In this suit plaintiff George Tucker seeks payment of medical expenses incurred as a result of injuries he received in an automobile accident on November 27, 1977. Defendant Allstate Insurance Company filed a third-party complaint against Motor Club of America alleging M.C.A. is obligated to contribute toward P.I.P. payments. Both carriers move for summary judgment.
The undisputed facts are as follows:
In 1977 George Tucker sought insurance under the Assigned Risk Plan (Plan). The producer of record, Joseph C. Hishon (Producer), forwarded a completed application and a check for the required premium deposit, drawn on the Producer's account, to the Plan. The Plan reviewed the application and issued a notice of designation to Motor Club of America (M.C.A.) directing
them to issue a policy effective October 7, 1977. M.C.A. received the application and deposited the Producer's check on October 18, 1977. By letter dated October 19, 1977, the Producer notified M.C.A. that Tucker's check to him had been returned for insufficient funds and requested cancellation of the policy. At that time a policy number had been assigned by M.C.A., but no policy had been written and forwarded to Tucker. On November 14, 1977 M.C.A. mailed a letter to Tucker purporting to rescind the policy of insurance for nonpayment of premium deposit. Less than two weeks later, on November 27, 1977, Tucker suffered injury in an automobile accident while driving a rental car. Allstate, the insurer of Tucker's mother's automobile, seeks 50% contribution from M.C.A. on the basis that notwithstanding the unpaid check, acceptance of the application and the Producer's good check were enough to obligate M.C.A. On the other hand, M.C.A. contends that because Tucker's check was returned, the notice of designation was not effective, and the fact that the Producer paid the premium is not material.
The issue is whether receipt of a notice of designation accompanied by a completed application and deposit premium from the Assigned Risk Plan obligates the insurance company to comply with the notice of cancellation provisions of the policy under N.J.A.C. 11:3-1.19.
N.J.A.C. 11:3-1.14 provides that upon receiving a completed application and deposit premium from the Plan an insurance company shall issue either a policy or binder within 15 days. A company may appeal to the Governing Committee. N.J.A.C. 11:3-1.20(c). A risk cancelled for nonpayment of premium pursuant to N.J.A.C. 11:3-1.19(b)(5) is entitled to notice before the effective date of cancellation. If no cure is effected, the risk suffers a monetary penalty when reapplying. N.J.A.C. 11:3-1.21(c). The risk has no right to appeal the cancellation. N.J.A.C. 11:3-1.20(A).
The Assigned Risk Plan was intended by the Legislature to fairly distribute poor risks among insurance companies and to
enable poor risks to obtain insurance at a fair rate. The No-Fault Insurance Act should be construed liberally to effectuate its remedial purposes. Amiano v. Ohio Cas. Ins. Co., 85 N.J. 85, 90 (1981).
Section 19(B)(2) of the New Jersey Automobile Insurance Plan contemplates notice of cancellation and an opportunity to cure in the first 60 days of a policy.
In Miney v. Baum, 170 N.J. Super. 282, 291 (Law Div.1979), a 60-day binder had been issued pending negotiation between the broker, the company and the risk. No premium was ever billed or paid, yet the court ruled that the company must ...