Fort Worth insurance attorneys will have clients come to them wherein the insurance company is denying a claim. The stated reason for denial is that the policy was cancelled due to late payment. The Austin Court of Appeals ruled on this issue in May 2015. The style of the case is, Plasma Fab, LLC v. Scottsdale Insurance Company.
Plasma Fab, an ornamental iron construction contractor, purchased a general liability policy from Scottsdale in May 2008 and financed payment through premium finance company BankDirect. BankDirect paid all premiums in advance, and Plasma Fab was to make monthly payments to BankDirect. The premium finance agreement gave BankDirect authority to cancel the policy on behalf of Plasma Fab and seek a refund of unearned premiums for nonpayment of premium “after proper notice has been mailed as required by law.” Plasma Fab was chronically late making payments, and twice the policy was cancelled and reinstated. It is the third cancellation that is at issue.
On November 24, 2008, BankDirect prepared a notice of intent to cancel the policy effective December 4, 2008, which was ten days following the date the notice was prepared. However, BankDirect did not mail the notice of intent to cancel to Plasma Fab until the next day, November 25, 2008, so that the stated date of cancellation was only nine days after the date the notice was mailed. On December 4, 2008, after 5:00 p.m., BankDirect mailed a notice of cancellation to Scottsdale effective December 4, 2008.