A federal court in Mississippi denied an insurer’s summary judgment motion seeking a determination that it properly denied coverage for a fire loss on the basis that the policy had been cancelled or was expired at the time of the loss. Courtney v. State Farm Fire and Cas. Co., 2014 WL 4914038 (N.D. Miss. Sept. 30, 2014).

The insureds owned real property and obtained a policy which was renewed for one year, after the expiration of which a fire loss occurred. The insured made a claim with its insurance agent. The agent then called the insurer’s main office and found that the policy had been cancelled. The insurer maintained that it had sent a letter five months before the policy’s expiration notifying that the policy would be cancelled because the property was no longer owned or occupied by the insured. It was undisputed the loss payee, a different individual than the insured, received the notice of cancellation, but it contended that the insured never received notice or the refund of the unearned premium sent with it. The insured sued the insurer.

The insurer moved for summary judgment on a lack of coverage due to the policy being cancelled or otherwise expired at the time of loss. It further argued that because the loss payee was a trustee of the insured’s minor child, he was liable for failure to take action and secure coverage after receiving his letter. The court looked to whether the policy, if not cancelled, would have automatically renewed, as part of its determination as to whether coverage existed at the time of loss. Both Mississippi statute, Miss. Code section 83-5-28, and the policy required the insurer to give proper notice of cancellation. However, under Mississippi law, an insurer does not have to prove actual receipt of notice by the insured. A certificate of mailing creates a rebuttable presumption that notice was received. The insurer did not produce a certificate of mailing in connection with its motion or proof that the refund check was ever cashed. Despite evidence that the loss payee called the insured and told her about the cancellation letter, notifying her of the cancellation and the basis for it, the court held that the insurer had at least to provide actual notice and notice in writing under the statute and policy. The court further found that the insurer failed to give proper notice of nonrenewal, such that coverage did not lapse as to the loss payee as under Mississippi law, the failure to pay a renewal premium may result in lapse of coverage for an insured, but not for a loss payee unless the loss payee is given proper notice.