No Coverage Owed for Home Destroyed by Fire Even if Agent Pocketed Premiums

By Jim Sams | October 22, 2020

A property insurer is off the hook for a $200,000 claim against a policy that it canceled, leaving a lawsuit filed against a former insurance agent who was arrested for pocketing premiums as the only apparent recourse available to the homeowners.

The Georgia Court of Appeals reversed a ruling by a Bleckley County Superior Court judge and granted summary judgment, dismissing a lawsuit filed by policyholders Charles Otis and Wanda Kaye Lancaster against American Reliable Insurance Co.

The appellate panel, in an opinion dated Oct. 2 and published Tuesday, found that American Reliable had shown that it properly canceled the policy because it did not receive payment for the premium. The carrier gave proper notice to the Lancasters even though the couple says they never received the documents sent to them, the court decided.

The Lancasters say when it came time to renew their farm owner’s policy with American Reliable in December 2014, they made premium payments directly to their insurance agent, Macie Anedra Yawn. She was the sole proprietor of the Charles Robinson Insurance Agency in Eastman, Georgia.

The Lancasters home was completely destroyed by fire on May 30, 2015, about six months from the date that the Lancasters say they paid their premium to Yawn. American Reliable denied the claim, telling the couple that the policy had been canceled because the premium wasn’t paid when it came time for renewal.

Investigators for the Georgia Insurance Department’s fraud division ordered the arrest of Yawn for 10 counts of insurance fraud on Dec. 15, 2015. She was sentenced to 10 years of probation in 2018 and assessed $3,840 and fined $185, an Insurance Department spokesman said Thursday.

The Lancasters filed a lawsuit against both Yawn and American Reliable in Bleckley County Superior Court. American Reliable filed a motion for summary judgment. Judge C. Michael Johnson denied the motion, finding that genuine issues remained as to whether Yawn was American Reliable’s agent.

The appellate panel said in Georgia, an independent insurance agent is not considered an agent for an insurer unless the insurer granted the agent authority to bind coverage or represented to a policyholder that the agent represented it. The Lancasters submitted no evidence that Yawn was an employee of American Reliable or an authorized agent, the court said.

The court said the record shows that American had rescinded any authorization that it may have granted Yawn to act as its agent. What’s more, the renewal notice that American Reliable mailed to the Lancasters “stated on the front page that it was a direct bill, rather than an agency bill, policy.”

“These facts are different from cases in which we have found apparent agency, as in those cases the insurer permitted the purported agent to act on its behalf while never informing the insured that the agent had no authority to do so,” the opinion says.

Even though the Lancasters argued that they never read the renewal notice or the statement that they must pay American Reliable directly, the insurer demonstrated that it had sent proper notice by entering U.S. Postal Services receipt notices into evidence.

The court said since no insurance was in place at the time of the fire that destroyed the Lancaster’s home, their breach of contract and bad faith claims must be dismissed.

Online court records do show that Yawn and her husband were involved in a divorce proceeding in 2018, and that her maiden surname was Moore.

Georgia Department of Insurance records show that an agent’s license issued to Macie Anedra Moore in 2013 became inactive when it expired on Aug. 31, 2017. The records show that Moore had been a registered agent for 21 carriers, but American Reliable was not among them. All of the carriers canceled their appointments with Moore from 2014 to 2017.

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