Insurer’s faulty cancellation notice leads to $1.5M settlement

An auto insurance company had to set aside $1.5 million to compensate drivers whose policies were cancelled after receiving notices that didn’t satisfy state laws, according to terms of a settlement reached in federal court.

Nationwide Affinity Insurance Company sent out pre-cancellation warning notices to approximately 70,000 policyholders in North Carolina.  The notices were missing some of the language required by state law concerning certain rights the policyholders had, including the right to have the state’s Department of Insurance review the cancellation notice.

The drivers who were represented in the lawsuit against Nationwide all had their insurance cancelled after receiving the deficient notices. This caused Nationwide to tell the state’s DMV that the policies had lapsed, which meant that the drivers then had to pay a fine to the state. The class action lawsuit, originally filed in state court but later removed to federal court, was filed to recover those losses.

The parties reached a settlement that would provide up to $1.5 million if all the eligible drivers were to come forward. An attorney for the plaintiffs, J. Michael Malone of Hendren & Malone in Raleigh, said the final figure paid out was significantly less than that number since not all eligible drivers responded to the settlement notices.

Debbie Weston Harden and Meredith J. McKee of Womble Carlyle in Charlotte represented Nationwide. Jonathan Harkavy of Greensboro mediated the settlement.

Follow David Donovan on Twitter @NCLWDonovan

SETTLEMENT REPORT: CLASS ACTION

Case name: Truesdale et al. v. Nationwide Affinity Insurance Company of America

Court: U.S. District Court for the Middle District of North Carolina

Case number: 11-cv-467

Judge: William L. Osteen Jr.

Mediator: Jonathan Harkavy (Greensboro)

Amount: $1.5 million made available

Date of settlement: April 4

Attorney for plaintiff: J. Michael Malone of Hendren & Malone (Raleigh)

Attorneys for defendants: Debbie Weston Harden and Meredith J. McKee of Womble Carlyle (Charlotte)