A Wisconsin appeals court ruled that a notice of cancellation became effective ten days after the mailing of the notice, not after the receipt of the notice by the insured, in Schmitz v. Fire Insurance Exchange, No. 04-1545, 2005 WL 545301 (Wis. App. Mar. 9, 2005).

 

Robert Schmitz applied for a homeowners insurance policy through a Fire Insurance Exchange agent, Karen Paladino. Because Schmitz had submitted a prior claim on a previous policy, Paladino warned him that his application might be denied. She issued a binder for coverage anyway, and Schmitz paid premiums.

 

Schmitz did not have home delivery of mail when he submitted his application and provided a mailing address to a post office box. However, Paladino failed to enter the mailing address into the computer.

 

Fire Insurance Exchange informed Paladino that the application had been declined and issued two mailings to Schmitz—one returning his premiums and the other a notice of cancellation, providing a cancellation date of December 6, 2001. The letters were addressed to Schmitz's physical address.

 

Various postmarks appeared on the envelope he received as the letter was forwarded to his mailing address. One postmark was for December 4, 2001, and showed his correct mailing address. Schmitz believed he received the mailing on December 8 or 10.

 

A fire occurred at Schmitz's residence on December 17, 2001. When he contacted Paladino, she informed him that he did not have a valid policy. He filed suit against Fire Insurance Exchange and Paladino and her liability insurer. Fire Insurance Exchange said that the policy had been cancelled December 14, 2001, at the latest, which was ten days following the postmark showing the notice was mailed to Schmitz's correct mailing address. The trial court agreed.

 

Wisconsin Statute 631.36 states, “No cancellation under this paragraph is effective until at least 10 days after the 1st class mailing or delivery of a written notice to the policyholder.” On appeal, Schmitz argued that the use of the terms “mailing or delivery” was ambiguous and that the cancellation date should be determined based on the date the mailing was delivered to him.

 

The court said that Schmitz's argument “assumes that the 'delivery' language of the statute is linked to the predicate act of 'mailing' under the statute. This case turns on whether this assumption is correct.”

 

Because the word “or” links mailing and delivery in the statute, the court determined that the legislature intended them to be two separate methods for informing the insured of cancellation. If Schmitz's interpretation were used, the court reasoned, mailing would not need to be mentioned in the statute because the benchmark for measuring the ten days would always be from the date the insured received the mailing. The court further stated that such an interpretation would cause confusion as to when the ten days began—when the notice was mailed or when it was received.

 

Thus, the court concluded that the statute clearly addresses two methods of sending cancellation notices—mailing them or delivering them by some other means than mailing. Therefore, Schmitz's notice of cancellation was effective December 14, 2001, and the policy did not cover the fire loss.