Expert: Richard Hixenbaugh - 8/31/2010

Question
My company is the lienholder on a vehicle that recently caught fire.  The insurance company says there is no coverage.  The insured has a policy that lapsed and then made a payment on 6/2/10 to reinstate ( we have notices).  The Ins Co accepted PMT and send us reinstated POI on 6/2/10. The date of loss is 6/28/10.  The Ins Co has a record of a notice sent on 6/22/10 canceling policy back to 6/2/10 because the insured's check was returned NSF. I believe there is a SC law that requires the Inc Co to give us as lienholder at least 10 days of coverage. Larger companies like Nationwide and Allstate do this as procedure.  This small Ins Co says "Never heard of it, send me the Statute". Can you please help me find the statute, I have research all day and an not find it.  

Answer
Hi Darla,

Unfortunately, I can not look up state statutes.

I do know from experience that a lienholder must be given 10 days notice of cancellation. However, once that notice has been given for non-payment and then a payment is made that comes back as NSF, it is as if the payment was never made and the policy lapsed as originally indecated in the cancellation notice. The question here is, since you were provided with a reinstatement notice, does another 10 day notice to the lienholder need to be given in the event of an NSF check by the policy holder. This unfortunately I do not know.

You should try contacting your stste insurance commissioners office. They may be able to answer this question for you.

I hope this helps
Richard Hixenbaugh