Skip to Main Content
Services Talent Knowledge
Site Search
Menu

Alert

Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

July 31, 2008

Cancellation Of Homeowner's Policy For Failure To Pay Premium

The Appellate Division, Third Department, recently considered an insured's claim that his homeowner's policy was improperly cancelled by his insurer and also that he had a special relationship with his insurance agent whereby the agent was required to inform him when his premium payments were past due in order to avoid cancellation of the policy. Kaufman v. Leatherstocking Cooperative Ins. Co., __ A.D.3d __ (April 22, 2008).

The plaintiff requested that the defendant, Hughson & Benson Associates Insurance ("Hughson") provide him with a homeowner's insurance policy on property he owned in Schenevus, New York. After issuance of the policy, plaintiff began to fall behind in premium payments. His late payment of a premium altered the installment payment schedule resulting in a higher monthly payment for August 2004. The plaintiff failed to make that payment and Leatherstocking Insurance sent a letter notifying him that his policy would be cancelled on September 26, 2004 if the minimum premium payment was not received. Plaintiff failed to remit payment and the policy was cancelled. Ten days later, the plaintiff's property was destroyed by fire resulting in a loss of $92,243.

Leatherstocking Insurance disclaimed coverage based upon its policy cancellation for nonpayment of premium. Plaintiff commenced suit against both Leatherstocking Insurance and Hughson alleging causes of action for breach of contract and negligence. After joinder of issue and discovery, the defendants moved for summary judgment. Supreme Court granted the motions and the plaintiff appealed.

The Appellate Court rejected plaintiff's argument that the notice of cancellation was defective since it did not specify the amount due as required by Insurance Law § 3425(c)(1)(A). The court noted that that provision was applicable to automobile rather than homeowner's policies and that the notice clearly stated that the minimum payment of $87.40 was due to maintain the policy in effect.

The Court also rejected plaintiff's argument that the cancellation notice was not received. Leatherstocking's proof of its standard operating procedure for mailing notices of cancellation and proof of the actual mailing by an affidavit of an employee with personal knowledge was sufficient to create a presumption of receipt and the plaintiff's testimony that he had not received the notice of cancellation was insufficient to rebut such presumption.

Finally, the Court rejected the plaintiff's contention that he had a "special services agreement" with Hughson requiring the agency to inform him when payments were past due. The court noted that Hughson submitted affidavits from its principals and deposition testimony demonstrating that no such special arrangement existed and that the plaintiff had been specifically informed that he would receive direct bills from Leatherstocking. "Significantly, plaintiff did not submit proof sufficient to raise a question of fact on this issue as plaintiff's deposition testimony indicates that his claim is based upon conversations that he had with one of [Hughson's] principals regarding an unrelated commercial policy."

This case is an example of a successful defense by the insurance carrier and the agent to claims for coverage based upon the insured's alleged failure to have received notice of cancellation for past due premiums.

Subscribe

Click here to sign up for alerts, blog posts, and firm news.

Featured Media

Alerts

New York Public Service Commission Determines to Withdraw Its Finding in the New York City Offshore Wind Public Policy Transmission Need Process

Alerts

A "Sticky" Situation – Can Treatment of Administrative Claims Be Modified in a Subchapter V Plan?

Alerts

Key Affordable-Housing Provisions in the One Big Beautiful Bill Act

Alerts

What the One Big Beautiful Bill Act Means for Clean-Energy Tax Credits

Alerts

One Big Beautiful Bill Act Changes Tax Incentives for Charitable Giving

Alerts

Website Accessibility Lawsuits: Several "Tester" Plaintiffs—Wislande Claude, Felipe Fernandez, Howard Wilson, Lisa Cantwell, and Erika Alexandria—Targeting Businesses in Recent Flurry of Lawsuits