Certified Mail Does Not Satisfy "Mailing Requirement" For Notice of Cancellation
Many people, insurer’s included, believe or assume that certified mail is better or safer when sending someone an important document because certified mail, unlike plain old first claim mail, provides official written proof of delivery. But people are not always available to sign for certified mail or willing to go pick up that mail at the post office. As a result, certified mail often gets returned to the sender. When this happens in the insurance context, insurers and insureds are left asking whether an insurer’s notice unsuccessfully sent by certified mail constitutes valid notice binding upon its insured.
The Washington Supreme Court addressed this issue on December 18, 2008, in Cornhusker Cas. Ins. Co. v. Kachman. The Court ruled that an insurer who sends a notice of cancellation by certified mail does not satisfy the “mailed” requirement imposed by a Washington statute – in this instance RCW 48.18.290 as it read in 2004 – providing for notice by “actual delivery or mail.” The Supreme Court reasoned that certified mail imposes additional burdens and obligations upon an insured and that, if the Washington legislature had wanted to permit “mailed” notice by certified mail, it could have done so by specifying “certified mail” as it has done in a number of other insurance-related statutes.
While RCW 48.18.290 was amended in 2006 to eliminate the “actual delivery” prong of the statute, the decision remains of potential significance for insurers and insureds. As the Ninth Circuit noted in its decision certifying the question to the Washington Supreme Court, the current statute “still distinguishes between delivering and mailing a notice of cancellation without either defining mail to include certified mail or instead requiring delivery of certified mail” such that “resolving this issue by the Washington State Supreme Court will also clarify the meaning of the word ‘mail’ in the current version of the statute.”
The potential significance of this ruling is illustrated by the dispute underlying the Cornhusker decision. The insured was involved in a fatal motor vehicle accident in October 2004. About a month before the accident, Cornhusker Insurance had sent its insured, by certified mail, a notice of cancellation for non-payment of premiums past due. The notice stated that the insurance would be cancelled effective three days before the accident unless the insured paid the past due premiums. But the insured never received the notice and it delivered payment only after the fatal accident and the insurer’s payment deadline. After receipt of the claim, Cornhusker Insurance filed a declaratory judgment action against its insured and the estate of the individual killed in the accident. While the Washington Supreme Court did not state that Cornhusker’s policy remained in effect and available to satisfy the estate’s claims against Cornhusker’s insured, that appears to be the likely result because the notice that Cornhusker sent by certified mail was never actually delivered to the insured’s last known address. And under the Court’s ruling, certified mail does not constitute “mailed” notice.
