Comprehensuve Auto Insurance Hail Damage Cancellation

Farmers insured pays monthly with debit card then loses debit card and cancels it without thinking to transfer payment to new card, missing next payment. Ten days after payment was due, the hail storm totaled out the car. After storm client remembers the missed payment and pays on line, which Farmers accepted. Now Farmers is denying coverage for the hail damage, despite no cancellation notice at any time. Is there coverage? Bad faith?

Answer: If the policy term is not up, then a cancellation by the insurance company is necessary or there is coverage. The problem comes when the policy term expires and the insured doesn’t pay the premium to renew. Under these circumstances, the policy expires and there is no duty on the part of the insurance company to send a notice. There is an exception to this if you can show the insurance company in the past has accepted late payment for renewal and kept the policy in force without interruption. Under those circumstances, the insurance company may be estopped to treat the late payment as a forfeiture of the policy. If you have that circumstance, let me know and I’ll see if I can find the case law on it.