Denial of House Fire Claim Upheld; Insureds Never Knew Their Policy Was Nonrenewed

A Connecticut Appeals Court has affirmed that an insurer is not obligated to provide actual notice of a home insurance nonrenewal; proof that the insurer sent the notice by registered or certified mail is sufficient.

The homeowners claimed they never saw the certified letter about their policy’s nonrenewal that National General Insurance Co. mailed to them in 2020, weeks before their house was destroyed in an accidental fire. They also claim they were never informed by the insurer or their agent of the results of a house inspection that formed the basis of the nonrenewal.

The homeowners did not learn they had no coverage until they called their agent on July 15, the day of the fire, and were told that their policy had not been renewed on June 27 because of an “unresolved inspection issue.”

The appeals court upheld a trial court’s granting summary judgments for the insurer and the insurance agency. The courts agreed that both the law and the insurance policy plainly provide that an insurer may send such a notice by registered or certified mail or may deliver the notice. Neither the law nor the policy requires “actual” notice or confirmation that the insured received the letter — the appeals court said that would render “meaningless the language affording the insurer the option to send the notice and specifying the manner in which it could be sent.”

The ruling also affirmed that in the absence of a special relationship, an agency’s duty to an insured ends after the policy is procured and an agent has no obligation to notify an insured about a nonrenewal or cancellation.

U.S. Post Office records indicate that the delivery of the certified notice was attempted on April 23, however “no recipient was available” and the insurer received a return notice of that status on May 15. Thus, the insureds argued, as of May 15, the insurer was aware that the notice of nonrenewal letter was never received by the insureds. The homeowners argued that since they never got it, their insurer and their insurance agency failed to provide adequate notice of the June 27 nonrenewal and thus their coverage should have still been in effect on the day their home burned down.

In granting summary judgement, the trial court held that there is no statutory right to “actual notice” of a policy nonrenewal. “Giving the words and phrases of the nonrenewal statute their plain and ordinary meaning leaves no room for ambiguity or dispute—it is the sending of, inter alia, the certified mail that satisfies the statute. No proof of receipt is required,” the court stated.

The trial court also noted that Connecticut courts have repeatedly found that there is no actual notice requirement. The court said it found the reasoning by the state’s Court of Appeals in a 2004 case persuasive, that “any rule that provides that the risk of delivery of certified mail should be placed solely on the sender would set a dangerous precedent.”

The appeals court found that the trial court correctly interpreted the insurance contract and statute, “consistent with overwhelming precedent,” concluding that there is no “actual notice” requirement. The appeals court agreed that requiring an insurer to ensure actual receipt of the certified mail would transform the sending option into a delivery option. “This clearly violates the rules of statutory construction,” the appeals court concluded.

The homeowners noted that the evidence does not indicate where the postal worker left the notice. They said they have experienced a “great deal of confusion” for deliveries because they access their home through a right of way driveway located on another road, their home is set back from the road behind another property, and there is no house number on their mailbox, which was not located by their house or driveway.

As for the agency’s obligations to notify them, the courts also agreed that the case offered no reason to depart from the general rules that an agent’s duty to insureds ends when the policy is purchased and that an agent has no duty to inform insureds of a nonrenewal or cancellation.

The homeowners further alleged that the insurance agency was negligent in not informing them of the results of the house inspection, which took place shortly after they purchased the policy. They maintained that ”the inspection was part of the application process” and that ”the reason for the nonrenewal has everything to do with the results of that inspection.”

The inspection report showed the house lacked some siding on an exterior wall, a condition the insurer considered a hazard that needed to be remedied. The insurer sent a copy of the report to the insurance agency and twice advised the agency that the policy would not be renewed if the siding issue was not fixed. The agency, however, never sent the report to the insureds and did not discuss it or the potential nonrenewal of their policy with them, although the agency asserts it left several messages.

The insureds further contended that the agency owed them a duty of care, even after the policy went into effect, because a special or fiduciary relationship existed between the parties. But the appeals court found that the insureds failed to properly raise the issue and failed to supply evidence of a relationship whereby the agency owed them an ongoing duty of care.