If the insurance company said that, then he would obviously take it to court...and for it to BE gross negligence the insurance company would have to PROVE that he made a conscious and voluntary disregard for his property, and he could rebuttal that argument with SO many things that it would close the case (being tired, too excited for the races, being hungry, etc etc.)
Now those of you that don't know Jason, he is an INCREDIBLY honest and down to earth guy. I have been talking with him a lot lately and he called me up and told me the story of this occurrence. I personally feel SO bad for the guy...he made a mistake and paid for it WELL more than he should have had to. I wish the best for you buddy and you know that if you need anything you give me a call!
The first part is probably why an insurance company would pay the claim then cancel insurance on someone, as I previously stated. It's too shaky trying to go to court to get out from paying the claim.... But if his truck, trailered vehicle AND modifications to said trailer vehicle are fully covered, they might try it... 50k+ is a hard pill of any carrier to voluntarily swallow.