Maryland Auto Insurance Policy Lapses Day Before Fatal Accident; Court Provides No Relief to Driver

In a case with startling facts leading to worst-case scenario consequences, the Maryland Court of Special Appeals examined whether the insurance coverage of a driver expired just one day prior to a fatal accident. In Price v. State Farm Insurance Company (Md. Ct. Spec. App. September 14, 2015), the driver struck and killed someone crossing the street in a motorized wheelchair. As a result of the accident, the deceased’s heirs and estate filed an injury action against the driver.key-1546278-640x480

In Price, the driver was delinquent in making his premium payment. On January 11, 2012, the insurance company sent a notice that, unless the premium was paid, his policy would be canceled on January 24, 2012 at 12:01 a.m. The letter also stated that, if payment was received any time after that date and time, the insurance company would inform him of whether and when the policy would be reinstated. It specifically added that there would be no coverage between the date and time of cancellation and the date and time of reinstatement.

Sometime on January 24, 2012, the driver’s wife mailed an electronic payment from her back to the insurance company, stating that it was intended to pay for the driver’s policy premium. Although the payment was processed on January 24, 2012, it was not received by the insurance company until January 26, 2012. In addition, the payment was applied to the wife’s, not the driver’s, auto policy. On the following evening of January 25, 2012, the driver hit and killed the deceased.

The driver paid the premium by credit card on January 26, 2012 after discovering the payment had not gone to his policy. The insurance company reinstated the driver’s policy on January 27, 2012 and refunded him the amount for the three days his policy was not in effect. The question then arose as to whether the driver was insured at the time of the accident, and the estate sought a declaratory judgment from the circuit court on the issue. The insurance company moved for summary judgment on the grounds that the driver’s policy had been canceled at the time of the accident for failure to pay the policy premium. The estate and driver argued, in turn, that the premium should be regarded as paid in time under the “postal acceptance rule.”

The “postal acceptance rule” is a legal canon that provides that, when a party consents to receiving communications, including payment, by mail, a communication is deemed received when it is properly delivered to the U.S. Postal Service. The plaintiffs in Prince argued that the court should extend the “post office” rule to electronic transmissions, which would allow the electronic payment to be deemed received on the processing date instead of the date received. The Court of Special Appeals found that, although that argument was an interesting one, it did not apply in this case, since the wife’s electronic payment was submitted after 12:01 a.m. on the date it was due, and as a result it failed to meet even the deadline of the postal acceptance rule. The driver was therefore uninsured at the time of the fatal accident, exposing him personally to potentially enormous liability without coverage.

The Maryland injury attorneys at Foran & Foran, P.A. assist clients in a variety of personal injury cases, including auto accidents, malpractice, premises liability, and more. We routinely deal with insurance companies on behalf of our clients to obtain the coverage and compensation that they deserve, as well as pursuing damages from careless drivers in negligence cases. To discuss your case with one of our experienced attorneys, contact us by phone at (301) 441-2022 or online.

More Blog Posts:

Maryland Court Rules in Favor of Insurance Company in Car Accident Settlement Case, Maryland Personal Injury Blog, published July 30, 2015

Court of Appeals of Maryland Finds Underinsured Motorist Policy Applicable in Single Vehicle Car Accident Settlement Case, Maryland Personal Injury Blog, published July 15, 2015