What Evidence Proves an Insurance Company Has Satisfied Its Statutory Duty of Proper Notice When Canceling a Policy?

The Nebraska Supreme Court explained the criteria in Barnes v. American Standard Insurance Company, (297 Neb. 331).

In this case, Jimmy Barnes, (“Barnes) was in an accident with a vehicle while riding his motorcycle. He had three insurance policies with American Standard Insurance Company (“American Standard”), including an underinsured motorist policy. At least he thought he did. American Standard received a claim from Barnes under his underinsured motorist policy. The company denied the claim, stating the policy had been canceled due to non-payment of premiums. The lower court granted partial summary judgment in favor of American Standard based on the evidence presented purported to prove that notice of cancellation had been sent via certified mail, as is statutorily required. Barnes appealed.

American Standard presented affidavits from employees regarding mailing procedures and policies on cancellation, a copy of American Standard’s mailing log showing a piece of mail relating to Barnes’ homeowner’s policy. On the copy of the receipt, the box for “Certified” was not checked. Upon further inspection, it was noted that the certified letter addressed to Barnes had his name, city, state, and zip code, but did not list his street address. The lower court accepted this as enough proof, along with the affidavits regarding policy and procedure. However, the Supreme Court of Nebraska determined that the granting of partial summary judgment was in error.

The standards for summary judgment require the inferences to be taken in favor of Barnes as the nonmoving party. The moving party has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law. Barnes was not required to prove the nonoccurrence of statutorily required certified mail; instead, upon its motion for summary judgment, American Standard bore the burden to show that its notice to Barnes had met its statutory duty of a certified mailing and that it was entitled to judgment as a matter of law. Because of the lack of proof that the cancellation notices were timely sent by certified mail, American Standard did not meet its burden.  Therefore, the Court stated the evidence offered by American Standard did not entitle it to judgment. The case was remanded for proceedings consistent with this opinion.

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