SW Legal studies in Business

Proper Delivery of Policy Cancellation Notice Must Be Met for Cancellation to Occur

Washington high court held that an insurance company did not ensure that a certified letter to an insurer had been delivered, so its attempt to cancel an insurance policy was ineffective and the policy was still in effect.

Topic Insurance
Key Words

Cancellation; Mailing; Delivery

C A S E   S U M M A R Y

Cornhusker Casualty provided commercial automobile insurance to Rockeries, Inc. The policy was renewed quarterly for four years. Payments were usually late. When a payment was not received, Rockeries was sent a letter notifying it of impending cancellation of the policy if payment was not received. Rockeries failed to pay the premium due on September 2. On September 29, Cornhusker sent a letter by certified mail notifying Rockeries that the policy would be cancelled if payment was not received by October 19. Rockeries did not receive the letter. On October 22, a Rockeries employee was in an accident that killed another person. On October 25, Rockeries notified Cornhusker of the accident and also sent a check for the past-due premium. Cornhusker returned the check and another letter telling Rockeries that the policy had been cancelled before the accident. Rockeries sued, contending that Cornhusker had not cancelled the policy before the accident. The district court held for Cornhusker; Rockeries appealed. The federal appeals court certified a question about Washington insurance law to the Washington supreme court about the proper cancellation of an insurance policy.


Question answered. State insurance law regarding the cancellation of insurance policies states that it “may be effected as to any interest only upon compliance with the following: (a) Written notice of such cancellation, accompanied by the actual reason therefore, must be actually delivered or mailed to the named insured…. (2) The mailing of any such notice shall be effected by depositing it in a sealed envelope, directed to the addressee at his or her last address as known to the insurer….” Hence, when an insurer sends notice by regular mail, actual receipt by the insured is not required for effective notice. Notice is effective when mailed. When notice is sent by certified mail, more is required as the insurer is looking for evidence that there was actual delivery. Since Cornhusker did not receive notice from the Post Office that it had been delivered, the terms of the statute had not been met and the policy was not cancelled.


Cornhusker Casualty Insurance v. Kachman, 198 P.3d 505 (Sup. Ct., Wash., 2009)

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