The Dangers of Letting Your Auto Insurance Policy Lapse

The Dangers of Letting Your Auto Insurance Policy Lapse

Have you ever received a letter from your auto insurance company asking for information, and ignored it?

That could lead to disastrous consequences down the line, as discussed by the California Court of Appeal this week in Trent Mills v. AAA of Northern California.

In 2005, the Fields family enrolled in an auto insurance policy offered by AAA.  Their son Patrick was not listed on the policy.

After he was involved in a collision in one of the insured vehicles, AAA sent a letter to the Fields asking for information about Patrick, since he wasn’t originally listed as an insured driver.

The letter stated that the Fields had the option of a) adding Patrick to the policy, or b) excluding him from future coverage.  The letter concluded that if the Fields family did not respond within 30 days, AAA would cancel their policy.

Thirty days came and went with no response, so AAA sent another letter informing the Fields that their policy would cancel 30 days after that.

Then the unthinkable happened!  After the policy lapsed, the Fields’ daughter Krystal was involved in a terrible crash caused by an uninsured motorist.  Trent Mills was a passenger in Krystal’s car.  He was severely injured and suffered permanent brain injuries.

After obtaining a judgment against the uninsured driver for $12.7 million, Mills sought to access Krystal Fields’ uninsured motorist benefits under her AAA auto insurance policy.

AAA denied the uninsured motorist benefits, and this week the Court of Appeal affirmed AAA’s argument that the policy had lapsed.  AAA properly denied tendering the Uninsured Motorist benefits because the Fields’ policy was no longer effective on the date Mills suffered his injuries.

The takeaway?  If your auto insurance company sends you paperwork associated with your policy, don’t ignore it!  If you are unsure what the letter means, contact your insurance representative or an attorney as soon as possible.

It could be the difference between having insurance and not having insurance!

For questions about your case or insurance coverage, the Rabbi Lawyer is ready to assist, 24/6!