2019 COA 11
Colo. Ct. App.2019Background
- Michael Brown bought a motorcycle policy from American Standard in March 2014; American Standard mailed a cancellation notice effective August 20, 2014, stating the reason: “DOES NOT HAVE A VALID DRIVER’S LICENSE.”
- Brown received the notice, did not dispute it before the effective date, and was later involved in a motorcycle accident on September 6, 2014.
- Brown sought uninsured/underinsured motorist benefits; American Standard denied coverage based on the prior cancellation.
- Brown submitted an affidavit saying he did have a valid Colorado driver’s license at the time of cancellation and on the accident date, and pointed to an October 3 letter from a different insurer (American Family) stating coverage continued on a separate auto policy.
- The trial court granted summary judgment to American Standard, finding coverage was not in effect; the Court of Appeals reversed, holding a cancellation that states a reason must be factually accurate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a cancellation notice stating a reason is effective if the stated reason is factually incorrect | Brown: the cancellation is ineffective because the stated reason (no valid license) was false | American Standard: mailed valid cancellation notice; policy therefore not in effect on accident date | Court: If insurer states a reason for cancelling, that reason must be accurate; an inaccurate reason renders the cancellation ineffective (reversed summary judgment) |
| Whether Brown waived challenge by not disputing cancellation before the accident | Brown: failure to challenge earlier does not bar suit on the policy | American Standard: Brown’s delay implies acquiescence; cancellation effective regardless | Court: Waiting to sue does not, standing alone, waive right to sue or ratify improper cancellation |
| Whether the October 3 letter from American Family reinstated the motorcycle policy | Brown: the letter revoked prior cancellation / continued coverage | American Standard: letter concerns a different policy/company/vehicle; irrelevant | Court: Letter pertains to a different insurer and policy; trial court’s rejection of this claim stands (not reached on merits) |
| Whether acceptance of post-cancellation premium payments reinstated the motorcycle policy | Brown: payments demonstrated insurer accepted premiums and reinstated coverage retroactively | American Standard: payments were to American Family, not American Standard; no evidence links payments to the motorcycle policy | Court: Trial court did not find sufficient evidence; appellate court did not resolve on merits (left to remand) |
Key Cases Cited
- Geiger v. Am. Standard Ins. Co. of Wis., 117 P.3d 16 (Colo. App. 2004) (insurer must strictly comply with cancellation requirements)
- Rotenberg v. Am. Standard Ins. Co. of Wis., 865 P.2d 905 (Colo. App. 1993) (confirmed strict compliance principle)
- Peterson v. Allstate Ins. Co., 330 P.2d 843 (Cal. Dist. Ct. App. 1958) (cancellation by mistake is no cancellation)
- Nassau Ins. Co. v. Hernandez, 408 N.Y.S.2d 956 (N.Y. App. Div. 1978) (statutory requirement to state reason implies reason must be accurate)
- Fields v. Parsons, 234 N.E.2d 744 (Mass. 1968) (notice must describe reason with sufficient specificity)
- Argenzio v. Aetna Cas. & Sur. Co., 318 N.Y.S.2d 64 (N.Y. Civ. Ct. 1971) (incorrect information in cancellation notice can invalidate cancellation)