A federal appeals court just confirmed: GoAuto’s digital process for canceling financed auto policies meets Louisiana law – no handwritten signature required.
On Oct. 3, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal of a lawsuit against GoAuto Insurance Company and related entities, holding that their procedures for canceling financed auto insurance policies complied with Louisiana law.
The case involved plaintiffs Kimberly Williams, Nicholas Jenkins, and Felita Wright. Williams and Wright were former GoAuto insureds, while Jenkins was involved in an accident with a GoAuto-insured driver. All relevant policies had been financed through American Premium Assistance Company, LLC (APAC), which paid GoAuto the full premium and collected monthly payments from the insureds. The finance agreements authorized APAC, through a power of attorney, to cancel the policies if payments were missed.
When payments were not made, APAC sent a notice to the insured stating that the policy would be canceled if payment was not received within 10 days. If the default was not cured, APAC’s computer system automatically sent GoAuto an email with a copy of the notice of cancelation and a request for cancelation. The request included a certification that the premium finance agreement contained a valid power of attorney, was in default, and that proper notice had been sent to the insured and any interested parties.
The plaintiffs filed a class action, alleging that GoAuto’s procedures did not strictly follow Louisiana Revised Statute § 9:3550(G)(3)(a), which governs the cancelation of insurance policies financed by premium finance companies. They argued that the cancelation notices were not properly “certified” because they lacked a signature, and that GoAuto had not properly received the cancelation requests as required by law.
The district court granted summary judgment for GoAuto, finding that its procedures complied with state law. On appeal, the Fifth Circuit agreed. The court held that the statute does not require a signature on the certification and that the electronic process used by APAC and GoAuto satisfied the statutory requirements. The court also found that GoAuto’s receipt of the cancelation notice through its computer system constituted valid “receipt” under the law, allowing the insurer to proceed with cancelation.
The court’s opinion noted that Louisiana law requires strict adherence to statutory procedures for canceling financed insurance policies but does not add requirements not present in the statute’s text. The court concluded that certification by the premium finance company, as stated in the statute, does not require a signature by a named employee.
The Fifth Circuit’s decision provides clarity for insurers and premium finance companies in Louisiana, confirming that electronic processes and certifications without a physical signature can satisfy statutory cancelation requirements. The ruling underscores the importance of following the statutory steps in insurance policy administration.
