469_C300

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COVERAGE SOUGHT UNDER CANCELLED POLICY

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Homeowners	Cancellation
Nonpayment

Joseph Kaufmann purchased a Leatherstocking Cooperative Insurance Company homeowners insurance policy through Hughson & Benson Associates Insurance. The policy was effective from June 25, 2004, through June 25, 2005. Kaufmann made a down payment of $94 and elected to pay the remainder of the premium in monthly installments. By July 2004, he was behind in his payments. Leatherstocking sent him a notice of cancellation, advising him that the policy would be canceled on August 16, 2004, unless he made the minimum payment of $66.80. Kaufmann paid the $66.80, but the late payment caused a change in the payment schedule, resulting in a higher monthly payment for August. In September, Kaufmann was behind on his payments again. On September 9, Leatherstocking sent him a letter informing him that his policy would be canceled effective September 26 if he didn't make a minimum payment of $87.40. When Kaufmann failed to pay the $87.40, his policy was canceled.

On October 26, 2004, Kaufmann's property was destroyed by fire, resulting in a loss in excess of $92,000. When Leatherstocking failed to provide coverage because the policy had been canceled, Kaufmann sued Leatherstocking and Hughson & Benson. The lower court found in favor of the defendants; Kaufmann appealed.

In support of its position, the insurer provided affidavits and testimony of Leatherstocking's former president to establish that the installment payment schedule was altered as a result of Kaufmann's first late payment that this fact was fully disclosed, and that Kaufmann did not make the necessary payment. Through the affidavit of an employee, Leatherstocking also submitted proof of the standard operating procedure for mailing late payment notices and proof of the actual mailing to Kaufmann.

The Supreme Court, Appellate Division, Third Department, New York, found this evidence convincing and concluded that Leatherstocking met its burden of proof on the issue of notice. Nevertheless, Kaufmann continued to argue that the notice of cancellation was insufficient. First, he argued that the notice did not comply with a provision in the New York insurance law. The court quickly dismissed this argument, noting that the law cited was applicable only to automobile insurance. Kaufmann also argued that he had a "special services agreement" with Hughson & Benson that required the brokers to inform him that his payments were past due. Hughson & Benson submitted testimony that there was no such special arrangement, and the court found it especially convincing that Kaufmann did not submit proof of any conversations he had with Hughson & Benson personnel that would have indicated that there was a "special services agreement." The court concluded that Kaufmann's arguments were without merit, and the decision of the lower court was affirmed.

Kaufmann vs. Leatherstocking Cooperative Insurance Company-Supreme Court, Appellate Division, Third Department, New York-June 12, 2008-52 Appellate Division 3d 1010.