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Insurance – CGL – Cancellation – Premium Service – Nightclub Shooting

Evans v. Nautilus Insurance Co. (Lawyers Weekly No. 002-015-18, 8 pp.) (David Norton, J.) 2:17-cv-00712; D.S.C.

Holding: Plaintiffs paid their commercial general liability insurance premiums through a premium service company. That company complied with S.C. Code Ann. § 38-39-90(b) when it cancelled plaintiffs’ policy (as plaintiffs’ attorney-in-fact) with the defendant-insurer. The cancellation occurred two days before a shooting at plaintiffs’ nightclub; therefore, the insurer did not breach a contract when it declined to defend or indemnify plaintiffs in the underlying action brought by the shooting victim.

The court grants the insurer’s motion for summary judgment.

Section 38-39-90(b) sets forth two requirements: (1) the premium service company must give the insured at least 10 days’ written notice of its intent to cancel, and (2) this notice may not be mailed to the insured more than 10 days before the due date.

Here, the premium service company, IPFS Corp., mailed the notice of intent to cancel on Aug. 7, 2012, and mailed a cancellation letter on Aug. 27, 2012, effective Sept. 1, 2012. The August 7 letter provided more than 10 days’ written notice to plaintiffs before IPFS cancelled the policy.

Second, IPFS did not mail the notice to plaintiffs more than 10 days before the “due date.” The phrase “due date” applies to the original due date of the premium.

The court interprets the statute as saying that a premium insurance company may deliver a notice of its intent to cancel the insurance contract in advance of an insured party actually defaulting, but it is not allowed to send this notice more than 10 days in advance of the due date for the payment on which the insured might default.

Plaintiffs conflate “due date” with the grace period deadline provided by IPFS. The Aug. 25, 2017, grace period deadline in the notice of intent to cancel letter refers to the date by which the plaintiffs must send in their past-due payment to avoid default. Here, the “due date” under §38-39-90(b) was Aug. 2, 2012, the original date that the monthly premium was due. The notice was mailed on Aug. 7, 2012, not more than 10 days before that due date.

Motion granted.


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