Academic journal article Journal of Risk and Insurance

Insolvency Filing Period Extended by Failure to Receive Notice

Academic journal article Journal of Risk and Insurance

Insolvency Filing Period Extended by Failure to Receive Notice

Article excerpt

The state liquidator's failure to notify an insured party of impending cancellation may result in extending the period in which the insured can file claims against the insolvent insurer's estate. In this case, Missouri declared Transit Casualty insolvent and began liquidations proceedings. As part of the proceedings, the liquidator notified policyholders that policies would be cancelled. A policyholder, Digirol, did not receive the notice even though the liquidator had the proper address. After the date the liquidator designated for cancellation, fire destroyed the Digirol's property. Digirol learned of the cancellation after he filed a claim with the ancillary receiver appointed in New York. He appealed the decision, arguing that his policy required actual notice before cancellation. The lower courts rejected his argument, but the state's highest court agreed and reversed the prior adverse decision.

The court concluded that the cancellation notice did not disrupt the policyholder's existing right to notice. The right to notice was a right that existed as a claim against the insured at the time of the insolvency. …

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