California Insurance Coverage Court Decision - Adult Child Living with Parents

Recently 21st Century Insurance company lost a case where they tried to deny insurance coverage for an adult child who was living with her parents. In this case, the parents kept her on their automobile insurance policies and provided coverage for the car owned by the child.

Here is the issue in the case. The parents failed to pay the premiums so the insurance company legitimately cancelled the policy for nonpayment. The insurance company properly gave advance notice of cancellation to the parents as policyholders. But the legal question was this. Did they have to give separate notice to the adult daughter since the daughter was named as an insured driver on her parents’ policy and her vehicle was also insured under the policy.

The Court of Appeal held that “under Insurance Code 1 section 662, subdivision (a) ... the answer is yes.”

This means that even though the parents had notice and the policywas cancelled, “because the insurer did not give advance notice of cancellation to the adult daughter, the policy was still legally in effect when she got into an accident driving her covered vehicle without knowledge of the purported cancellation.”

See: Molinar v. 21st Century Insurance Company (Cal. Ct. App., Feb. 26, 2024, No. D081431) 2024 WL 772632, at *1

This is important because if you are hit by an uninsured driver different policy provisions apply and you seek coverage from your uninsured or underinsured motorist coverage. Usually that is fine. But if your policy provides minimal coverage for you (let’s say $ 15,000), then the other driver’s policy may be of great importance to ensure that you obtain a full recovery.

This is very much an attorney issue. As the court stated in Molinar:

“California courts require strict adherence to a statutory mandate regarding transmittal of cancellation notices.” (Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1120, 100 Cal.Rptr.2d 246 (Kotlar).) “Termination of coverage can only be accomplished by strict compliance with the terms of any statutory provisions applicable to cancellation.” (Mackey v. Bristol West Ins. Services of Cal., Inc. (2003) 105 Cal.App.4th 1247, 1258, 130 Cal.Rptr.2d 536 (Mackey).) “If a cancellation is defective, the policy remains in effect even if the premiums are not paid.” (Kotlar, at p. 1121, 100 Cal.Rptr.2d 246.)

These types of legal arguments rarely succeed unless they are made by an attorney.

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