Insurer only obligated to mail notice of non-renewal, not required to obtain proof of delivery of notice of non-renewal or lapse of policy
Recently, the Louisiana Supreme Court issued an opinion important to insurers. Specifically the Court held that insurers are required only to mail the notice of non-renewal of a homeowner’s insurance policy to the insured. The insurer is not required to prove receipt or delivery, if the notice is mailed.
Accepting that notice of renewal is the responsibility of the insurer, and not the agent, the agent’s records were nonetheless important in the court’s determination that the insurance policy had lapsed and therefore was not in effect at the time of the event, a house fire.
In the recent case discussed above, the agent received by email an “Agent’s Lapse Letter”, in compliance with the insurer’s customary business practices. The agent received the lapse letter five days after the lapse but before the insured’s house burned down. The agent testified he did not contact the insured until three weeks after he received the lapse letter, which was 11 days after the fire.
The initial notice to the insured was mailed by first class mail, so there was no documentary proof of mailing, such as a mailing receipt from the Post Office. However, the insurer prevailed by convincing the court that it had followed its customary business practices of non-renewal notification. The court cited the emailed lapse letter to the agent as part of the proof that the insurer followed its customary practices.
If you, as an insurance agent, receive notifications from your insurance companies of the non-renewal of or the lapse in a customer’s coverage, you should maintain copies of the notification and the date it was received. Your records could be essential to the insurer’s proof that it complied with the notification laws.