Court Opinion

ID: 9735787
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:30:48.732213+00
Date Added: 2024-06-11T18:27:01.563052
License: Public Domain

JUSTICE COOK, dissenting: I respectfully dissent and would reverse the decision of the trial court. On August 18, 1997, Anthem sent Curtis the following “Notice of Cancellation”: “Dear Insured, As you know, you have a premium due 08/31/97. If you have already sent this payment to us, we thank you for your prompt attention. If, however, you have not yet sent it to us. [sic] Please remember that this payment is due in our office on 08/31/97. Having it here before that date will avoid cancellation of this policy. If this payment is not received by us before 08/31/97, then this notice will serve as a notice of cancellation for non[ (payment of premium effective 08/31/97, at 12:01 a.m. standard time.” This August 18 notice purports to cancel the policy for a breach that may occur on August 31. Anthem argues that the notice complies with section 143.15 because it was “mailed at least 10 days before the effective date of the cancellation.” 215 ILCS 5/143.15 (West 1996). The notice was also mailed before there was any breach, any nonpayment of premium. The notice could have been sent the day the policy was issued. Perhaps Curtis was already in breach on August 18, when the notice was sent. Perhaps Anthem could have declared the policy canceled for that breach, such cancellation to be effective sometime after August 28. Anthem, however, chose not to do that. Anthem’s specific reason for the “notice of cancellation” was the premium due August 31. Under the “notice of cancellation” there could be no breach until August 31. Anthem then sent Curtis, on September 19, 1997, a collection notice for the premium due for the period through August 31, 1997. The notice stated, “Recently your policy with our company was canceled. Prior to that cancellation, there was a balance due for insurance protection you have already received. The premium due is $106.81.” On October 17, 1997, Curtis was in an automobile accident, which resulted in damages to Ronald J. Yacko. This case presents two related issues: (1) Can an insurer send a notice of cancellation before the reason for cancellation has occurred? and (2) Was the language in the August 18 “notice of cancellation” positive and unequivocal? The issues are related because it is questionable whether a “notice of cancellation,” sent before a breach has occurred, can be positive and unequivocal. An insurer is permitted to cancel an automobile insurance policy only by compliance with the applicable provisions of the Insurance Code. Bates v. Merrimack Mutual Fire Insurance Co., 238 Ill. App. 3d 1050, 1051, 605 N.E.2d 626, 627 (1992) (must also comply with policy terms). An insurance company is held to a strict standard when it attempts to terminate a policy in midstream, to cancel a policy for the nonpayment of a premium. Textile Maintenance v. Industrial Comm’n, 263 Ill. App. 3d 866, 871, 636 N.E.2d 748, 751-52 (1994); Conley v. Ratayzcak, 92 Ill. App. 3d 29, 34-35, 414 N.E.2d 500, 504 (1980). After an automobile insurance policy has been in effect for 60 days, it may be cancelled only for the reasons specified in section 143.19 of the Insurance Code. 215 ILCS 5/143.19 (West 2000). Most notices of cancellation must be mailed at least 30 days prior to the effective date of cancellation. 215 ILCS 5/143.15 (West 2000). The insurer, however, may take advantage of a special rule where the cancellation is for nonpayment of premium. “[W]here cancellation is for nonpayment of premium, the notice of cancellation must be mailed at least 10 days before the effective date of the cancellation.” 215 ILCS 5/143.15 (West 2000). Cancellation for nonpayment of premium, unlike other reasons for cancellation, cannot be appealed to the Director of Insurance. 215 ILCS 5/143.23 (West 2000). “Nonpayment of premium” means “failure of the named insured to discharge, when due, any of his obligations in connection with the payment of premiums.” (Emphasis added.) 215 ILCS 5/143.13(e) (West 2000). There is no suggestion in the statute that a nonpayment of premium can occur before the premium is due. Under the majority’s analysis, insurers may ignore the statutory requirement that a notice of cancellation be sent. Because there is no limit how early the notice can be sent, the policy can be its own notice. The policy may simply contain a paragraph stating that if any premium payment is not timely received, the policy is terminated, effective 10 days thereafter. Where a notice of cancellation is sent after a reason for cancellation has occurred, the insured is given some important information, not that something is possible but that it has happened. In the present case, for example, assume that the insured sent in a premium payment on August 25. Would the insured know on August 31 whether that payment had been received by the insurer? Would he know whether his policy was in force? The answer to both questions is “no.” In contrast, if the insured had received a notice of cancellation after the premium was due on August 31, he would have been given some definite information: (1) his August 31 premium payment had not been received by the insurer; (2) his policy had been canceled; and (3) he had 10 days from the date of mailing to do something about it. “All notices of cancellation shall include a specific explanation of the reason or reasons for cancellation.” 