The Difference Between Cancellation and Non-Renewal of an Insurance Policy

In Waters v. Miller (08-14072), a published opinion released by the Eleventh Circuit on April 15, 2009, the Eleventh Circuit affirmed the district court. The court distinguished cancelling an insurance policy from the situation when the insured does not renew the policy. The court stated:

Critical to this case, each motor carrier must maintain a liability insurance policy in full force and effect and the policy “may not be canceled on less than 30 days’ written notice by the insurer to the [FDHSMV].” Fla. Stat. § 320.02(5)(e).

As the district court found, Florida Statutes section 320.02(5)(e) applies when an existing policy is cancelled, but not when a policy expires because of non-renewal by the insured. The distinction between these two terms is recognized by insurance treatises and Florida law. See 3-16 Holmes’ Appleman on Insurance 2d § 16.7 (2009) (“[Cancellation] is to be distinguished from the use of the term ‘termination’ . . . .”); 2 Couch on Insurance § 30:2 (3d ed. 2008) (“The right to cancel is distinct from a policy’s lapse, or expiration by its own terms.”); Safeco Ins. Co. v. Oehmig, 305 So. 2d 52, 54 (Fla. 1st DCA 1974) (construing a “notice of cancellation” required by Florida Statutes section 627.728, which expressly distinguishes between cancellations and nonrenewals). By the plain terms of the Florida statute, we find Progressive’s failure to notify the FDHSMV of the Policy’s expiration did not result in the continuation of insurance coverage beyond September 11, 2005. Accordingly, we affirm the district court’s order granting summary judgment to Progressive on the state law issue.