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A recent Florida appellate decision exposes the need to keep emotions at bay, while focusing on the facts. In the case of GEICO v. Kisha, a Florida jury found there to be coverage despite the insured's policy having been legally cancelled pursuant to Florida law. In reviewing the case, the facts present as such:

The insurance policy had a designated policy period from December 19, 2010, to June 19, 2011, and provided PIP and underinsured/uninsured motorist coverage to Madeline Kisha and her husband, Stephen Kisha. The policy contained provisions under the heading “CANCELLATION BY US,” that stated:

“We may cancel this policy by mailing to you, at the address shown in this policy, written notice stating when the cancellation will be effective. This notice will be mailed by United States Post Office certificate of mailing.

We will mail this notice:

(a) 10 days in advance if the proposed cancellation is for nonpayment of premium or any of its installments when due;

(b) The mailing or delivery of the above notice will be sufficient proof of notice. The policy will cease to be in effect as of the date and hour stated in the notice.”

According to the court documents, on March 14, 2011, GEICO sent the Kishas the monthly bill requiring payment of $195.20 by March 29th. When GEICO did not receive the payment by the due date, it sent a notice of cancellation for nonpayment of premium to the Kishas on April 4th. This notice was in conformance with the cancellation provisions previously quoted and advised the Kishas that unless they submitted the past due payment prior to April 20th, the effective date of cancellation, their policy would be cancelled as of that date.

The waters became somewhat murky when the insured provided a cancelled check for the proper premium amount dated on April 17th. However, the postmark of the envelope in which the check was mailed was dated April 25th, past the cancellation date. On May 8th, the Kishas were involved in a rear-end collision and subsequently filed a claim.

The carrier responded with a reservation of rights letter to the claim parties, indicating that it did not appear that there was coverage at the time of the loss, as the policy had lapsed on April 20th for non-payment of premium.

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When presented to the jury, there was evidence that the Kishas had been longstanding insureds. Previously referenced court documents indicated policies dating back between 17 and 24 years. In addition, GEICO did receive a check for the premium amount, which was cashed and deposited, which is a standard practice.

With a jury heavily laden with emotion, and plaintiffs arguing estoppel, it is somewhat understandable how the jury came to their decision to award coverage, but it was not a proper decision had the jury focused solely on the law, which is what they were empaneled to do.

The premium check was received on April 28th, eight days after the policy lapsed. The check was deposited as a matter of course and held for a period of two weeks to give the policyholders ample time to contact GEICO to get their policy reissued. The carrier asserted that it kept the premium payment for the period of time to comply with section 627.7283(2), Florida Statute (2012), which requires that when an insurer cancels a policy, it is to mail any unused premium to its insured within 15 days of cancellation. The statute further provides that if the check is not mailed out within the 15-day period, the insurer will owe the insured 8% interest on the unearned premium due until it is returned §627.7283(3) Fla. Stat. (2012).

The carrier issued a refund check that was written and dated May 14th and was mailed out to the Kishas on May 17th. Madeline Kisha admitted that at the time of the accident she did not know that GEICO had deposited the check, and Stephen Kisha stated that he did not know GEICO had deposited the check until after suit was filed. Thus, the carrier appropriately contended that the plaintiffs could not have detrimentally relied on the deposit of a check that they did not know had even been deposited.

While the plaintiffs garnered sympathy from the jury based upon length of policy term and theory of estoppel, the defense argued that the only relevant contract was the one cancelled for non-payment. The trial court allowed significant testimony that did not appear to be relevant to the issue at hand.

On appeal, the justices found that the length of contract was not relevant and should not have been admissible, reversing and remanding the case back for a new trial.

The challenge of coverage issues is that they can be emotionally charged. Let's face it, the insurance industry generally is not showered in adoration by the public. According to an Ipsos poll, negatives outnumbered positives among the public by more than two to one. Compounding matters is a recent Insurance Research Council poll that showed nearly one quarter of Americans believes it acceptable to inflate insurance claims.

Having investigated claims with questionable coverage, it is not unheard of for policies to lapse and then a loss to occur. It is also not uncommon to have parties to the claim attempt to add coverage after a loss has occurred.

Insurance fraud is a complex phenomenon as detailed in my new thriller, Swoop & Squat. While a work of fiction, many aspects of the book were derived from very real situations involving everything from coverage issues to international criminal enterprises. The key to getting the right outcomes on claims is to focus on the facts; just the fact.

Christopher Tidball is an author, speaker and claims consultant. He spent more than 25 years in the property & casualty industry in adjusting, management and leadership roles. To learn more, please visit www.christidball.com.