This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Mutual Service Casualty
Filed April 16, 2002
Mille Lacs County District Court
File No. CX001306
Richard A. Newgren, Richard Newgren Law Office, Wells Fargo Plaza, Suite 2100, 7900 Xerxes Avenue South, Bloomington, MN 55431(for appellant)
Richard J. Kruger, Moore, Warner & Kruger, Two Pine Tree Drive, St. Paul, MN 55112 (for respondent)
Considered and decided by Randall, Presiding Judge, Klaphake, Judge, and Poritsky, Judge.*
Appellant Lucinda Block brought this action against respondent Mutual Service Casualty Company (MSI), seeking underinsured motorist coverage on two automobile policies for an accident that occurred on June 12, 1999, five days after her policies expired due to nonpayment of premiums. Appellant argued that because MSI offered a nine-day “grace period,” her coverage was automatically extended for nine days even though she did not pay her premiums during that grace period. Because MSI’s renewal and expiration notices were not misleading and were legally sufficient to apprise appellant that her policies expired on June 7 due to her nonpayment of premiums, and because appellant’s incapacity following the accident does not legally excuse her from making payment within the nine-day grace period, we affirm.
This court may grant summary judgment when no genuine issues of fact exist and either party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03. We read “the evidence in the light most favorable to the party against whom judgment was granted.” Nygaard v. State Farm Ins. Co., 591 N.W.2d 738, 740 (Minn. App. 1999) (quotation omitted), review denied (Minn. June 29, 1999). The interpretation and construction of insurance contracts are questions of law, which we review de novo. Haarstad v. Graff, 517 N.W.2d 582, 584 (Minn. 1994).
“An insurer may terminate coverage under automobile policies by nonrenewal or by cancellation.” Dairyland Ins. Co. v. Neuman, 338 N.W.2d 37, 39 (Minn. 1983). This case involves termination due to nonpayment of a renewal premium, for which no statutory termination notice is required. Id.; see Minn. Stat. § 65B.17 (2000).
MSI sent appellant renewal notices on April 23, 1999, 45 days before the end of the policy period. These notices offered to continue the policies “in force for [the] period” from June 7, 1999 to December 7, 1999, in “consideration of payment of the total premium stated” on or before the due date. The renewal notices warned appellant that her coverage would “END ON THE DUE DATE UNLESS THE RENEWAL PREMIUM IS RECEIVED ON OR BEFORE 06/07/99.” MSI did not receive payment for either policy by June 7, 1999.
On June 9, MSI mailed expiration notices on both policies, which informed appellant:
YOUR POLICY EXPIRED AT 12:01 A.M., 06/07/99, BECAUSE WE DID NOT RECEIVE YOUR PREMIUM PAYMENT. IF YOU HAVE ALREADY PAID THIS PREMIUM IN THE LAST FEW DAYS, PLEASE DISREGARD THIS NOTICE. UNLESS YOU HAVE PURCHASED COVERAGE ELSEWHERE, YOU ARE CURRENTLY WITHOUT INSURANCE.
As of June 12, 1999, the date of the accident, the premiums remained unpaid. The motorcycle on which appellant and her husband were riding was covered by another MSI policy with a different policy period, but the motorcycle policy did not include underinsured motorist coverage. On June 25, 1999, 13 days after the accident and 18 days after the end of the policy period, MSI received premium payments for both automobile policies.
These renewal and expiration notices were legally sufficient to allow MSI to terminate coverage for nonpayment of the renewal premiums. Cf. Martinson v. Iowa Kemper Ins. Co., 390 N.W.2d 447, 449-50 (Minn. App. 1986) (where conduct of parties demonstrated insurance policy still in effect, insurer required to give cancellation notice, and renewal notices were legally insufficient). Although the notices were part of premium bills, they contained clear and unambiguous language informing appellant that coverage expired as of June 7, 1999, and that she was without coverage as of that date. See Pierce v. MSI Ins. Co., 406 N.W.2d 328, 330-31 (Minn. App. 1987) (insurer’s cancellation notice to insured must be explicit, unconditional, and unequivocal).
MSI’s internal policy of offering a grace period to its insureds who pay their premiums within nine days did not automatically extend coverage for nine days. An insurer’s offer to renew the contract and provide continuous coverage if a renewal premium is received within a grace period does not extend the initial coverage through the grace period. Royal Ins. Co. v. Western Cas. Ins. Co., 444 N.W.2d 846, 847 (Minn. App. 1989). During a grace period, an insured is temporarily indebted to the company for the new premium; if the new premium is not paid during the grace period, a default takes place as of the date when the premium was due. Id. (citing Erickson v. Equitable Life Assurance Soc’y of U.S., 193 Minn. 269, 280, 158 N.W. 736, 741 (1935)). Thus, even though MSI’s internal policy offered appellant a nine-day grace period, she was required to pay the premiums by June 16 in order to continue coverage. Because MSI did not receive payment until June 25, appellant defaulted on her policies as of the original due dates.
Appellant suggests that because MSI had previously accepted late payments, she was misled into believing that it would accept these late payments. Appellant offers little evidence to support this estoppel or waiver argument. The evidence regarding appellant’s late payment history tends to support MSI’s enforcement of the nine-day grace period policy: payments received more than nine days beyond a premium due date generally changed the effective date of the policy to the date of receipt of the payment. Moreover, given the clear language of the notices that she received, any reliance on appellant’s part or assumption that late payments would continue coverage would be unreasonable. Nor has appellant offered any evidence from which it might be inferred that she intended to accept MSI’s renewal offer. Rather, a contrary inference might be reached, given the fact that she and her husband were operating their only insured vehicle at the time of the accident.
Finally, appellant argues that her late payments should be excused due to impossibility, because she was in a coma and incapacitated as a result of the accident. As a general rule, however, an insured’s physical incapacity does not excuse nonpayment of premiums. 5 Couch on Insurance 3d § 75:12, n.75 (West 1997) (citing cases from various jurisdictions); see Simms v. United Ins. Co., 379 So.2d 1169, 1170 (La. App. 2 Cir. 1980) (where policy contained no provision for waiver of premium payments during disability, policy lapsed for nonpayment of premiums, notwithstanding fact that, before end of grace period, insured was rendered comatose and incapable of paying premiums). Because an insurance contract does not contemplate payment of premiums by an insured personally, an accident or other unforeseen contingency outside of the insured’s control does not legally excuse performance. 5 Couch on Insurance 3d § 75.12. Thus, appellant’s failure to make her premium payments is not excused by her incapacity.