In
Kutz v. State Farm Fire & Casualty Company, 2008 OK CIV APP 60, the issue was whether the Kutzes were properly notified about their policy cancellation. The Kutzes sued State Farm and Agent for bad faith breach of contract after State Farm failed to defend John Kutz or pay his claim for liability for an auto accident because the policy insuring the vehicle had been canceled before the claimed loss occurred. The Kutzes asserted State Farm and Agent failed to notify them the policy was being canceled, and the Kutzes asserted Agent was negligent for failing to warn them before cancellation.
The Kutzes claimed they did not receive the following from State Farm: a balance due notice on April 30, and a cancellation notice on August 26. The policy was cancelled on September 8; and Mr. Kutz was involved in an accident in November. It was admitted that the Kutzes did not pay the full premium, but they claimed it wasn’t their fault because they did not receive a reminder that the premium was due.
The court first noted that State Farm was required to follow the terms of the policy in cancelling it. Midwestern Ins. Co. v. Cathey, 1953 OK 169, 262 P.2d 434, 436. The policy only required that the cancellation notice be mailed, not that it be received, in order to be effective. The plaintiffs claimed that the record only showed the cancellation notice was prepared, not that it was mailed. But the evidence included a photo of the envelope addressed to plaintiffs going through State Farm’s automated mailing system, and an affidavit that it was State Farm’s regular practice and procedure to submit the notices to the post office immediately thereafter, and State Farm did not deviate from its procedure. A business’s regular practice and procedure is admissible as proof of mailing. Summary judgment in favor of State Farm was affirmed.
The court then discussed the Kutzes claim that the agent was negligent in failing to tell them they forgot to pay their premium. The court that the agent had no such duty. Summary judgment to the agent was also affirmed.
This case is interesting because it details the type of proof necessary to show that something was mailed. Many insurance companies no longer send out notices by certified mail – thus, it has been difficult to show such notice. Furthermore, the court was unwilling to expand the duty of an agent to include advising a client about payment and cancellation issues.
