Court Opinion

ID: 8293854
Source: CourtListenerOpinion
Date Created: 2022-10-17 10:56:01.495305+00
Date Added: 2024-06-11T16:43:57.181585
License: Public Domain

HUFF, Judge:
I respectfully dissent. In my view, the circuit judge erred when he ruled that Catawba was required to provide notice of the cancellation of insurance to Auto Now.
■ Catawba argues the trial court erred in holding Catawba’s policy required it to notify Auto Now of the policy’s cancellation.
Section 38 — 39—90(d) provides,
All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee, or other third party apply where cancellation is effected [by a premium service company]. The insurer shall give the prescribed notice in behalf of itself or the insured to any governmental agency, mortgagee, or other third party by the second business day after the day it receives the notice of cancellation from the premium service company and shall determine the effective date of cancellation taking into consideration the number of days’ notice required to complete the cancellation.
No South Carolina statute or regulation expressly requires the insurance carrier to provide notice to the loss payee. Auto Now argues the South Carolina Supreme Court recognized the loss payee’s right to receive notice of involuntary cancellation in Rawl v. American Cent. Ins. Co., 94 S.C. 299, 77 S.E. 1013 (1913).
In Raid, a fire insurance policy provided: “ ‘This policy shall be canceled at any time at the request of the insured, or by the company, by giving five days’ notice of such cancellation.’ ” Id. at 299, 77 S.E. at 1013. The policy also provided, “ ‘if, with the consent of this company, an interest under this policy should exist in favor of a mortgagee, or any person or corporation having an interest in the subject of the insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relat*534ing to such interest as shall be written upon, attached, or appended hereto.’ ” Id. The supreme court found the burden the insurer placed on itself to provide notice of cancellation was not expressly limited to the insured. Holding the policy must be strongly construed against the insurer, the court declared that under the policy stipulation, notice must be given to all persons who, by the terms of the policy, are interested in maintaining it in force. Accordingly, it ruled the loss payee was entitled to notice of cancellation. Rawl.
In Rawl, the loss payee’s entitlement to notice was created by the policy’s stipulation. We must look to the Catawba policy to determine whether Catawba similarly assumed the burden of providing the loss payee with notice.
The cardinal rule of contract interpretation is to ascertain and give effect to the intention of the parties and, in determining that intention, the court looks to the language of the contract. If the language is clear and unambiguous, the language alone determines the contract’s force and effect. United Dominion Realty Trust, Inc. v. Wal-Mart Stores, Inc., 307 S.C. 102, 413 S.E.2d 866 (Ct.App.1992). It is not the function of the courts to rewrite or torture the meaning of an insurance policy to extend coverage. Gambrell v. Travelers Ins. Cos., 280 S.C. 69, 310 S.E.2d 814 (1983).
The Catawba policy contains a simple loss-payable clause rather than a standard clause. See Nationwide Mut. Ins. Co. v. Hunt, 327 S.C. 89, 92, 488 S.E.2d 339, 341 (1997) (“A loss-payable (or open mortgage) clause typically declares that the loss, if any, is payable to a mortgagee as its interest might appear.”). Although a standard mortgagee clause creates an independent contract for the insurance of the mortgagee’s interest, a loss payable clause merely identifies the mortgagee and the mortgagee stands in the insured’s shoes. Id. at 93, 488 S.E.2d at 341.
Under the loss payable clause, Catawba is required to give the loss payee the same notice of cancellation as it gives to the named insured. The policy provides it may be canceled by two methods: (1) by the insured with written notice to Catawba or (2) by Catawba for “factors or conditions for which cancellation or deletion is allowed by law at the time the cancellation or deletion is to take effect” Under the second *535provision, Catawba was to “mail to the named insured at the address shown in the policy at least 15 days before the date the cancellation or deletion is to take effect.”
The trial court found the policy was canceled by operation of law pursuant to the second cancellation provision rather than by the insured. It held Catawba was required to provide the insured, and, thus, Auto Now, with notice of the cancellation.
An insurance company may cancel an insurance policy for a limited number of reasons, including nonpayment of the premium.1 S.C.Code Ann. § 38-75730 (1989 & Supp.1999). When a company cancels a policy, it must give the named insured written notice of the cancellation. The notice must be given no later than ten days prior to the effective date for cancellation due to nonpayment of the premium and not less than thirty days prior to the effective date for cancellation for other reasons.
Regulation 69-13 provides a carrier does not have to provide an insured notice of cancellation when the policy has been canceled by a licensed premium service company for nonpayment of premiums pursuant to a power of attorney under section 38-39-90. 25A S.C.Code Ann. Regs. 69-13(A)(V)(B)(3) (1989). The regulation explains,
*536In such a situation, the insured will have already been notified of the premium service company’s intent to request cancellation, such cancellation by the premium service company is deemed to be the equivalent of cancellation by the insured himself, and the forms, methods and timing set forth in the premium service laws ¿re declared to be the exclusive means of effecting cancellation of insurance contracts by premium service companies. See, S.C.Code § 38-39-90(b), (c) and (g) (1976), as amended.
Id. (emphasis added); see also S.C.Code Ann. § 38-39-90(c) (Supp.1999) (“The insurance contract must be canceled as if the notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract.”).
PBI’s cancellation of the policy on the Maxima was the equivalent of cancellation by Robinson and Jones. As Regulation 69-13 clearly provides, Catawba was not required to provide notice to the insured when the policy was canceled by PBI. Under the terms of the contract, Catawba was only compelled to provide the loss payee with the same notice it was required to provide the insured. We are constrained by the statutory, regulatory, and contractual provisions to hold Catawba was not required to provide notice of the cancellation to Auto Now.
Section 38-39-90(d) also requires a carrier to provide notice on behalf of the named insured. Although the Auto Now contract mandated that Robinson and Jones maintain insurance on the Maxima, it did not dictate that they provide it with notice if the insurance policy was canceled.
Accordingly, I would reverse the trial court’s order requiring Catawba to pay $3,500.00 to Auto Now.

. (a) No insurance policy or renewal thereof may be cancelled by the insurer prior to the expiration of the term stated in the policy, except for one of the following reasons:
(1) nonpayment of premium;
(2) material misrepresentation of fact which, if known to the company, would have caused the company not to issue the policy;
(3) substantial change in the risk assumed, except to the extent that the insurer should reasonably have foreseen the change or contemplated the risk in writing the policy;
(4) substantial breaches of contractual duties, conditions, or warranties; or
(5) loss of the insurer’s reinsurance covering all or a significant portion of the particular policy insured, or where continuation of the policy would imperil the insurer’s solvency or place that insurer in violation of the insurance laws of this State. Prior to cancellation for reasons permitted in this item (5), the insurer shall notify the director or his designee, in writing, at least sixty days prior to such cancellation and the director or his designee shall, within thirty days of such notification, approve or disapprove such action.
S.C.Code Ann. § 38-75-730 (1989 & Supp.1999).