From original poster:
Thank you for all the comments, court citations (especially useful) and suggestions!
We have very clearly produced a document which the customer signs/initials and we copy the signed doc for our files, and they get this with a verbal summary along with other policy application, etc. paperwork. Also, we put a statement to the effect of non-reminders on a sticker label that is affixed to a large envelope that ultimately contains all the copies of stuff we give them.
More specifically about the 'court case at hand', after we both went to court mandated mediation, we haven't heard from the other party (plaintiff-insured). There has been no move to get a court date set. The court doesn't automatically assign one. After 120 days the case becomes inactive. Though locally the court clerks are behind in work and haven't made the inactive status official as yet. We think that the 'attorney' by her side in the mediation (probably either a friend or assigned through a prepaid legal plan) told her that she really has no case. As we pointed out during the mediation, the party she should be suing is her mortgage bank! They were the ones who didn't pay her insurance bill. Though...they would say easily that she also got notices to pay and ultimately the cancellation notice...and summarily threw both in the garbage!
Further to her ridiculous arguments, on an aside, she blamed us for 'telling her mortgage company to pay another policy on an altogether different landlord policy' for a totally different property. ...which by the way occurred 3 months after the first policy cancelled due to nonpay. Which we again summarily refuted as the paperwork from that other insurance company showed that the endorsement was not made by us, but by the insurer after the mortgage company made the payment...as they thought that now there is a mortgage and that the insured wants them to pay....and then they refunded her the money she paid them herself just a week before. It's a case of mistaken insured who complicated issues and policies that were first set up totally correct....just thought you'd like to know that little funny tidbit of info..
Thank you all again, and any further court citations or links to professional papers, attorney opinions, etc. could make for a good gathering place of information for all to utilize. Gary