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Stanley v. Safeway Insurance Co.

Citations: 682 So. 2d 951; 96 La.App. 3 Cir. 493; 1996 La. App. LEXIS 2627; 1996 WL 638205Docket: No. 96-493

Court: Louisiana Court of Appeal; November 5, 1996; Louisiana; State Appellate Court

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The appeal by Safeway Insurance Company centers on issues of insurance coverage related to an automobile accident involving Wilda and Cleo Stanley and Melinda Willis. The accident occurred on July 22, 1993, but Safeway contends that there was no active liability insurance policy on that date due to a lapse in coverage. Wilda had applied for month-to-month insurance, and Safeway claimed that a required premium payment was not made in time to maintain coverage for July 22.

The trial court initially found coverage under Safeway's policy and determined that both Cleo and Willis were equally at fault, awarding Wilda $25,000 in general damages. Safeway's appeal challenges the ruling on coverage, as well as the fault and damages determinations, but the appellate court focused solely on the coverage issue. The court agreed with Safeway, citing the testimony of underwriting supervisor Janice Burghdoff, who explained the company's method for processing premium payments for month-to-month policies. Evidence showed that Wilda did not send her premium until the expiration date of her policy, leading to a lapse in coverage. Specifically, Wilda mailed the premium for the second one-month policy on June 21, which was received on June 25, resulting in coverage being reinstated on June 22. Similarly, she mailed the premium for the third policy on July 22, after the second policy had expired, and Safeway reinstated coverage effective July 23 due to its standard practices regarding payment processing. The appellate court reversed the trial court's decision on the coverage issue, agreeing there was no coverage at the time of the accident.

The accident occurred on July 22, the same day the insurance policy expired at 12:01 a.m. According to the renewal certificate, payment was only considered made upon receipt and acceptance by the insurer, not at the time of mailing. Safeway's practice for reinstated policies set the inception date to the day after receipt of a postmarked payment; without a postmark, it was based on the check or money order date. This practice aligned with the policy's language, which required premium payment on or before the effective date for renewal. The trial court determined the policy expired on June 21 due to non-payment, as a premium check dated June 21 was received on June 25. Consequently, the next coverage period was ruled to be from June 25 to July 25, thus confirming coverage on the accident date. The trial court's adjustment of the policy dates was seen as an attempt to reform the policy post-expiration, which is impermissible since both parties had clear knowledge of the policy duration. Citing Youngblood v. Allstate, the court noted that reformation requires proof of mutual mistake, which was absent in this case. The insured had adequate notice of the policy period and failed to pay by the due date. Safeway's internal practices for establishing effective dates for renewals were deemed acceptable and not considered backdating, as there's no law prohibiting such practices for automobile insurance. The trial court's judgment was reversed, with costs of the appeal assigned to Wilda and Cleo Stanley.