Scott v. Allstate Insurance

291 S.E.2d 277 (1982)

Walter E. SCOTT, Jr.
v.
ALLSTATE INSURANCE COMPANY.

No. 8126SC1002.

Court of Appeals of North Carolina.

May 18, 1982.

James, McElroy & Diehl by Gary S. Hemric, Charlotte, for plaintiff-appellant.

Walker, Palmer & Miller by Robert P. Johnston, Charlotte, for defendant-appellee.

VAUGHN, Judge.

At issue on appeal is whether defendant was required to give plaintiff notice of nonrenewal of his collision coverage at the expiration of the policy's stated period. If plaintiff was entitled to such notice, then there exists an issue as to whether notice was ever mailed and summary judgment was improper. See White v. Insurance Co., 226 N.C. 119, 36 S.E.2d 923 (1946). We hold, however, that notice was not a material fact in the present action. The court properly ordered summary judgment.

Insurance policies are usually for a short period with provisions for renewal upon payment and acceptance of premiums. Where there is a stated expiration date, such as in plaintiff's policy, courts in general do not require the insurer to give notice of expiration or of an intent not to renew automatically. 13A J. Appleman, Insurance Law and Practice § 7642 (1976). The insured is charged with knowledge of the terms of his policy.

In some circumstances, however, a duty of notification may arise because of statute, custom, or agreement between the parties. Id. E.g., Kapahua v. Haw'n Ins. & Guar. Co., 50 Haw. 644, 447 P.2d 669 (1968); Waynesville Security Bank v. Stuyvesant Ins. Co., 499 S.W.2d 218, 222 (Mo.App.1973). In the present case, plaintiff concedes that defendant was under no statutory duty to notify him of expiration of collision insurance coverage. G.S. 20-310 governs only termination of liability coverage. Plaintiff contends that defendant's duty rested upon agreement and custom.

Plaintiff asserts that defendant expressly agreed to provide plaintiff with notice in paragraph 19 of the policy. That section states that defendant may cancel the policy by mailing to the insured written notice not less than ten days prior to when cancellation shall be effective. Plaintiff, however, mistakenly equates cancellation with nonrenewal. Cancellation occurs when the insurer unilaterally terminates a policy then in effect before the end of the stated term. Where defendant did not terminate coverage until the end of the stated date, the policy was not cancelled. It lapsed. The notice provisions of paragraph 19 are, therefore, not applicable. See Waynesville Security Bank v. Stuyvesant Ins. Co., 499 S.W.2d at 220.

Plaintiff next argues that defendant's attempted notification demonstrates that defendant customarily gave notice of nonrenewal to its policyholders. In order to establish a duty because of custom, however, plaintiff must show not only the existence of the custom but also his knowledge of it. Plaintiff has failed to do so. There is no evidence that he knew of defendant's practice with other policyholders. Neither is there any evidence of a course of dealings between the parties such that plaintiff could reasonably infer defendant would either notify him of termination or automatically renew collision coverage.

In the absence of statute, agreement, custom or course of dealings to the contrary, we conclude that defendant had no legal duty to give plaintiff notice of expiration of his collision coverage. The coverage stopped at the end of the policy period on 12 March 1977. Plaintiff made no premium payments after that date. Therefore, at the time of plaintiff's accident on 30 March 1977, plaintiff had no right to reimbursement from defendant.

The order granting defendant's motion for summary judgment is affirmed.

Affirmed.

ROBERT M. MARTIN and ARNOLD, JJ., concur.