Elkins v. State Farm Mutual Automobile Insurance Co

In Elkins v. State Farm Mutual Automobile Insurance Co., 197 W. Va. 412, 475 S.E.2d 504 (W. Va. 1996), the notice of cancellation stated that it was being issued for non-payment of premium and that the policy was being cancelled for non-payment on a date 35 days following the date of the notice. 475 S.E.2d at 505. In the box labeled "CANCELLATION DATE" was that date together with a dollar figure labeled "AMOUNT DUE." Id. However, there was no additional language explaining why the amount due was referenced or what, if anything, the policyholder could do before the stated cancellation date to maintain coverage in effect. Id. The insured did not pay by the cancellation date, became involved in an accident, and then paid the overdue premium. 475 S.E.2d at 505-06. The Elkins court applied the rule that a cancellation notice must be "clear, definite and certain," and that any ambiguity regarding the company's intent to cancel would be resolved in favor of the insured. 475 S.E.2d at 506. The court then found that inclusion of a reference to an amount due would lead an ordinary person to believe that payment of that sum would keep the policy in force and avoid cancellation. 475 S.E.2d at 507. The court therefore found that the notice of cancellation was not clearly and definitely a cancellation and resolved the perceived ambiguity against the insurer by continuing the policy in effect, thereby providing coverage for the accident. Id. The court specifically held that any cancellation notice that informs an ordinary person of the amount due is sufficiently ambiguous as to render the notice ineffective. Id.