You Got Mail! Is Electronic Delivery of Policy Documents Enforceable in Washington State?

Author: Doug Baier

Guest Editor: Issa Mikel

July 9, 2018 9:00am

A look at Jackson v. Esurance Ins. Co., 2 Wash.App.2d 470 (2017)

Background

Under Washington State law, an insurance carrier must deliver an original insurance policy to the insured “within a reasonable period of time after its issuance.”[1] Before amending or modifying an insurance contract, an insurer must give the policyholder notice and obtain the policyholder’s consent.[2] Washington law does not dictate the manner in which insurers are to deliver notice of changes or amendments to the insured.[3]

In fact, Washington law allows an insurer to deliver insurance notices and documents electronically.[4] “Delivery of a notice or document in accordance with this section is the equivalent to any delivery method required under applicable law, including delivery by first-class mail; first-class mail, postage prepaid; certified mail; or registered mail.[5] The legislature made it clear that electronic delivery prior to July 24, 2015 remained effective so long as the insured consented to receive a notice or document in an electronic form otherwise allowed by law.[6]

Jackson v. Esurance Insurance Company, 2 Wash.App.2d 470 (2017)

In Jackson, the insured plaintiff filed a complaint against his automobile insurer to recover for collision damage during a driving-skills training program at a racecourse. His insurance company, Esurance Insurance Company (“Esurance”) denied coverage based on an exclusion in the Esurance policy excluding collision coverage “for any vehicle located inside a racing facility for the purpose of … or participating in any … driving school, driver training, or skills training.”[7]

In February 2006, plaintiff purchased a personal auto insurance policy with a six-month term from Esurance. Esurance, an internet-based insurance company that offers policyholders a paperless delivery system, allowed its policyholder to elect to receive his or her polices, billings, and other documents through an online system called “the online management platform.”[8] To participate in the platform, the policyholder must affirmatively consent to receive documents electronically as opposed to U.S. Mail.[9] The policyholder may also withdraw consent.  After doing so, the policyholder receives paper copies of documents.[10] The plaintiff consented to receive his documents electronically via Esurance’s paperless delivery stem when his purchased his initial policy and never withdrew his consent or requested paper copies of documents.[11]

Esurance renewed plaintiff’s policy every six months by posting a “Renewal Offer” to the online management platform, providing an email notification to plaintiff that the policy was up for renewal, and that he should review the terms and conditions.[12] Plaintiff’s original February 2006 personal auto policy excluded losses that occurred inside a racing facility when the car is driven to compete in or practice of any race.[13] Plaintiff’s policy renewed every six months and remained in effect from February 2006 through February 2010.[14]

In January 2010, Esurance provided plaintiff an offer for the policy renewal effective February 2010.  The e-mail notification included the following statement: “By renewing your policy, you’re agree to Esurance’s current Terms and Conditions.”[15]  Esurance also included in the email a link indicating that the renewal offer was a new Esurance Automobile Policy that differed in many ways from the earlier policy.[16] The notice of policy change explained that Esurance had expanded the raci ng exclusion.[17] “We added language excluding coverage for any vehicle while competing in, or practicing or preparing for any prearranged or organized racing or speed contest.”[18]

Plaintiff accepted this policy by paying the first installment amount due on the policy, and Esurance sent plaintiff a confirming email thanking hm for renewing his policy and telling him he could review, save, or print his policy by logging into his account.[19] Plaintiff never accessed the online portal and never read the policy.[20] This policy continued to renew every six months and remained in effect from February 2010 through February 2013.[21] The insurer posed a new policy that included the same racing exclusion as the February 2010 policy, in plaintiff’s online management platform.  Plaintiff accepted this policy by paying the installment premium due.[22]

On June 27, 2014, plaintiff was driving his car at Pacific Raceways participating in a driving-skills event when he crashed.[23]  Plaintiff sought coverage form Esurance for the damages to his car.  Esurance denied coverage, explaining that his policy excluded coverage for participating in any racing school, driving school, or skill training at a facility designed for racing.[24]

Plaintiff sued Esurance and the trial court granted summary judgment for the insurer. The Court of appeals upheld the trial court’s decision, holding that Esurance’s policy was enforceable.[25] The court stated that all of the following material facts were undisputed (1) plaintiff consented to receive all policy documents and notices electronically;[26] (2) on January 15, 2010, Esurance sent plaintiff an email informing him that his policy would be renewing soon and that by renewing his policy he was agreeing to the “Terms and Conditions;” (3) in January 2010, Esurance posted a policy-renewal offer, including the amended policy, to plaintiff’s online management platform and that plaintiff admitted he never read the policy;[27] (4) on January 27, 2010, plaintiff accepted the renewal offer by paying the first installment amount due under the policy; and (5) on January 6, 2013, Esurance delivered a renewal offer for an updated policy and the racing elusion in the January 2013 policy was identical to the racing exclusion included in the prior policy. Plaintiff accepted the new policy by paying the installment premium. Therefore, because Esurance provided notice within a reasonable amount of time before amending plaintiff’s policy, the policy was enforceable.[28]

The Takeaway

Electronic delivery of notice of change in policy can be held enforceable. However, the insured must first consent to electronic delivery of notices and documents and it must be consistent with RCW 48.185.005. However, it must be noted that an insurance company should maintain sufficient records so that there is undisputed evidence that the insured consented to electronic delivery and that it timely delivered notice of the change in policy. This can often be established by posting the new policy or renewal to the online policy management platform and sending an email notification of such changes to the insured.

 

[1] RCW 48.18.260(1).

[2] McGreevy v. Oregon Mut. Ins. Co., 74 Wash. App. 858, 867 (1994).

[3] Jackson v. Esurance Ins. Co., 2 Wash. App. 2d 470, 477 (2017).

[4] See RCW 48.185.005.

[5] RCW 48.185.005(3).

[6] RCW 48.185.005(9); see Jackson, 2 Wash. App. 2d at 478.

[7] Jackson, 2 Wash. App. 2d at 472.

[8] Id.

[9] Id.

[10] Id. at 473.

[11] Id.

[12] Id.

[13] Id.

[14] Id. at 474.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id. at 475.

[20] Id.

[21] Id.

[22] Id.

[23] Id. at 476.

[24] Id.

[25] Id. at 478.

[26] Consent was lawful under RCW 48.185.005(9).

[27] In Washington, an insured as an affirmative duty to read the policy is on constructive notice of the terms and conditions of the policy. Dombrosky v. Farmers Ins. Co., 84 Wash. App. 245, 257 (1996).

[28] Id. at 479; RCW 48.18.260(1); McGreevy, 74 Wash. App. at 867.

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