On appeal from the Superior Court of New Jersey, Hudson County, Law Division.
King, Baime and Keefe. The opinion of the court was delivered by Keefe, J.A.D.
The questions presented are whether an automobile insurance policy originally issued by the New Jersey Automobile Full Underwriting Association (JUA) lapses when an offer to renew the policy is not accepted by payment of all or part of the premium on or before the renewal date and whether, in this case, an appropriate offer to renew was made. These precise issues have not been previously addressed.
The trial judge held that the insurance policy did not lapse at the end of the policy period, despite the insured's failure to pay the renewal premium, because the insurer failed to properly cancel the policy by issuing a notice of cancellation in conformance with the requirements of N.J.S.A. 17:29C-10. We now hold that where an offer to renew an automobile policy is made
by the insurer in accordance with applicable regulations and the offer is not accepted by timely payment of the premium, the policy lapses on the expiration date. Under such circumstances, the insurer need not also issue a notice of cancellation. However, because the record before us is not sufficiently complete to permit the conclusion as a matter of law that an appropriate offer to renew was made to the plaintiff, we remand the case for further proceedings consistent with this opinion.
The JUA was created pursuant to statute as a non-profit organization established to provide insurance to individuals who are unable to obtain coverage in the voluntary market. N.J.S.A. 17:30E-2. The facts stated briefly are as follows. Hanover Insurance Company (Hanover), as a servicing agent for JUA, N.J.S.A. 17:30E-7e, issued a motor vehicle insurance policy to plaintiff, Obal Lopez. The stated policy period was from January 18, 1986 to January 18, 1987. The producer for the policy was defendant ConEsa Insurance Agency, Inc. (ConEsa). N.J.S.A. 17:30E-10. Hanover contends that on December 16, 1986, 32 days prior to the expiration of the policy, it mailed a "renewal bill" to plaintiff for the policy period to begin on January 18, 1987 and terminating on January 18, 1988. The notice stated as follows:
A renewal policy for the new policy period shown above will be issued provided the renewal premium is received before 1/18/87.
The total premium charge for the entire policy period was $494.00 if paid in installments. A minimum payment of $166.88 was requested. The notice was sent to plaintiff at 410 Palisade Avenue, Union City, New Jersey, the address shown on his policy. A copy of the notice was also sent to ConEsa.
ConEsa contends that on December 17, 1987 it sent a letter to plaintiff advising him that his insurance would expire on January 18, 1987 unless the policy was renewed. The letter was sent to plaintiff in Spanish.
On January 6, 1987 Hanover claims to have sent a "reminder notice" to plaintiff which stated in pertinent part:
If payment is not received in our office by 1/18/87 you will no longer have automobile insurance protection. You will not receive your new automobile insurance identification card.
This is the last notice you will receive. If payment has been made, please disregard this notice.
Further, ConEsa claims that on January 20, 1987 it sent plaintiff another notice stating that "your automobile insurance policy expired on 1/18/87" and informed ...