Nifty Fact Pattern with a Consideration Issue!

On December 26, 2019, William Stephens completed an application for car insurance through Progressive.  He paid the initial premium, but his check was returned for insufficient funds.  On January 3, 2020, Progressive sent him notice that his policy would be canceled unless he paid by January 12th, which he did not do.  On January 14th, Progressive sent Mr. Stephens notice that the policy was rescinded as of December 26, 2019.  Meanwhile, on January 3, 2020, Mr. Stephens allegedly hit a pedestrian, Franscisco Ball-Rodriguez with his car.  Unable to recover from Mr. Stephens, Mr. Ball-Rodriguez went after Progressive, and Mr. Stephens joined the action, alleging bad faith refusal to pay the claim.

The trial court granted Progressive summary judgment.  On appeal in Ball-Rodriguez v. Progressive Premier Insurance Company of Illinois, the Georgia Court of Appeals affirmed.  Plaintiffs argued that Progressive had waived its right to rescind the policy when it sought to collect premiums from Mr. Stephens.  That argument was foreclosed by clear language in the policy, giving Progressive the right to rescind for non-payment of premiums.  There was no “clear and unmistakable” waiver.

In addition, Plaintiffs made various arguments for why Mr. Stephens had given consideration.  His personal data provided to Progressive was consideration.  His attempt to send a check was consideration.  The court made short work of these arguments.  The provision of personal information was not understood by either party at the time of contracting as consideration for the policy.  Payment was the consideration, and payment was never made.  The insurer should not be punished for granting Mr. Stephens extra time to pay his premium.

At first, it struck me that, at the time of the accident, Mr. Stephens likely did not have notice of his bounced check, and so there might be an argument that he should be covered so long as he paid the premium at some point thereafter.  But it occurs to me that making such allowances would open the way for Better Call Saul-style scams.  Not that I have any reason to think that anything like that was going on in this case.