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I lost my library in a fire which took everything in 2002 otherwise I could give you the case where this was given as law, together with a list of others.
In my view it goes against agency law but it is not the only example of strange things relating to insurance.
Ask a law student who should confirm it for you...it's one of the basics really.
You may like the notion of "co insurance.
You insure your house for say $300,000 it is destroyed.
It is found that the house is worth $600,000.
The insurance company then says they will pay out only $150,000.
Why? They rely on the principle of co insurance, which means as you insured for half the value they only have to pay out half the insured sum.
Now you say but I paid for.$300,000 cover..too bad the principle allows them to pay half.
Now not only did I learn this from my studied but early on we had a client who experienced this when his box factory burnt down.
So I saw it in action.
After studying insurance you find many cases where they really have the law on their side.
Most cases can not go to court because the insurance contract is subject to arbitration clause.
In other words if there is no matter where interpretation of the law is involved you can not even go to court.
I would expect in both of the situations re agency or co insurance you could not due as the law is clear.
As I suggest if you are ever at a party with a law student ask..but do not ask a qualified lawyer or he will bill you.
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