by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
INSURANCE; CANCELLATION; NOTICE: Where statute requires mailed notice, evidenced by post office documentation, in order to cancel an insurance policy, and provides that "no notice of cancellation is effective unless mailed . . . to the named insured and the mortgage or lien holder. . . " insurer's failure to provide post office certification of mailing notice of cancellation to mortgagee renders cancellation ineffective as to mortgagee, but not as to insured homeowner, where homeowner did receive notice.
Economy Fire and Casualty Company v. Hughes, 649 N.E.2d 561 (Ill. App. 3 Dist. 1995).
The insured claimed that he also had received no notice of cancellation, but the insurer provided a post office certificate showing that an unidentified letter was held for delivery to the insured. This satisfied the court that there was "no genuine issue of material fact" as to notice to the homeowner.
The insurer, however, could not produce a similar certificate regarding its notice to the mortgagee, although it did provide extensive evidence of its business practices regarding notice. In a 1986 Illinois Appeals court case, the court had permitted evidence of a copy of the notice of cancellation with a notation of mailing by the insurer's staff in satisfaction of the statutory notice requirement. But the court noted here that the statute specifically provides that the insurer "shall maiintain proof of mailing . . . on a recognized U.S. Post office form . . . or other commercial delivery service." Consequently, it disavowed the 1986 lower court opinion, holding that evidence of the receipt from the delivery carrier is the only acceptable evidence of notice.
Despite the court's insistence on rigid compliance with the statutory language regarding evidence of notice, however, the court did not apply the statute literally as to the impact of failure to give notice. Although the statute says that no notice is effective unless provided to the insured "and to the mortgage or lien holder," the court observed that vast majority of courts in other jurisdictions have read this to mean that notice to one of the parties is valid even if the other is not notified. Therefore, the cancellation of the policy was effective as to the insured home owner but ineffective as to the bank mortgagee.
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