Nationwide Mutual Insurance Company appealed an order from Pennsylvania’s Insurance Commissioner, alleging it did not engage in Unfair or Deceptive Insurance Practices in connection with the cancellation of a residential insurance policy issued to Ms. Darlene Miller. The Court affirmed the decision of the insurance commissioner and found that “the Commissioner properly determined, based on credible evidence, that Nationwide failed to comply with Section 5(a)(9) of the Unfair Insurance Practices Act and the cancellation of Miller’s homeowner’s policy was ineffective.”

Based on the facts presented in the opinion, Nationwide Mutual Fire Insurance Company v. Insurance Department, Ms. Miller timely paid her premium to Nationwide in December of 2007, but instead of issuing a premium payment for $1129.00, the check was mistakenly written for only $1029.00. This little mistake snowballed when, six months later, Nationwide mailed a notice to Miller to let her know the company intended to cancel her policy for non-payment of premium. The first bill from Nationwide requesting the difference in the premium was mailed in April with a due date of May 15, 2008, for the remainder of the premium and a small fee, but Ms. Miller never received the bill and Nationwide did not receive the $108.00 it sought. On May 22, a notice of cancellation – effective on June 25 at 12:01 a.m.–was sent to Ms. Miller.

The opinion explains that for some ”unknown reason” both the letters were returned to the post office as undeliverable and returned to Nationwide’s Columbus, Ohio office. The opinion also explains that Nationwide has a practice of sending returned mail to the Nationwide agent of record, but at a hearing in this matter, the Nationwide representative testified it was not known whether the practice was followed in this case.

The record showed that Ms. Miller resided in the insured home in April and May of 2008, but that she was traveling often to Easton, Pennsylvania, to spend time with her family. Ms. Miller’s health was fading and she elicited the help of her daughter, Maureen Miller, to help her with some of her personal matters, including paying some bills.

A theft loss was discovered at the insured property on December 11, 2008, prompting Maureen Miller to contact the Nationwide agent. The agent reviewed the policy and explained to her that the insurance had been cancelled in June. Interestingly, the agent encouraged the Maureen to pursue a claim with Nationwide.

Maureen Miller, on her mother’s behalf, worked to contest the cancellation.

  • Maureen contacted the agent’s office again to see if there was some way to resolve the issue given her mother’s health and the failure to receive notice of the cancellation.
  • Maureen made repeated phone calls in January 2009 and, after three attempts, sent a certified letter to the agent on January 30, 2009, detailing the chronology of events them and requesting coverage for the claim
  • Maureen hired a public insurance adjuster to help with the adjustment of the theft claim
  • February 12, 2009, she again telephoned the agent, who indicated that she would need to contact Alicia Dominick, a Nationwide underwriter.
  • Darlene Miller received an email chain between underwriter, Dominick and the agent that “acknowledged that the insured had not received the April 15, 2008, bill and the May 22, 2008, cancellation notice. However, Dominick stated that Nationwide had issued the appropriate correspondence to Miller and she told the agent to inform Miller that the policy was cancelled on June 25, 2008, that the policy would not be reinstated.
  • Miller contacted Pennsylvania’s insurance Commissioner.

The insurance commission found that Nationwide was in violation of Section 5 (a)(9), in pertinent part, which provides as follows:

No cancellation or refusal to renew by any person shall be effective unless a written notice of the cancellation or refusal to renew is received by the insured either at the address shown on the policy or at a forwarding address.

The Court agreed with the Commissioner’s findings:

  1. It was undisputed that Miller did not receive the notice because it was returned to Nationwide as undeliverable mail.
  2. The insured was still residing at the insured home. Mrs. Miller’s trips from her home to stay with family in Easton did not persuade the Commissioner to determine Miller had moved to another address.
  3. Additionally, “ Nationwide has a practice of sending returned mail to the Nationwide agent of record, but Nationwide’s representative at the hearing did not know specifically whether that was done in this case or how the agency servicing Miller’s homeowner’s policy handled returned mail forwarded to it. Thus, even after having three of its mailings to Miller returned as “undeliverable”, Nationwide did not prove that it complied with its own practice of sending returned mail to the local Nationwide agent of record for investigation. The Commissioner found that there was no evidence that Nationwide made any attempt to re-send the notice or otherwise notify Miller that her homeowner’s policy was being cancelled prior to submission of the claim in December 2008. As such, Nationwide’s contention that it is truly unfair to Nationwide to void the cancellation since it was Miller’s conduct that prevented her from receiving the cancellation notice is without merit.”

By upholding the decision of the Insurance Commissioner, Judge Kelly of the Commonwealth Court of Pennsylvania affirmed that the cancellation of Miller’s homeowner’s policy was ineffective, giving Miller the ability to make a claim for the December 2008 theft loss.