Court Opinion

ID: 9862365
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:08:01.529913+00
Date Added: 2024-06-11T11:25:11.447959
License: Public Domain

BTJRMAN, P. J., dissenting: The plaintiff in this case seeks a declaration that the defendant insurance company is liable under its automobile liability insurance policy for damages arising out of an automobile collision in which she was involved and which occurred some time after the insurance company had cancelled the policy. The issue presented is whether the cancellation was effective. The cancellation provisions of the policy and the notice of cancellation are set out in the majority opinion. I believe, and the plaintiff admits, that under the proper interpretation of the cancellation provision, the defendant had the right to cancel the policy for any reason. Where, as in this case, there is no provision in a policy of insurance that cancellation is conditioned upon the existence or recital of a reason for such action, the court will not read any such restriction into the policy. Jablonski v. Washington County Mut. Fire Ins. Co., 13 Ill App2d 499, 142 NE2d 170. In addition it should be noted that the cancellation clause of the policy specifies that “payment or tender of unearned premium is not a condition of cancellation.” The relation of an insurance company to its policyholders is purely contractual. It is the duty of the courts to construe and enforce them as made and not to make a new contract for the parties. Coons v. Home Life Ins. Co. of New York, 368 Ill 231, 13 NE2d 482. The notice of cancellation provided the ten days notice as required by the cancellation provision of the policy. The notice informed the plaintiff that her policy was cancelled “in accordance with its terms and conditions.” At the bottom of the notice the following appears: Without prejudice to the validity or effect of the foregoing Notice of Cancellation we advise you that, according to the Company’s records, the status of the premium is as follows: . . . [X] 2. As no premium has been received by this Company for this insurance, there is none to be returned. I believe that the cancellation of the policy by the defendant was effective because it met all the conditions of cancellation required by the policy. The notice states no reason for the cancellation, but as I have indicated, none was necessary under the agreement, Moreover, the fact that the defendant has not computed or adjusted the paid premium does not make the cancellation ineffective, as the plaintiff argues. In my opinion, the computation or adjustment of the premium is not a prerequisite for an effective cancellation. The language of the cancellation provision of the policy specifically states that payment or tender of the unpaid premium is not a condition of cancellation. Our courts have considered insurance policy cancellation provisions similar to that in question here and have held that the return of the unearned premium is not a condition precedent to cancellation, but only a consequence thereof, See Scapes v. Orr, 2 Ill App2d 363, 119 NE2d 479 and Leslie v. Standard Acc. Ins. Co., 327 Ill App 343, 64 NE2d 391. The plaintiff argues that Kafkis, the person with whom she dealt and to whom she paid the premium, is the defendant’s agent or is deemed to be the defendant’s agent for the purpose of receiving the premium under the Insurance Code (Ill Rev Stats 1963, c 73, § 1065.52). From this the plaintiff argues that nonpayment of premium was an invalid reason for the cancellation and concludes that the cancellation for that reason was also invalid. Even granting for the purposes of argument that Kafkis was the defendant’s agent or is deemed to be such under the Insurance Code, I do not believe that these considerations are relevant in determining the effectiveness of a cancellation which the defendant could make for any reason of its choosing. Such was the holding of the Jablonski case, cited above, wbicb I believe to be controlling. In that case the court found, as I would find here, that the insurance policy permitted the insurance company to cancel for any reason. In that case the insurance company cancelled the policy for failure to pay an assessment which was required under the policy. The trial court had held that the assessment was invalid and hence that the cancellation of the policy was invalid because it was based on an invalid reason. The Appellate Court reversed, holding, as I would hold here, that since the policy permitted the insurance company to cancel for any reason of its choosing, the validity of any reason given for the cancellation was irrelevant in determining the validity of the cancellation. I do not believe that the section of the Insurance Code on which the plaintiff relies was intended to restrict the insurance company’s privilege of cancelling the policy in accordance with its terms and conditions. I agree that the section relied on was intended to protect the public and the policy holders as well as the insurance company. Dorfman v. Gerber, 38 Ill App2d 61, 186 NE2d 372; reversing on other grounds, 29 Ill2d 191, 193 NE2d 770. But I believe that the provision was intended only to protect the policy holder from the attempt of the insurance company, after an accident, to escape liability on the grounds that the premium had not been paid. The provision should not, in my opinion, be read to infringe on the insurance company’s privilege under its policy to cancel for any reason prior to an accident. Such is especially the case here, where no premium was received by the company or by its authorized agent, Agres, and where there was no evidence to show either that the insurance company knew of the office arrangement between Agres and Kafkis or that the company knew that Kafkis had been paid the premium by the plaintiff, and where the defendant, who knew at the time of the cancellation that Kafkis was no longer in the Agres7 office, did not contact either Agres or the defendant between the time she received the notice of cancellation and the time of the accident to tell them that she had paid the premium to Kafkis. Since the defendant effectively cancelled the plaintiff’s insurance policy before the accident, it should not be held liable under the policy. Hence, I think that the judgment of the Circuit Court should be affirmed.