Best Practices for Proper Cancellation of Coverage

Courts continue to insist that there must be strict compliance with N.J.S.A. 34:15- 81 in order for insurers to prove proper cancellation of coverage. In Davis v. Yassien Mobility Assistance & Ambulance, Inc., A-0356-14T3 (App. Div. May 5, 2015), the insurer cancelled coverage in March 2006. An employee for the insured was injured over a year after the cancellation. She filed a claim and the insured maintained that it had no coverage for years. The insured then raised the issue of improper cancellation on February 9, 2013. The insured alleged that the insurer did not include the certified statement required in N.J.S.A. 34:15-81 when it notified the New Jersey Commissionof Banking and Insurance of the coverage cancellation. The judge of compensation agreed with the insured. However, on appeal, the Appellate Division determined that it would be unfair to insurers to permit an insured to raise improper cancellation so many years after the policy was cancelled and it reversed. This was a rare victory for an insurer on a coverage case and insurers should strive to cancel coverage in strict compliance with N.J.S.A. 34:15-81.