Court Opinion

ID: 9607130
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:55:45.124486+00
Date Added: 2024-06-11T12:44:14.272159
License: Public Domain

HOWARD,
Chief Judge (dissenting).
The majority opinion takes an otherwise unambiguous insurance policy and creates an ambiguity out of whole cloth. The policy period clause set forth in the policy is as follows:
“The policy period shall be as shown under ‘Policy Period’ and for such succeeding periods of six months each thereafter as the required renewal premium is paid by the named insured on or before the expiration of the current policy period. The ‘Policy Period’ shall begin and end at 12:01 A.M., standard time at the address of the named insured as stated herein. ...”
The policy period specified in the policy is from November 13, 1972 to March 26, 1973. For this six months’ coverage the appellee had paid a premium of $128.20.
On April 4, 1973, when appellee sent his check, the policy had expired. It is apparent by the position of the majority that the policy is automatically renewed if the insurer does not give the insured 10 days’ notice under Condition 17. (The policy has been amended and the condition is now found in Amendment 6167.1Y.) The majority consistently fails to distinguish between cancellation and renewal. Amendment 6167.1Y clearly and unambiguously applies only to the cancellation of policies that are still in effect and not to policies which have expired. On point are the cases of Hoefler v. Farm and City Insurance Company, 193 N.W.2d 538 (Iowa 1972) and Hensley v. Aetna Casualty and Surety Company, 200 N.W.2d 552 (Iowa 1972).
In Hoefler the policy provided:
“ ‘The term of this policy shall be as of 12:01 A.M. Standard Time as to each of the dates given hereon, and for such terms thereafter as the required renewal premium is paid by the insured on or before the expiration of the current term and accepted by a duly authorised representative of the company.’ (Emphasis added.)” 193 N.W.2d at 539.
The policy period, when originally issued, was for three months. The policy provision was authorized by Rule 9, Rules of the Iowa Insurance Department.1 The Iowa Code, § 515.80 provided:
“No policy or contract of insurance * * * shall be forfeited or suspended for non-payment of any premium, assessment, or installment provided for in the policy, * * * unless within thirty days prior to, or on or after the maturity *23thereof, the company shall serve notice in writing upon the insured that such premium, assessment, or installment is due or to become due * * * which may be made in person, or by mailing in a certified mail letter addressed to the insured at his post office as given in or upon the policy, and no suspension, forfeiture, or cancellation shall take effect until the time thus fixed and except as herein provided, anything in the policy, application, or a separate agreement to the contrary notwithstanding.”
After the policy was originally issued, it was renewed for three similar periods each. Thereafter no further payments were made. The last premium was paid on November 22, 1967, for a three-month period which expired on February 22, 1968. The question presented was whether the failure to give the notice required by the Iowa Code meant that the policy was still in effect when the accident occurred. The lower court in Hoefler had ruled in part as follows:
“ ‘[The policy of insurance] is not specific at all but has, instead, an automatic renewal provision that keeps on operating as long as the renewal premium is paid.
‘Clearly, when the renewal premium is not paid, the duty should be on the company to notify the insured that they didn’t get it.
‘It is therefore ordered, adjudged and decreed, in accordance with R.C.P. 105, that the notice required by section 515.80 of The Code of Iowa must have been given to terminate the policy described * * * in the petition at law.’ ” 193 N.W.2d at 540.
The Iowa Supreme Court, in reversing the lower court, stated :
“The question here is one of policy construction. We have stated that insurance policies should be construed as an ordinary man would understand the language used and not as a technical insurance expert would interpret it. We have also said that doubt or ambiguity in an insurance policy is to be construed strictly against the insuror and liberally in favor of the insured. Goodsell v. State Automobile and Casualty Underwriters, 261 Iowa 135, 140, 153 N.W.2d 458, 461 (1967), and citations; State Automobile and Casualty Underwriters v. Hartford Accident & Indemnity Co., 166 N.W.2d 761, 763 (Iowa 1969).
However, this does not mean that we may undertake to make a new policy for the contracting parties whenever we deem that course desirable. We can apply the rules of construction only -when there is ambiguity or uncertainty in the contract terms. Archibald v. Midwest Paper Stock Co., 260 Iowa 1, 8, 148 N. W.2d 460, 464 (1967); Mopper v. Circle Key Life Insurance Co., 172 N.W.2d 118, 124,125 (Iowa 1969) and citations.
We find no ambiguity or uncertainty here. The policy was written for a definite and certain period. Both starting and terminating dates were given with certainty. There could be no possible misunderstanding about the term of the policy or its expiration date. ******
We hold the policy issued by defendant was for a ‘specific term of duration’ and that, under rule 9 of the Insurance Department’s regulations above referred to, defendant company was not required to give the notice provided for in section 515.80. ...” 193 N.W.2d at 540.
In Hensley the court quotes with approval the aforementioned language of Hoefler and held that the policy was for a “definite and certain period”, terminated by its own specific terms, and no notice under Iowa Code § 515.80 was required.
I find nothing in the case at bench to distinguish it from the Iowa cases. Notice of cancellation is not required of a policy which has already expired by its own terms.
The majority considers that this policy, since it is for six months and is renewable upon payment of the renewal premium, has a premium payment plan within the mean*24ing of the cancellation provision. This is clearly not so. Automobile insurance policies are frequently written for short periods such as six months or a year with provisions for renewal for a like term upon payment and acceptance of the premium prior to the expiration of the current policy period. 7 Blashfield Automobile Law and Practice § 293.2, p. 250 (1966). Had the policy been for a one-year period, with semi-annual or quarterly payments, then there would be a premium payment plan which would prevent cancellation without the proper notice.
If the majority opinion is allowed to stand it would mean that the insurance company could foist an unwanted policy upon the insured. If the company does nothing and the insured does not pay the premium, the company could wait for six months after the period and then charge the insured for the premium since the policy, under the majority’s reasoning, would still be in existence. This is an absurd result and its undesirability was recognized in Kapahua v. Hawaiian Insurance and Guaranty Co., 50 Hawaii 644, 447 P.2d 669 (1968). The renewal provision in the policy is nothing more than an offer which the insured must accept.
This policy is clear and unambiguous but has been emasculated by a majority opinion unsupported by any authority.
I would reverse the judgment of the trial court and order it to enter judgment for the defendant.

. A.R.S. § 20-1632 (B) allows the insurer to fail to renew a policy for non-payment of premium without first giving a 10-day notice.