On appeal from Superior Court of New Jersey, Law Division, Passaic County.
Before Judges Pressler, Wallace and Carchman.
The opinion of the court was delivered by: Carchman, J.s.c. (temporarily assigned).
This appeal requires us to determine the length of a "day" as the term is used in the cancellation provisions of the Insurance Premium Finance Company Act (the Act), N.J.S.A. 17:16D-1 to -16. We hold that a "day" consists of twenty-four hours and not one minute as prescribed by the language of the insurance policy in question, and the coverage extended until the stroke of midnight at the end of the third day.
The facts are not in dispute. Third-party defendant Newark Insurance Company (Newark) *fn1 issued a Commercial General Liability Policy to defendant Intercontinental Restauranteurs, Inc. effective for one year commencing January 21, 1992. The policy was financed through Crossland Premium Funding (Crossland) with monthly installments due in the amount of $1,167.66. The first payment was due on February 21, 1992. Under the terms of the financing agreement, Crossland was appointed as attorney-in-fact on behalf of defendant to cancel the policy in the event of non-payment of the premium. Defendant defaulted on the first payment, and on March 2, 1992, a Notice of Intent to Cancel the policy was forwarded to defendant. Defendant was given fifteen days to cure the default or the policy would be canceled effective March 18, 1992. No payment was forthcoming, so on March 18, 1992, Newark mailed a Notice of Cancellation to defendant advising that the policy was effectively canceled at 12:01 a.m. on March 18, 1992. *fn2
On March 21, 1992, at approximately 10:00 p.m., plaintiff Diana Fiduccia was injured when she slipped and fell at Carina's Italian Family Restaurant in Kinnelon. Carina's was operated on property owned by defendant. Newark disclaimed coverage asserting that its policy was canceled effective 12:01 a.m. on March 21, some twenty-two hours before the accident occurred.
Newark relies on the provisions of N.J.S.A. 17:16D-13 which provides, in relevant part:
After expiration of such 10-day period [after the filing of the Notice of Intent to Cancel], the premium finance company may thereafter request in the name of the insured, cancellation of such insurance contract or contracts by mailing to the insurer a notice of cancellation . . . . The effective date of such cancellation shall not be earlier than 3 days after the date of mailing of such notice to the insured and to the insurance agent or insurance broker.
[N.J.S.A. 17:16D-13(c) (emphasis added)].
Newark asserts that the provisions of its policy read in conformity with the statute allow cancellation at 12:01 a.m. on the third day after notice. *fn3 On a motion for summary judgment, the motion Judge concluded that the notice requirement included the entire third day, not simply one minute of the third day. We agree and affirm.
We have previously discussed the function and import of the notice of cancellation and the requisite three-day provision in Wright v. Rumble, 194 N.J. Super. 337 (App. Div. 1984), where we observed:
The "notice of cancellation" is given after the insured has failed to cure the default. He already knows from the "notice of intent to cancel" that the finance company may now cancel at any time. The notice of cancellation advises the insured that the finance company cancelled the policy. Its function is simply to alert the insured that he is no longer insured by the policy. Whenever he receives it, the insured can no longer prevent cancellation if the notice of intent to cancel was adequate.
In order to prevent terminating coverage before the insured has a chance to be aware of cancellation, the statute provides that "cancellation shall not be earlier than 3 days after the date of mailing of [the notice of cancellation]." This allows time for mail delivery of the notice. Thus no matter when the finance company requests the insurer to cancel, the statute establishes the effective date of cancellation as three days ...