The Georgia Court of Appeals (US) found that payment of premiums by house owners insurance policyholders to their insurance agent was not payment to the insurer where notice had been given to the policyholders to pay directly to the insurer.

In October 2014, the insurer sent a renewal notice to the policyholders requiring them to pay premiums directly to the insurer. When no payments were received the insurer sent a cancellation notice in December 2014 repeating the requirement that premiums had to be paid to the insurer. Although the policyholders denied receiving either notice the record included a receipt for certificate of mailing and the court found that they had received the notices.

The policyholders’ home burnt down in 2015 and the insurers denied coverage because the policy had been cancelled for non-payment of the premium.

The court found that the insurers had terminated the broker’s agency and the policyholders had notice of termination. The broker was therefore neither the actual nor apparent agent of the insurer.

In South Africa an insurer can terminate the broker’s mandate to collect premium at any time but must make sure that notice of the new requirements for premium payments is given to the policyholder and termination is subject to the Policyholder Protection Rules if applicable.

The case is American Reliable Insurance Company v Lancaster.