 1:46
  • Sure, and courts generally bend over backwards to find consideration but in the context of the OP’s question, asking the question is not consideration – Dale M Jul 3 at 2:18
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    Might the example given be a statement of how the wording of agreement is interpreted by the insurance company (not requiring consideration) rather than a modification of the contract? – George White Jul 3 at 5:09
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    @DaleM, If the customer asks "will this cover a 21-year old?" and is told "yes" that is not modifying the contract, but describing it, perhaps incorrectly. But perhaps the customer may relay on such statement, perhaps to the customer's determinant. That might lead to estoppel. – David Siegel Jul 3 at 12:34

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