Court overturns auto insurance company’s policy cancellation

We’ve all been in a situation where an important bill wasn’t paid. Usually, this problem is easily corrected.

What if that bill was an auto insurance premium payment, and the policy got canceled as a result? Furthermore, to what lengths must an auto insurance company go to to notify a policyholder of a pending cancellation?

We have our answer in Molinar v. 21st Century Insurance Co., decided by the California Court of Appeal last week.

Silvia and Alberto Molinar purchased a 21st Century auto insurance policy in 2006. They added their daughter Tania to the policy in 2013. Tania added her Mazda to the policy in 2016.

In 2017, Silvia closed the Wells Fargo bank account from which the premiums were auto-deducted. 21st Century sent two notice of cancellations to Silvia and Alberto after the premiums were not paid. They did not send the notice to Tania.

The policy was canceled for non-payment on May 1, 2017. Four days later, Tania was in a serious collision. Her passenger died of his injuries.

In a subsequent wrongful death case, Tania turned to 21st Century Insurance to indemnify (protect) her. They declined, arguing that the policy was cancelled because of non-payment.

Tania argued that she had no knowledge of the policy’s cancellation. She further argued that as a policyholder, she was entitled to receive the same notice of cancellation that 21st Century sent to her parents. 21st Century disagreed, arguing that only the original “named insureds” were entitled to receive the notice of cancellation.

The Court ruled for Tania and her parents. While 21st Century argued that forcing it to send a notice of cancellation to all policyholders would be too burdensome, the Court disagreed. The burden on 21st Century to send one more notice of cancellation in this case was slight compared to the burden of Tania driving an uninsured vehicle and exposing herself personally to a multimillion dollar wrongful death claim.

The Court ruled that all policyholders are entitled to receive an auto insurer’s notice of cancellation. The case is a big win for consumers.

If you or someone you know has auto insurance questions, or was in an accident and needs to discuss the case with someone knowledgeable, remember that my office is ready to assist, 24/6.