Failure to timely pay premium may not act as a bar coverage.  In Infinity Select Ins. Co. v. Tarrie Fleming, the insured struck and killed a pedestrian while driving at approximately 11 p.m. on October 4, 2013.  The insured had previously been insured under a policy issued by Infinity.  However, the Infinity policy was cancelled at 12:01 a.m. on October 4, 2013 for nonpayment of premium.   On October 5, 2013, at approximately 2:34 p.m., the insured made an online premium payment.  The policy was reinstated “without lapse”.

Infinity sued its insured seeking a declaration that it did not owe coverage for the accident, since, the policy had been cancelled at the time of the accident, and the premium was not paid until after the accident.  Infinity argued that other courts ruled that an insurer has no duty of coverage where an accident occurs during the time period when a policy was suspended for nonpayment of premium.  The Pennsylvania Superior Court determined that Infinity could not rely on this as a basis to deny coverage, as Infinity had decided to reinstate its insured’s policy “without lapse”.  Since Infinity conceded that it reinstated its insured policy “without lapse”, the court reasoned there was no defaulted period upon which Infinity could deny coverage.

This case reveals that an insurer’s reinstatement of a policy, without lapse, may estop the insurer from later claiming there was no coverage during the time period in which a policy was cancelled for nonpayment but before the outstanding premium payment was made by the insured.

Thanks to Colleen Hayes for her contribution to this post.