The issue to be decided is whether defendant insurance carrier had the right to cancel plaintiff's entire coverage when plaintiff had fully paid the premium on the original policy but had failed to complete premium payments due on a subsequent endorsement. The question has not been previously addressed by the courts of this State. The case was submitted on a stipulated set of facts upon which the court heard oral arguments.
The original insurance policy covering a 1977 Dodge van, was issued on November 29, 1977, for a term of one year. The premium was to be paid in installments. Application for this assigned risk automobile liability policy was through the third-party defendant, Motor Car Insurance Co. (hereinafter MCI), and assigned to Travelers Insurance Co. (hereinafter Travelers). It was served with process but has filed no answering pleadings. It is not a party to the stipulation and no relief is sought against it at this time.
Sometime after November 29, 1977, and before October 2, 1978, plaintiff moved and did not notify Travelers of the change of address. On January 9, 1978, plaintiff requested an endorsement to the policy extending coverage to include a 1971 Oldsmobile. At that time plaintiff paid an additional premium of $78 toward the endorsement. Although plaintiff made no further payment in connection with the endorsement, plaintiff continued to make payments on the original premium installments.
Sometime after the 1971 Oldsmobile was added to the insurance policy, plaintiff was sent a premium notice, showing an installment premium due in the amount of $112.80, and a due date of May 19, 1978. This premium notice was sent to plaintiff's original address. When this payment was not received by Travelers, a notice of cancellation of the policy was issued on June 9, 1978. The notice of cancellation was also addressed to
plaintiff's original address, and provided for an effective date of cancellation of June 29, 1978. Plaintiff did not receive either the statement of the additional premium owed or the notice of cancellation.
On August 22, 1978, defendant issued a draft in the amount of $212.10 representing the unearned premium for the cancelled insurance policy. This draft was issued to the order of Motor Car Insurance Agency, and in due course was deposited by MCI.
On November 3, 1978 Studzinski reported to the Newark, New Jersey, Police Department that the Dodge Van was stolen. As of that time Studzinski believed that he was still insured by Travelers.
The premium for insurance coverage of the Dodge Van was $472 which was paid in full by plaintiff. The additional premium for the add-on Oldsmobile was not paid in full.
At the outset the court notes that Travelers met the procedural requirements for cancellation. Plaintiff had a duty under the policy to notify Travelers of his change of address. Absent notification, Travelers' notices to plaintiff were correct. Under N.J.S.A. 17:29C-10 "cancellation may be effective whether or not the insured has actually received the notice of cancellation since proof of mailing, not proof of receipt is the determinative factor." Weathers v. Hartford Ins. Group , 77 N.J. 228, 234 (1978).
An insurance company is to be held to a fair reading of the policy, enabling the insured to obtain the coverage he reasonably expected. Fenwick Machinery, Inc. v. A. Tomae & Sons, Inc. , 159 N.J. Super. 373 (App.Div.1978). Plaintiff's expectation of coverage here is reasonable only if the subsequent endorsement is severable from the original policy.
Whether a contract is entire is a mixed question of fact and law. It depends on the intentions of the parties, to be ascertained from the circumstances surrounding the agreement and contract ...