Cancelled
policy not revived
Injured
party can't benefit from insurer's mistake
By
David Ziemer
david.ziemer@wislawjournal.com
May
28, 2007
| What
the court held Case:
Bruchert v. Tokio Marine & Nichido Fire Ins. Co., Ltd., No. 2006AP2113. Issue:
Can an injured party recover from the tortfeasor's insurer, when the policy was
cancelled for nonpayment, but the insurer failed to notify its insured's lienholder? Holding:
No. The failure
does not affect the cancellation of the policy as to the insured and parties seeking
coverage through the insured. Attorneys:
For Appellant:
Rice, Christine Marie, Milwaukee; For Respondent: Fertl, Jeffrey S., Milwaukee.
|
An
automobile insurer’s failure to notify its insured’s lienholder that
cancellation is imminent does not defeat its subsequent cancellation of the policy
for nonpayment, the Wisconsin Court of Appeals held on May 22.
Major
League Sports, a company owned by Charles T. Monfre, leased a car from Mitsubishi
Motors Credit of America. The lease required that the car be insured, and that
Mitsubishi be named as an additional insured.
The
lease also required Major League Sports to ensure that the policy require that
Mitsubishi be notified of any cancellation of coverage 30 days in advance.
Major
League Sports insured the car with Acuity, but failed to pay its premiums. After
giving the 10-day notice required by sec. 631.36(2)((b) to Monfre, Acuity cancelled
the policy. However, Acuity gave no notice to Mitsubishi.
While
driving the car with Monfre’s permission, James R. Erickson was involved
in an accident that injured Laura C. Bruchert.
Bruchert
brought suit against many parties, including Acuity. Acuity moved for summary
judgment, relying on its cancellation.
The
insurer for Mitsubishi opposed the motion, and the circuit court denied it, holding
that the failure of Acuity to give notice of cancellation to Mitsubishi meant
that the policy remained in effect and provided liability coverage for Bruchert’s
injuries.
Acuity
appealed, and the court of appeals reversed, in a decision by Judge Ralph Adam
Fine.
The
court noted that, while sec. 631.36 requires that written notice be given to a
policyholder 10 days before the proposed cancellation, nothing in the statute
requires that notice be given to anyone else. The policy required that notice
be given to Acuity as the “loss payee” in connection with the “Car
Damage Coverage” only.
The
court thus concluded that, when Monfre failed to pay the premium and ignored the
cancellation notice, he “voluntarily joined the ranks” of the uninsured,
and both he and those whose derivative liability coverage flowed through his (Erickson’s)
lost liability coverage.
Accordingly,
the court reversed.
Click
here for Case Analysis.
David
Ziemer can be reached by email.
