If a cashier's check is cashed by auto insurance company does this imply auto coverage?

Question

My niece is really heart-sick. She is only 20 and just financed her first car. About a week ago someone hit her beautiful car and drove off. It was a hit and run. She has insurance, but deliquent in payment. She sent them a cashier's check to cover her insurance in full. She sent a cashier's check to the insurance. The company hadn't sent a late notice. Upon the evening of the accident-- the check was in the mail. The insurance company, in the meantime, took photos of her car. And upon receipt of the cashier's check it was immediately negotiated by her insurance company. But, they refuse to pay for the damage done to her vehicle. In a like manner, are they not accepting responsibility for repairs in that they cashed her check? She is a very sad young girl. Is there anything we can do?

Answer 1

Imply? Sort of. An auto policy is a contract. She can violate that contract by lying on the application. The insurance company has a certain time period to cancel it with no reason - which varies from state to state, but usually is around 30 days.

The insurance company doesn't HAVE to honor the postmark, but most do. But they don't HAVE to. So if it was POSTMARKED prior to the cancellation date, they normally would have reinstated it.

If the cancellation date was 01/03/07, that means, 12:01AM, on that date. A postmark of 01/03 is NOT going ot help her. Dropping it in a mailbox on 01/03 isn't going to help her, as it won't get postmarked until the next day.

Insurance companies do NOT have to reinstate a policy if they get the payment past the cancellation date.

Yes, payments DO immediately get deposited. Most of the time, the payment address isn't even the insurance company - it's a lock box directly at the bank, so someone at the BANK cashes it, notes that it's her payment, THEN it gets matched up with the policy.

So, is there anything you can do? Check. What was the cancellation date? What was the postmark date? If the postmark is BEFORE the cancellation, call your agent and ask for help. Otherwise, she's going to be paying for this wrecked car for a LONG time.

Answer 2

At least in my state (Pennsylvania), there are very clear and specific guidelines about when and how an insurance company may cancel a policy for non-payment of premium. A delinquent notice has to be sent. The delinquent notice will specify on what date, and specifically at what clock hour, coverage will cease unless the delinquent payment is received. The agent will be able to tell the insured whether or not there was any lapse in coverage. A lapse in coverage is a pretty serious thing; it does not merely happen when an installment is a few days late without the insured knowing about it. Solve the question about continuous coverage, first. Continuous coverage can't be established BY YOU after there has been a lapse, but oftentimes if you send in a late payment and it's REALLY late, the insurance company might elect to reinstate the policy after-the-fact, and if they do this, there will be a letter saying so: "Reinstated with no lapse in coverage," or similar language. Find out what rationale the insurance company is using to deny her claim. Also find out exactly what coverages your niece actually purchased. Merely having some sort of coverage does not necessarily imply that that specific situation was covered!! Uninsured / underinsured motorists' coverage sounds like the part that might have applied in that situation.

Answer 3

I'm assuming you're in California???? If so, the DOI in CA tells the insurance companies what to do, when to do it, and HOW to do it. Specifically regarding billing and claims, which are 2 seperate beasts.

The DOI MANDATES all claims be investigated, even if there is a question of coverage. The coverage question is investigated concurrently with the claim for damages.

Now...when you purchase insurance you either pay a downpayment equal to 2 months of the monthly installment, or 20%. Assuming she put 2 months down and forgot a payment she is still paid current.

The insurance company is required to show "Proof of Mailing" for the following items: monthly bill, late notice, cancellation notice, and the big one....TERMINATION NOTICE!!! They must send the last one 20 days prior to be terminated. Termination is just that....terminated. Cancellation is the policy cancelled but when a payment was made it can revert back to "active" or "paid" status. The insurance company doesn't have to prove she actually received any of these notices, just that they sent it out.

As for the payment they cashed....they cash checks daily and it is unreasonable to ask they research each & every policy prior to depositing the check. If the policy has been terminated, they will refund back to her any unearned premium, i.e. premium she may have overpaid for the time they actually provided coverage.

One has absolutely nothing to do with the other, except in this particular case: there is a lapse in coverage and payment is made to bring it current. If an accident occurs during the lapse, it is up to the insurance company if they want to cover the loss. Is it fair to ask an insurance company to back date coverage upon receipt of payment and pay for damages to a vehicle when there wasn't coverage at the time of the loss? This is up for debate.

From what you've written...I honestly doubt the insurance company isn't paying for the damage because of the cashiers check situation. They may not pay for a number of reasons: the policy specifically EXCLUDES hit and runs (which is doubtful but possible), or the damage is below her deductible (which is most likely the reason).

If her claim was denied, they have to advise her in writing why it was denied. If a coverage investigation was conducted, they have to advise her of that as well.

She should call the billing department of the insurance company and find out if there is ANY lapse in coverage--they will tell her when & if there was. She should also call her adjuster and find out why they are denying the claim.

If all else fails and you ARE in California.....file a complaint online with the Department of Insurance....they'll investigate and give you the final ruling.

Answer 4

She needs to call her insurance company and see if they posted her account with a lapse in coverage. If they did, then she was not insured at the time of loss and they will not cover the accident. They may have afforded coverage during the lapse and the underwriting department didn't notify the claims department, so verify that was done as well.

Sometimes they will make exceptions in a short lapse, but probably not for a first year insured. If the coverage was lapsed due to the non-payment, then they will not back off that, even with you getting an attorney. Otherwise, people would neglect to pay their insurance all the time until they got into accidents.

Answer 5

I'm not saying this to be mean, but she is 20 and should is responsible for being current on the payments.

That being said, an insurance company will not be heart-sick at all over this unless you are backed by someone that knows the law.

Try to go to a community law center and get some free advice. Your State may have legislation for this. They also may have notification requirements before terminating coverage.

Also, contact your State's Insurance Commissioner. They may be able to help or tell you where to write a complaint, get help, etc.

Best to you.

Answer 6

You can get a lawyer, but you will probably loose. No insurance company in their right mind would pay for damages if they had not received payment and have it posted to your account. this is an easy way for them to cut their losses, they will probably refund your last payment -but they will not pay for the car crash.

Answer 7

You will probably need to consult an attorney on this one. It is not obvious from the data that the insurance was in full force and effect at the time of the collision.