Court Opinion

ID: 8908087
Source: CourtListenerOpinion
Date Created: 2022-11-27 02:11:06.781912+00
Date Added: 2024-06-11T17:08:20.970850
License: Public Domain

JOHNSON, Judge.
The question posed by this appeal is whether Great American had effectively canceled Freeman’s liability policy prior to the accident on 8 November 1981. An insurer may terminate automobile liability coverage before the end of a policy period only for the reasons stated in and in compliance with the procedural requirements of G.S. 20-310. Smith v. Nationwide Mut. Ins. Co., 72 N.C. App. 410, 324 S.E. 2d 868 (1985). G.S. 20-310 provides in part:
(d) No insurer shall cancel a policy of automobile insurance except for the following reasons:
*776(1)The named insured fails to discharge when due any of his obligations in connection with the payment of premium for the policy or any installation thereof, ....
(f) No cancellation or refusal to renew by an insurer of a policy of automobile insurance shall be effective unless the insurer shall have given the policy holder notice at his last known post-office address by certificate of mailing a written notice of the cancellation or refusal to renew. Such notice shall:
(2) State the date, not less than 60 days after mailing to the insured of notice of cancellation or notice of intention not to renew, on which such cancellation or refusal to renew shall become effective, except that such effective date may be 15 days from the date of mailing or delivery when it is being canceled or not renewed for the reasons set forth in subdivision (1) of subsection (d) and in subdivision (4) of subsection (e) of this section;
(3) State the specific reason or reasons of the insurer for cancellation or refusal to renew;
When an insured is in default on the payment of a premium within the meaning of G.S. 20-310(d), the notice requirements of G.S. 20-310(f) are triggered. Hence, the threshold issue is whether Freeman was in default on 14 October 1981 when Great American sent the “Automobile Final Notice” giving fifteen days notice of cancellation. He was not. Freeman accepted Great American’s offer to renew for the period 5 August 1981 through 5 February 1982 when he sent $30.00 partial payment. See Smith v. Nationwide Mut. Ins. Co., 71 N.C. App. 69, 75, 321 S.E. 2d 498, 502 (1984). Applying $30.00 toward the total due of $53.77, Freeman had paid for coverage through 14 October. Additionally, the “Automobile Final Notice” expressly stated that the amount $25.77 was due at a date certain in the future, namely 1 November 1981. Because Freeman had paid for coverage through 14 October and because the October 14 notice showed a prospective due date, Great American could not view Freeman as being in default on the date *77714 October. The 14 October attempt to give notice was fatally premature.
The earliest possible date Freeman could be deemed in default pursuant to G.S. 20-310(d)(l) was 2 November. The second letter from Great American, the “Cancellation Notice” of 5 November, could effectively operate as a valid notice of cancellation if it otherwise substantially complied with requirements of G.S. 20-310(f). It did not. Foremost, G.S. 20-310(f)(2) requires fifteen days notice from the date of mailing. The “Cancellation Notice” at issue did not show a date of cancellation at least fifteen days hence; instead it showed a date of cancellation four days prior to the mailing. Great American did not meet all statutory requirements of G.S. 20-310 in either the 14 October or the 5 November communications.
Great American argues that to allow such an interpretation of the interrelationship between G.S. 20-310(d)(l) and 20-310(f) allows for the possibility that the insured could receive fifteen days of free coverage. We believe the Legislature was advertent to the possibility of such gaps in the statute. See Faizan v. Grain Dealers Mut. Ins. Co., 254 N.C. 47, 55, 118 S.E. 2d 303, 309 (1961). Any other construction would render the protection offered to the motoring public by these statutes meaningless. Smith, 72 N.C. App. at 405, 324 S.E. 2d at 872.
In Faizan, the Court construed an alleged notice of cancellation and held that the insured was not covered. Faizan can be distinguished on the facts. In Faizan, the insured failed to pay any premium at the time of renewal. The Court held that the cancellation of insurance was the result of an act of the insured, thus the requirements of G.S. 20-310 were not invoked. Here, the insured had accepted the insurance company’s offer to renew when he sent and Great American accepted payment in August. Both parties stipulated that renewal had occurred. The attempted cancellation two months after renewal only can be deemed an act of the insurer, thereby invoking G.S. 20-310. Great American did not fulfill its obligations in conformity with G.S. 20-310; therefore, Great American had not effectively canceled Freeman’s liability policy prior to the accident on 8 November 1981. The judgment below is
*778Affirmed.
Judge Phillips concurs.
Judge WEBB dissents.