CHARLESTON – Paying for insurance before a crash works better than paying for it after a crash, according to the West Virginia Supreme Court of Appeals.
On April 5, the Justices declined to enforce a Progressive Classic Insurance policy that Terry Daniel renewed a day after he wrecked his truck.
"Mr. Daniel's accident, and the resulting total loss of his vehicle, occurred during a period that coverage did not exist under the renewal policy of insurance issued by Progressive," Justice Menis Ketchum wrote.
The Justices reversed Putnam Circuit Judge O. C. Spaulding, who ordered Progressive to cover a loss of $14,390.43, plus costs and interest.
The loss rests for the moment with Daniel's dealer, T.C.'s Used Cars, but the dealer can try to collect from him.
Daniel bought a 2004 Chevrolet Silverado in 2006, with a loan from Putnam County Bank.
The loan required his insurer to list the bank as loss payee, and it required T. C.'s Used Cars to guarantee payment.
Daniel secured six months coverage from Progressive.
On Jan. 29, 2007, with 25 days left on the policy, Progressive offered to renew it.
On Feb. 9, Progressive mailed a reminder that coverage would lapse if the premium didn't arrive by Feb. 25.
On Feb. 27, Daniel crashed the Silverado.
On Feb. 28, he paid the minimum to renew the policy.
He received a receipt telling him he renewed with a lapse in coverage.
"The renewal effective date will be one day after payment is made," it stated.
Putnam County Bank filed a claim with Progressive, and Progressive denied it.
T.C.'s Used Cars paid the bank, in exchange for the loan note.
The bank and the dealer together sued Progressive, claiming the insurer failed to notify Daniel and the bank of its intent to cancel the policy.
Progressive argued that coverage didn't exist and that the bank lacked standing to sue because it suffered no loss.
Spaulding agreed with Progressive on the bank's lack of standing, but he agreed with the dealer on the existence of coverage.
He reasoned that by offering to renew the policy, Progressive issued a new policy that it couldn't cancel without notice.
On appeal, the Justices couldn't follow his logic.
Ketchum wrote that review of statutes gave no suggestion that the Legislature intended to require cancellation of an expired policy.
"In such instances, there is nothing to cancel -– the policy has expired," he wrote.
He wrote that an insurer must notify a loss payee only when canceling or refusing to renew a policy.
"It is clear that neither of those circumstances were at issue in this case," he wrote.
West Virginia Code allows 45 days to reinstate coverage, he wrote, but it provides that coverage shall not be retroactive to the original expiration date.
He wrote, "While Mr. Daniel was entitled to the reinstatement of the expired policy because he applied for reinstatement within 45 days of the expiration of his policy, a lapse nonetheless occurred."
Carter Elkins and Laura Gray, both of Campbell Woods in Huntington, represented Progressive.
Christopher Smith of Hoyer, Hoyer and Smith in Charleston represented T.C.'s Used Cars.