In Wayne Savage v. Progressive Insurance, the plaintiff, Wayne Savage, found out firsthand the value of keeping a receipt. On 12/10/13, Mr. Savage went to Rallye Motors to purchase insurance for his car. He spoke with a gentleman identified as A.T. A.T. contacted Progressive, which provided a quote for Mr. Savage in the amount of $2700 to be paid in installments after an initial payment of $593. Mr. Savage then gave A.T. $593 in cash with the remaining payments to be withdrawn from Mr. Savage’s bank account electronically. Mr. Savage subsequently received a “welcome package” from Progressive in the mail. The package contained an application for insurance. The application stated that the policy term was 12/10/13 to 6/10/14 with a total premium of $2967 to be paid in five installments. The application also provided that this first payment would be made with funds transferred from Mr. Savage’s bank account. Mr. Savage read only the first page of the mailing and did not follow through with authorization for the direct funds transfer.
On 1/8/14, Mr. Savage was involved in a car accident. The police officer that responded to the accident contacted Progressive to ensure that Mr. Savage had coverage. The officer was informed that Mr. Savage did not have coverage, and the officer subsequently issued Mr. Savage a ticket. Mr. Savage then filed suit against Progressive under the Consumer Fraud Act based on Progressive’s alleged wrongful rescission of an automobile policy. Following a bench trial, a verdict was rendered in favor of Progressive. On appeal Mr. Savage argued that the trial court erred because (1) he made his initial payment to Progressive and (2) Progressive failed to cancel his policy in accordance with N.J.S.A. 17:29C-10.
In regard to his first issue, Mr. Savage argued that his payment to A.T. and his receipt of the “welcome package” was verification that he paid the first installment and had a valid policy. The court rejected these arguments because Mr. Savage provided no evidence besides his own testimony that he made the payment to A.T as he had not retained his payment receipt. Second, Mr. Savage admitted that he only read the first page of the “welcome package” and did not read the remaining pages that explicitly stated that the first payment would be transferred from his bank account. On the other hand, Progressive provided testimony that it did not accept cash payments. Progressive tried to transfer the funds electronically but the transfer was declined by Mr. Savage’s bank.
In turning to Mr. Savage’s last issue, the court held as an initial matter that N.J.S.A. 17:29C-10 did not apply because the issue was one for recession rather than cancellation of a policy. Thus, the court held that an insurer is within its right to declare a policy void from inception if the initial payment is never received. However, the court nonetheless stated that had this been a cancellation of a policy, Progressive would have still been incompliance with N.J.S.A. 17:29C-10, which provides in pertinent part that:
“No written notice of cancellation or of intention not to renew sent by an insurer to an insured in accordance with the provisions of an automobile insurance policy shall be effective unless… at the time of the mailing of said notice, by regular mail, the insurer has obtained from the Post Office Department a date stamped proof of mailing showing the name and address of the insured and the insurer has retained a duplicate copy of the mailed notice which is certified to be a true copy.”
Progressive produced evidence that it mailed a recession notice to Mr. Savage on 12/16/13 and that it also retained a duplicate copy. Therefore, it satisfied the requirements of N.J.S.A. 17:29C-10.
Thanks to Marcus Washington for his contribution.