What are my rights if I have business liability insurance but my insurer rejected my claim because the policy was cancelled, however they accepted payments for a balance due?

The loss occurred 10 days after past due balance was paid.

Asked on October 14, 2015 under Insurance Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If the policy was properly cancelled for nonpayment, then it remains cancelled even if you later after cancellation pay the balance due, which balance they would be allowed to keep because it was a debt owed them. The key issue is whether the policy was properly cancelled prior to the loss. Check the terms of the policy regarding nonpayment, cancellation and any notices they had to send you see if under the facts of this situation, they complied with the procedures in the policy which is a contract they are contractually obligated to follow its terms vis-a-vis cancellation. If they failed to cancel it properly, or if the facts e.g. the amount and timing of nonpayment didn't justify cancellation under the policy's terms, then the policy should still have been in force. And if the policy should have been in force and they won't pay, you could sue them for breach of contract to get the money due you for the claim.

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