Ohio law does not permit the cancellation of an automobile insurance policy unless the insurer issues a written notice of cancellation which contains (1) the policy number; (2) the date of the notice; (3) the effective date of the cancellation which cannot be earlier than thirty days following the date of the notice; (4) an explanation as to the reason for cancellation (or a statement that such explanation will be furnished to the insured in writing within five days upon request); and, if cancellation is for nonpayment of premium, (5) at least ten days’ notice from the date of mailing of the cancellation. Revised Code § 3937. If an insurer does not comply with this statute, then the policy cancellation is not effective as a matter of law.
Recently, Ohio’s Ninth Appellate District held, in a matter of first impression in this state, that an insurance company’s cancellation for nonpayment notice issued before the insured’s premium due date is not effective and did not cancel the policy because the insurer did not afford its insured the benefit of Ohio’s statutory ten day grace period.
In Vietzen v. Victoria Auto. Ins. Co., 9th Dist. No. 13CA010390, 2014-Ohio-749, Victoria Automobile Insurance Company insured a vehicle owned by Paulette Henry. On August 24, 2009, Victoria Insurance mailed a billing statement to Ms. Henry that included a notice that her policy would be cancelled at 12:01 a.m. on September 6, 2009 if she did not pay her premium by September 5, 2009. It was undisputed that Ms. Henry did not pay her premium.
On September 6, 2009, Mr. Vietzen was struck by an individual driving Ms. Henry’s car. Mr. Vietzen filed a lawsuit against Ms. Henry and obtained a judgment against her in the amount of $97,000. Victoria Insurance refused to satisfy the judgment based upon its claim that it had cancelled Ms. Henry’s policy at 12:01 a.m. on September 6, 2009, for nonpayment of the premium. Litigation ensued. In examining the dispute, the trial court found that Victoria
Insurance could issue a preemptive notice of cancellation in advance of Ms. Henry’s failure to timely pay the premium.
Upon review, the Ninth Appellate District reversed, finding that the mandatory notice provisions contained in R.C. § 3937.32 is intended to protect the public from the burden of compensating for injuries sustained as a result of uninsured drivers and the only reasonable interpretation of the statute’s 10-day notice requirement is that the legislature intended to include a grace period of ten days in which an insured may pay a past-due premium before the insurance company may cancel the policy.
The decision of the Ninth District in this case underscores the serious ramifications to insurers whose policy cancellation procedures do not strictly adhere to the mandates of R.C. 3937.32.
For a copy of this opinion or more information concerning its application, or any other question with respect to any insurance coverage issues, please contact one of Reminger’s Insurance Coverage/Bad Faith Practice Group members listed below.
