Fifth Circuit Upholds Digital Cancellation of Financed Auto Policies in Louisiana

The United States Court of Appeals for the Fifth Circuit upheld the use of GoAuto Insurance Company's digital cancellation process for financed auto insurance policies under Louisiana law.

GoAuto, along with American Premium Assistance Company (APAC), uses an electronic system to manage cancellations when insureds miss premium payments. APAC holds power of attorney to cancel policies under the finance agreements and sends notices to insureds, subsequently informing GoAuto via email to process cancellations.

The plaintiffs challenged the cancellation notices on grounds that they lacked handwritten signatures and did not comply with Louisiana Revised Statute § 9:3550(G)(3)(a). However, the district court and the Fifth Circuit affirmed that the statute does not require signatures on certifications and that the electronic cancellation procedures meet legal standards. The court emphasized Louisiana law's requirement for strict statutory adherence but confirmed that valid receipt through electronic means satisfies cancellation notice requirements.

This ruling establishes precedent for insurers and premium finance companies using digital processes in Louisiana, clarifying compliance standards for financed auto insurance policy cancellations without necessitating physical signatures.