Insurance Accepts Late Payment

Insurance lawyers in Dallas need to be aware of the law as it relates to an insurance company accepting a late premium payment. The Houston Court of Appeals [14th Dist.] issued an opinion in 2009, that dealt with this issue. The style of the case is, Hartland v. Progressive County Mutual Insurance Company. Here is some of the relevant information.
Charles Hartland, filed suit against Progressive, after the denial of an auto-insurance claim for a single-car accident. The jury found Hartland did not mail the premium to renew the policy until after the policy had expired; therefore, he did not have insurance when the accident occurred. On appeal, Hartland contended the parties formed a contract under the terms of the original renewal policy when Progressive accepted his premium payment, and therefore, the policy covered the accident.
Progressive sent Hartland a renewal bill on April 14, and a renewal reminder on April 23, stating the renewal policy period would run from May 9 to November 9. Hartland claimed he mailed a check in the amount of the renewal premium on May 8; Progressive attached a lockbox report to its counterclaim for declaratory judgment showing the postmark date was May 11. Joan Hartland, the wife, was in a single-car accident on May 9, 2004 at about 8:00 a.m., damaging a car covered under the initial policy.
Progressive presented evidence that it received Hartland’s check on May 16, and on May 18, Progressive sent Hartland a revised renewal declarations page with listed coverage dates from May 12, 2004, at 12:01 a.m. to November 12, 2004, at 12:00 a.m., excluding coverage for the date of the accident. Hartland requested review by Progressive of the denial of the claim. On August 6, Progressive again denied the claim, stating the policy was not in effect at the time of the loss.
Hartland sued for breach of contract and unfair claim settlement practices. Progressive filed a motion for declaratory judgement and a motion for summary judgement which the Judge denied and the case went to trial.
Hartland argued that the jury’s answer to question one of the charge is immaterial because an enforceable contract exists as a matter of law. Specifically, Hartland contends the parties formed a contract under the original terms of the renewal policy when Progressive retained payment on the forfeited policy.
It is the general rule that a renewal of an insurance policy constitutes a separate and distinct contract for the period of time covered by the renewal. Any offer by the insurer to renew an insurance contract must be accepted by the insured completely and unequivocally to constitute a new contract. The payment of the premium in accordance with provisions of the insurance policy is a condition precedent to establishment of liability against the insurer. The policy in this case states:
If we offer to renew or continue and you or your representative do not accept, this policy will automatically terminate at the end of the current policy period. Failure to pay the required renewal or continuation premium when due shall mean that you have not accepted our offer.
The renewal notice and bill sent by Progressive provided the following payment instructions to Hartland: “To renew your policy, please pay at least the minimum amount due by the due date.” The jury found that Hartland did not pay his premium on time. Because Hartland failed to timely pay the renewal premium, the condition for acceptance of the renewal policy was not met and the policy did not begin, leaving Hartland without insurance coverage when the accident occurred.
Hartland’s initial policy had expired as indicated on the renewal bill: “Your current policy will expire on May 9, 2004 at 12:01 a.m.” Hartland has conceded, for the sake of this argument, that his payment was not made until after the expiration of the initial policy and after his wife’s accident. Hartland’s policy provides:
If we offer to renew or continue and you or your representative do not accept, this policy will automatically terminate at the end of the current policy period. Failure to pay the required renewal or continuation premium when due shall mean that you have not accepted our offer.
When the initial policy expired, the relationship between Hartland and Progressive had ended according to the terms of the initial policy.
Therefore, Hartland lost on appeal.