270_C117

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NOTICE BY INSURER TO LESSOR HELD NOT REQUIRED WHEN LESSEE CANCELED LIABILITY INSURANCE AT LEASE TERMINATION

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The following certified question was presented to the West Virginia Supreme Court on a motion by an insurer, following a trial court judgment against it: "Absent controlling language in a lease or insurance policy, whether an insurance company has a duty to provide to lessors. who have been designated 'additional insureds,' notice of the cancellation of a businessowners' insurance policy of the lessee when the lessee canceled the insurance policy as the result of the termination of the lease between the lessor and the lessee by the normal operation of the lease provisions."

A tax service (the lessee) was required by lease provisions to provide general liability insurance on the building that it occupied. Accordingly, its insurer added the location to its ongoing liability coverage, included the building owners (the lessors) as additional insureds, and issued a certificate of insurance to the lessors that specified the full 3-year term of the policy. As is customary, the certificate stated that the insurer "would endeavor" to mail notice of any future cancellation to the certificate holder, but that it assumed no legal obligation to do so.

The lessee did not renew the lease and moved out shortly before its expiration, midway in the term of the insurance policy. It asked the insurer to remove the subject property from coverage, which was accomplished by endorsement. The lessors did not receive notice of the transaction, but were fully aware of the lease termination.

A passerby was injured three months after the lease termination when he fell on the sidewalk in front of the building. Defense and coverage for a lawsuit against the building owners was rejected by the insurer of the former occupants. The policy, under which the building owners claimed protection, was still in force.

The high court noted that the lease required the lessee to provide liability insurance on the "leased premises." It found it an unreasonable expectation for the lessee to maintain insurance after the termination of the lease. The certificate itself relieved the insurer from a legal obligation to notify the lessors of insurance termination. No statute or public policy, otherwise, imposed such an obligation.

The certified question was answered in the negative. The insurer did not have an obligation to provide a notice of liability insurance cancellation to the lessors. (CAMASTRO, Plaintiff v. DIESK ET AL., Defendants. West Virginia Supreme Court. No. 23403. March 14, 1997. CCH 1997 Fire and Casualty Cases, Paragraph 6046.)