INSURANCE LAW: Superior Court holds that insurance policy not cancelled due to 24-cent underpayment:

6/1/2016 | Joseph M. Busher Jr.

Category: Insurance

Joseph M. Busher Jr.

In a declaratory judgment action, the defendant auto insurer claimed that there was no duty to defend or indemnify based upon a cancellation that occurred for lack of full payment.  On May 5, 2012, the insurer informed the insureds that they owed $62.24 on or before June 11 as a result of a substitution of vehicles on the policy.  The insureds did not pay.  According to the court, on June 19, the insurer “sent a notice of cancellation, reflecting that the amount due was $124.48, more than twice the monthly installment actually due, and further advising that the policy would be cancelled as of July 4, 2012.”  The insureds paid $62.00 on June 26.  On July 28, one of the insureds was driving a covered vehicle when she was involved in an accident.  In the insurer’s declaratory judgment action to attempt to avoid a duty to defend and indemnify, the court concludes that the policy was not effectively cancelled.  “As an explanation regarding the $124.48 listed as the amount not paid on the cancellation notice, rather than the $62.24 that was actually due, [the insurer] advises the court that this was an amount ‘calculated internally by the plaintiff’s automated premium computation system’ that somehow calculates an amount the company believes would restore ‘premium equity.’  The amount stated in the cancellation notice, however, was not the amount due, therefore, the cancellation notice was incorrect, and might not be valid.”  The court further concludes that the insureds substantially paid the premium due and that the “incorrect and misleading” notice listing an incorrect amount due could not be allowed to obliterate “any rights of the insureds to the coverage for which they had contracted and paid”.  21st Century North America Ins. Co. v. Perez, CV14-6051072 (March 11, 2016)

Jackson O’Keefe, LLP, has served as insurance defense counsel since the 1950s.  If you have an insurance question or litigation matter involving a GL, E&O, D&O, homeowners,  or auto policy, contact us for assistance at 860-278-4040.

Jackson O’Keefe has been practicing in the insurance field since the 1950s. The firm was co-founded by a former Insurance Commissioner for the State of Connecticut.  The firm is pleased to have received the highest Martindale-Hubbell rating of “AV.”  It is recognized in A.M. Best’s Directory of Recommended Insurance Attorneys.  It is also recognized in the Bar Register of Preeminent Attorneys.  Additionally, several of our partners have been peer-reviewed by Thomson Reuters as “Super Lawyers” qualifying as among the top five percent of practicing attorneys in Connecticut.  We are active participants in the Claims and Litigation Management (CLM) Alliance. 

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