April 18, 2011 – A Wisconsin appeals court recently sided with an insurance company that did not give Daryl Risler statutory and contractual notice of policy expiration.
Wis. Stat. section 631.36(4)(a) requires insurance carriers to notify a policy holder of policy expiration at least 60 days before the expiration date.
Wilson Mutual Insurance Company did not give Risler notice that his umbrella policy was set to expire on May 29, 2007. Risler did not pay the renewal premium.
On Aug. 31, 2008, Risler’s son had a car accident that resulted in injuries to three people and the death of a passenger in another car. Wilson Mutual paid out the limits on Risler’s auto insurance policy, but sought a declaratory judgment that Risler’s umbrella policy expired.
The Buffalo County Circuit Court ruled the umbrella policy was still in effect because Wilson Mutual did not give Risler the required notice. Wilson Mutual appealed, arguing that Risler’s remedy was automatic renewal for one year, but the accident occurred a year after expiration.
In Wilson Mutual Ins. Co. v. Risler, 2010AP1573 (April 13, 2011), the District III Wisconsin Court of Appeals agreed with Wilson Mutual. In an opinion written by Judge Paul Reilly, the court concluded the “proper remedy for a violation of § 631.36(4)(a) and the terms of the policy is to allow the insured the opportunity to renew the policy for a length of time equal to the length of the expiring term.” Here, that term was one year.
The court held that under the Wisconsin Supreme Court case of Magyar v. Wisconsin Health Care Liab. Ins. Plan, 2001 WI 41, 242 Wis. 2d 491, 625 N.W.2d 291, violations of the statute or the contractual language can result in a perpetual term. The appeals court also rejected the argument that the policy contract provided greater protection than the statute.
Accepting the argument that Risler “could conceivably have umbrella insurance for the rest of his life without paying a premium” would lead to an absurd result, and “[w]e reject interpretations of insurance policies that lead to absurd results,” Judge Reilly wrote.