The Colorado Court of Appeals in Brown v. American Standard Ins. Co. of Wisconsin, 436 P.3d 597 (Colo. App. 2019) recently found that the insurance company’s reason for cancelling the policy must be accurate for the cancellation to be effective. The Colorado Court of Appeals, as a matter of first impression, held that when the insurance company provides the reason for its policy cancellation (in this case an automobile policy), the reason given by the insurer must be accurate. If the reason is not accurate, the notice of cancellation is ineffective. In doing so the court rejected the insurance company’s argument that the cancellation was effective, irrespective of whether the reason was actually accurate in situations where the insured did not contest the cancellation until after the accident had occurred. However, the Colorado appellate courts had previously held that insureds who received defective notification of cancellation were permitted to sue their insurance company without having previously challenged the cancellation.
MAKE SURE YOU’RE ACCURATE WHEN YOU EXPLAIN WHY THE POLICY WAS CANCELLED
On behalf of Steven Plitt, Insurance Expert | Jun 13, 2019 | Insurance Law
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