Expiration Of Policy

Grand Prairie insurance attorneys and those in Irving, Duncanville, Arlington, and other places in Texas need to understand issues that can arise related to the expiration of an insurance policy.
A Texas Supreme Court opinion decided in 1985, said that an insurance agent who receives commissions from a customer’s payment of insurance policy premiums has a duty to reasonably attempt to keep the customer informed about his or her insurance policy expiration date upon receiving information regarding the expiration date intended for that customer. This case is styled, Kitching v. Zamora. An Amarillo Court of Appeals case held in 1992, that an agent had a duty to reasonably attempt to keep a mortgagee informed about the policy expiration date and non-renewal. This case was styled, Horn v. Hedgecoke Insurance Agency.
A 1990, Dallas Court of Appeals case says that when the insured “forfeited” (i.e., cancelled or non-renewed) an insurance policy and the insurance company has knowledge of the existence of facts that constitute forfeiture of the policy, an unequivocal act done after the forfeiture has occurred, that recognizes the continued viability of the policy or that is wholly inconsistent with a forfeiture, constitutes waiver of the forfeiture. This case is styled, Schachar v. Northern Assurance Company. To bring about a waiver of the forfeiture and reinstatement of the policy, three conditions must be met:
1) the insurance company must have had knowledge of the facts constituting the forfeiture of the policy;
2) the forfeiture must have been complete and absolute; and 3) there must not have been some unequivocal act on the insurance company’s part that recognized the continuance of the policy or that was wholly inconsistent with the forfeiture.
It should be pointed out that in Schachar, the insureds mailed a check to the insurance company after receiving a cancellation notice for nonpayment of premium for an automobile policy. The check was dishonored, but the insurance company held the check and did not notify the insureds that the bank had not honored the check. The court held that evidence that the insurance company held the check until after the insureds submitted their claim under the policy raised a fact issue of whether the insurance company had waived its right to cancel the policy or was estopped from claiming that the policy was canceled.
The Schacher case is a good illustration of some of the games insurance companies will play and the efforts they will go to in their attempts to deny a claim. It also illustrates why it is important to get an insurance attorney involved whenever an insurance company denies a claim.