INSURANCE LAW: Appellate Court holds insured’s auto policy validly cancelled due to non-payment

The defendants purchased an automobile liability insurance policy from the plaintiffs and were required to pay $62.24 in monthly installments by the tenth of each month.  The plaintiffs failed to make the June payment and the plaintiff sent them a notice stating that their policy would be cancelled if they failed to pay $124.48 before July 4.  The defendants submitted a payment in the amount of $62 on June 26 and on July 4, the plaintiff terminated coverage due to nonpayment and notified the defendants.

One of the defendants was in a car accident on July 18.  The plaintiff filed a declaratory judgment action, seeking a declaration that it owed no duty to defend or indemnify the defendants because the policy had been properly terminated due to nonpayment.

The trial court found that the defendants’ $62 payment constituted “substantial compliance” and thus precluded the policy termination.

The Appellate Court reversed.  It found that the trial court had committed clear error in finding that the amount “that was actually due” by July 4 was $62.24, as all the evidence showed that the amount due was $124.48.  The Court held that regardless of the actual amount due, the insureds failed to tender payment and the trial court improperly applied the substantial compliance doctrine, as the defendants provided no basis for the proposition that such doctrine applies in this context.  Timely payment of insurance premiums is “an essential and material condition to automobile insurance policies issued throughout this state.” 

21^st Century North American Insurance Co. v. Perez, 177 Conn. App. 802 (2017)