A West Virginia appeals court has affirmed what most people know: It’s best to pay for insurance before a crash occurs.

The West Virginia Supreme Court of Appeals denied Terry Daniel Jr.’s claim for coverage by Progressive Classic Insurance Co. on a policy he renewed the day after he crashed his truck and four days after coverage lapsed.

The ruling overturned a lower court ruling, where Putnam County Circuit Judge O.C. Spaulding had ordered Progressive to pay Daniel $14,390.43 for losses, plus interest and court costs, for his 2004 Chevrolet Silverado after a Feb. 27, 2007, crash.

“Mr. Daniel’s accident, and the resulting total loss of his vehicle, occurred during a period that coverage did not exist under the renewal policy of insurance issued by Progressive,” Justice Menis Ketchum wrote in the appeals court ruling.
Court records show Progressive had offered to renew Daniel’s policy Jan. 29, 2007, with 25 days remaining on his six months of coverage. He received a letter, sent Feb. 9, 2007, reminding him that it would lapse Feb. 23 if payment didn’t reach the insurer by Feb. 25.

On Feb. 27, four days after the lapse, he crashed the vehicle, and on the next day, he paid the premium. With his payment, Daniel received a receipt, saying, “The renewal effective date will be one day after payment is made.”

Daniel’s loan for his Silverado called for Putnam County Bank to be the payee if a loss occurred and that T.C. Used Cars, the dealer from whom he bought the vehicle, to guaranteed payment, records show.

The bank filed a claim with Progressive, which was denied, then the used car dealer paid the bank for the loan note. Both the bank and the dealer sued Progressive, arguing in court documents that the insurer failed to notify Daniel and the bank that his policy would be canceled.

In court documents, Progressive argued that no coverage existed at the time of the incident and that the bank, having suffered no loss, didn’t have any right to sue.

The lower court said coverage did exist, but that the bank had no standing. Spaulding, the lower court judge, said in his ruling that Progressive’s offer to renew the policy was the same as issuing a new policy, whose cancellation would require separate notice.
“In such instances, there is nothing to cancel — the policy has expired,” Ketchum wrote, explaining the higher court’s reasoning.