The Georgia Supreme Court Clarifies Rules for Cancellation of an Automobile Insurance Policy

In Reynolds, the insurer denied coverage for an automobile accident which occurred on August 2, 2006 involving the insured’s son and which took the lives of two passengers. On July 10, 2006, the insurer, Infinity, had sent out a cancellation notice indicating that in accordance with the terms and conditions of the policy, the policy would cease providing coverage as of the cancellation date of July 25, 2006. The header on the notice stated “CANCELLATION NOTICE, NON-PAYMENT OF PREMIUM” and the cancellation date of July 25, 2006, was set out in a small box at the top of the notice and again in another small box at the bottom of the notice. The notice, however, also contained payment options and a detachable payment stub to be returned in the event a premium payment was remitted.

The insured argued that because the notice also contained a payment option it was ambiguous and could not be construed as a clear notice of cancellation of the policy.

The question asked by the 11th Circuit was:

“Is a notice of cancellation, properly given after the premium is past due, ineffective because it provides an opportunity for the insured to keep the policy in force by paying the past-due premium within the statutory ten-day period?”

The answer given by the Georgia Supreme Court is “no.”

Interestingly, three Justices of the Supreme Court, relying on their interpretation of existing Georgia law, disagreed and found that the notice was ambiguous simply because it provided for a payment option.

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About the Author

Michael Rust graduated from Emory University in 1980 and Emory University School of Law in 1983 where he was Notes and Comments editor of the Emory Law Journal (Law Review). Since that time, he has maintained an active trial practice in the state of Georgia both in State and Federal Courts. Mr. Rust teaches litigation as part of Emory University School of Law’s annual Trial Practice Program. He has received AV rating from Martindale Hubble, the highest rating afforded to lawyers by their peers.