Claim Denial Of Auto Policy Due To Cancellation

Fort Worth insurance attorneys will see situations where claims are denied due to policy cancellation. Here is a case that dealt with that situation. It is a Corpus Christi Court of Appeals opinion issued in 2001. The style of the case is, Jones v. Ray Insurance Agency. Here is some of the relevant information.
Jones purchased a new 1998 Pontiac automobile and purchased a State & County Mutual Fire Insurance Company (insurer) insurance policy from Ray and Harbor Insurance covering the automobile. Jones discussed with Ray that her sister lived with her, and was advised by him that would not be a problem, and as long as she paid the premiums on time she would have insurance. The policy excludes coverage for anyone residing with Ray age fourteen or over unless listed. Ray paid the November and December premium payments. The policy was effective from November 7, 1997 through May 7, 1998.
On December 28, 1977, Jone’s automobile was severely damaged when hit by another automobile driven by an uninsured drunk driver. Her vehicle was towed to Collision Clinic, Inc. The day after the accident, Jones was told by the insurer that she was in the computer and was fully covered by the insurance policy. Less than thirty minutes after she was told she was covered, Jones received a call from the insurer and was told she no longer was covered by the policy. At first appellant was told the policy was cancelled because she had not excluded her sister as a driver. Later she was told that the cancellation was because she had not provided a copy of her driver’s license. Ray alleged the notice of cancellation was sent by letter on November 25, 1997, to Jones at 9109 Fondren # 605, Houston, Texas 77074, but Jones denies receiving the letter and notice of cancellation. The letter allegedly advised Jones that her insurance policy would be cancelled on December 4, 1997. Ray has not returned Jones’s December 1997 premium payment or any part thereof.
The alleged notice of cancellation is the primary summary judgment ground alleged by Ray to counter each and every cause of action alleged by Jones. Ray contends that the language of the policy, “… Proof of mailing of any notice shall be sufficient proof of notice …,” prevents Jones from claiming she did not receive the notice of cancellation, and as a consequence Jones has no cause of action against Ray.
Ray’s is that Harbor conclusively proved that it mailed a cancellation notice ” in accordance with policy terms.” The policy provides the insurer may cancel by mailing at least ten days notice to the named insured, as follows:
“A. Cancellation….
2. We may cancel by mailing at least 10 days notice to the named insured shown in the Declarations at the address shown in this policy.
D. Other Termination Provisions.
1. … Proof of mailing of any notice shall be sufficient proof of notice….”
In this case, the premiums were paid and Ray had no right to cancel for nonpayment of premiums.
Assuming the insurer had lawful grounds to cancel, the fact that the insured never received the notice of cancellation raises a fact question as to whether the notice was actually mailed. The “proof of mailing” policy provision operates to excuse the insurer of further proof of notice only where the insured died, or moved without leaving a forwarding address. That provision does not make the notice of cancellation conclusive if the receipt of the notice is controverted by the insured. In policies as in this case where the insurer is required to give a certain number of days notice prior to the cancellation date, it cannot be determined whether the insured was afforded the number of days as agreed unless the insured received the attempted cancellation notice; and unless received, it is ineffective. Further, where there is conflicting evidence relating to an insurer’s failure to perform under the terms of the policy, the issue must be decided by the trier of fact.
The court ruled that the motion for summary judgement granted in favor of Ray was wrong under these circumstances.