That is precisely what occurred in a recent matter where David Weinberger of Kliger Partners acted against an insurer that could not prove it had properly cancelled the client's insurance policy months before the client was involved in a motor vehicle accident.

The client, regrettably, only found out his insurance policy had been cancelled when he called to lodge a claim.

The insurance company had cancelled the policy because the client failed to pay his premiums. The client had arranged to debit his credit card monthly, but after he lost his credit card the bank issued him a new card with a different number.

Subsequently, the insurance company's attempt to debit his credit card was rejected by the bank, resulting in the cancellation.

Approximately 9 months later the client was involved in an accident, and he immediately called his insurance company to report the accident and acknowledge that he was at fault.

He was surprised to find that his insurance policy had been cancelled and told his insurer that he had never received a letter or any notice advising him of the cancellation. Therefore, he requested that the insurance company review the matter.

The insurance company stood by its denial of the claim and the client decided to challenge the insurer's decision.

Kliger Partners argued that the policy had not been cancelled in accordance with section 59 of the Insurance Contracts Act 1984 (the "Act"), which requires written notification to be provided to the insured in order for the cancellation to be effective.

The insurance company argued that it had sent a generic form letter advising the insured that it intended to cancel the policy if payment was not received within 14 days.

Kliger Partners submissions were accepted and the insurance company was required to pay for all the damage caused to its insured's car as well as all of the damage to the other vehicle - a Mercedes Benz.

The decision explained:

It is an important step for a member [insurance company] to take to cancel a contract of insurance particularly an instalment contract and the Panel expects persuasive evidence to be provided by a member of a communication forwarded to a policyholder in these terms . . . The letter . . . does no more than indicate the policyholder has 14 days to rectify the arrears payment but it does no more than indicate an intention to cancel the policy. It does not state when the policy will be cancelled or on what basis it will be cancelled.