215 ILCS 5/143.15 (West 1996). The specificity provision requires that a notice of cancellation unambiguously provide sufficient information to enable the insured to determine whether the reason is valid, so that, if not valid, the insured can contest the cancellation and, if valid, the insured can correct the defect in order to obtain substitute insurance coverage. Kujbida, 260 Ill. App. 3d at 1008-09, 632 N.E.2d at 156. The requirement that a specific reason be given for cancellation supports the argument that a policy cannot be cancelled for nonpayment of premium until there has been a nonpayment of premium. What was the specific reason for cancellation in this case? No reason for cancellation existed at the time the “notice of cancellation” was sent. It is difficult to be specific about the reason for cancellation when speculating about what might happen in the future. A notice of cancellation is sufficient so long as it positively and affirmatively indicates to the insured that it is the intention of the company that the policy shall cease to be binding upon the expiration of the stipulated number of days from the time when the intention is made known to the insured. Burnett, 318 Ill. App. at 632, 48 N.E.2d at 560. A cancellation notice that is equivocal, that is conciliatory in tone, that contains some contemplation of future action, is ineffective to cancel the policy. Mitchell, 1 Ill. App. 3d at 28, 272 N.E.2d at 396; First National Bank of Pittsfield v. Country Mutual Insurance Co., 175 Ill. App. 3d 860, 867, 530 N.E.2d 521, 525 (1988) (the strict rules that apply to cancellation do not apply to nonrenewal). The notice of cancellation in the present case did not positively and unequivocally inform the insured that the policy would terminate after August 31. Quite to the contrary, the insurer was encouraging the insured to send the payment due on that date, and was hoping to continue the coverage. The notice of cancellation was conditional: “if this payment is not received by us before 08/31/97, then ***.” The majority suggests that the history of nonpayment of premiums, notices of cancellation, and continuation of the policy in force in this case warrants a hard-line position against the insured. Actually, the law takes the opposite approach. Where the insurer has continued coverage despite repeated nonpayments of premium and notices of cancellation, the insurer may thereby waive the right to argue that a supposed “notice of cancellation” terminated the policy. See Cormican v. Anchor Casualty Co., 249 Minn. 196, 204, 81 N.W2d 782, 788 (1957) (“generous credit” extended in the payment of premium for the prior year). A waiver may be express or implied, arising from acts, words, conduct, or knowledge of the insurer. It is unilateral, as no act of the insured is necessary to complete it. Prejudicial reliance by the insured is not required. Brochu, 105 Ill. 2d at 499, 475 N.E.2d at 878. The attitudes of insurance companies change after a loss has occurred. Prior to that time, the insurer is interested in the premium, and the goal of the “notice of cancellation” may be simply to persuade the insured to pay the premium. After a loss has occurred, the insurer is no longer interested in the premium. After a loss has occurred, past equivocal statements, which did nothing more than demand payment and raise the possibility of cancellation, may be argued to have been definite expressions of termination. See Conley, 92 Ill. App. 3d at 34, 414 N.E.2d at 503 (purpose of notice requirement is to forestall a retroactive notice). In the present case, did the insured, after August 31, believe that what he had to do was (1) pay his insurance premium or (2) find replacement coverage? Given the strict rules for notices of cancellation, the insured here would have been justified in concluding that he had insurance, but he needed to get his premium paid. The remaining question is the effect of the September 19 collection notice. The September 19 collection notice was clearly not a notice of cancellation. Can it be argued that the two notices should be added together to equal one good notice? Under that logic, the policy was in force until 10 days after the mailing of the September 19 collection notice, even though no such notification was given. If those two notices were insufficient, could a third or perhaps a fourth piece of correspondence be taken into account? Given the strict rules that apply to notices of cancellation, the answer should be “no.” The insured should be given a definite statement whether his policy is in force or not. The existence of several pieces of correspondence that may be construed together to indicate the policy has been terminated do not equate with a positive unequivocal notice. Requiring a positive unequivocal notice does not impose any great burden on the insurer. The question is not whether Curtis owed money for his premiums. Smith v. Richard, 134 Ill. App. 3d 378, 383, 480 N.E.2d 859, 862 (1985) (mere failure to pay premiums does not terminate policy). Anthem agreed to furnish coverage for a period of one year, expiring December 6, 1997. Anthem was obligated to provide that coverage unless it gave notice of cancellation in strict compliance with the statute. In the absence of such a notice, Anthem’s remedy was to collect past-due premiums from its insured, not to deny coverage. The majority asserts that these issues were not raised by the parties. The sufficiency of the August 18 notice was clearly an issue presented to us. Curtis argued that the notice “must unambiguously provide sufficient information to enable the insured to determine whether the reason is valid,” citing Kujbida, which he misspelled! Curtis specifically argued that Anthem’s actions in continuing coverage despite repeated notices of cancellation constituted a waiver of any right to strictly interpret the August 18 notice. This court is required to decide this case and establish the precedent of our court. We should do the best job we can. I reject the majority’s suggestion that an inadequate presentation by the parties requires an inadequate decision by this court.