SW Legal Educational Publishing

Mail Box Rule Applied to Insurance Policy Acceptance
Description Insurance policy holder's mailing of renewal premium two days before policy expiration held to form a contract under the mail box rule even though the renewal notice, which policy holder lost, stated that renewal was not effective until payment was received.
Topic Insurance
Key Words Acceptance, Mail Box Rule
C A S E   S U M M A R Y
Facts Traver's auto insurance policy expired March 14. His renewal premium was postmarked March 12, but was not received until March 22, at which point his policy was renewed. Traver was, the company asserts, not insured between March 14 and March 22, during which time he had an auto accident. The company claimed that coverage did not begin until payment was received. Traver sued, claiming the policy was valid from the date of postmark. The question raised in this case was certified to the Supreme Court of Arkansas for clarification.
Decision "Once an offer has been made, a contract is completed when the acceptance is mailed if the acceptance is made in a reasonable amount of time." The mail box rule applies in this case, but not uniformly in all insurance renewal cases. Traver had lost the renewal notice, so he was not in possession of the notice that specified the policy was not effective until payment was received. He sent a check with a note explaining that he had lost the notice. "Traver's placing the renewal premium in the mail in a timely manner constituted acceptance of Equity's renewal offer.... Given the fact that there was no fraud or negligence on behalf of Traver and the fact that Traver placed the payment in the mail with ample time for it to reach Equity prior to the expiration of the offer, we hold that in this instance there was a manifest acceptance of the renewal offer."
Citation Equity Fire & Casualty Co. v. Traver, ---S.W.2d--- (1997 WL 621308, Sup. Ct., Ark.)
953 S.W.2d 565 (Sup. Ct., Ark., 1997)

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