No Coverage When Loss Happened After Policy Was Cancelled And Before It Was Reinstated

How many thousands of cases have been decided over the years about some variation of this fact scenario? In Anderson v. Cooperative Ins. Cos., 2006 WL 73430 (Vermont, January 13, 2006), the court was presented with the ultimate “Moral Hazard” dilemma, where the insured seeks to buy insurance for damage that has already happened.
The plaintiff failed to pay her car insurance premium on time. The policy was cancelled. The plaintiff wrecked her car three days later and reported it to her agent. Next, she got a “final notice” generated automatically by computer, and dated the day she reported the accident to her agent, saying the policy would be reinstated with uninterrupted coverage if she paid the premium, which she did.
There is a strong suggestion in this case that if she had not reported the accident to her agent, the accident might have been covered under an estoppel theory. However, because she did report it while the policy was cancelled, the damage was a known loss and so was uninsurable.

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