decided: February 25, 1985.
CAPITOL INSURANCE COMPANY, PETITIONER
COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT, AND ANTHONY A. GEYELIN, INSURANCE COMMISSIONER, RESPONDENTS
Appeal from the Order of the Insurance Commissioner of the Commonwealth of Pennsylvania in case of In Re: Appeal of Alice M. Hartman, 2750 Axe Factory Rd., Apt. B112, Philadelphia, Pa. 19152, File No. 83-365-00892, Capitol Insurance Company Policy No. A28919, Docket No. P83-4-12.
James D. Rosen, Josel & Rosen, P.C., for petitioner.
Beth C. Sheligo, Assistant Counsel, for respondents.
Bruce D. Hess, Howland, Hess, Guinan & Torpey, for intervenor, Alice M. Hartman.
Judges Williams, Jr., Doyle and Barry, sitting as a panel of three. Opinion by Judge Doyle. This decision was reached prior to the resignation of Judge Williams, Jr.
[ 87 Pa. Commw. Page 639]
This is an appeal by Capitol Insurance Company (Capitol) from an adjudication of the Pennsylvania Insurance Commissioner (Commissioner)*fn1 which construed an automobile insurance policy between Capitol
[ 87 Pa. Commw. Page 640]
and Alice M. Hartman (Insured)*fn2 to provide coverage for the one year period between February 22, 1982 and February 22, 1983, including the date of January 15, 1983, on which Insured sustained damage to her automobile in the amount of $3,820.00.
On February 22, 1982, Capitol issued to Insured an automobile insurance policy providing collision and comprehensive coverage for her 1978 Buick Regal automobile. Insured timely paid the initial six months premium due on the policy for the period from February 22, 1982 to August 22, 1982. Then, on or about June 15, 1982, Capitol prepared for Insured a document entitled "Expiration Notice" which directed the recipient to "CONTACT YOUR BROKER FOR DETAILS." Although this notice provided that "failure to pay the premium within the allotted time is construed as a refusal by the applicant to accept the insurance," no premium amount or policy period was indicated. This document allegedly was mailed both to Insured and to the agent through whom she had purchased her policy. The Commissioner, however, found as a fact that neither party ever received it.
On January 15, 1983, Insured was involved in an automobile accident, as a result of which her Buick Regal was damaged. Capitol refused to pay for the repairs to the vehicle on the basis that Insured's policy had been terminated for nonpayment of premiums. Insured had the vehicle repaired at a cost of $3,820.00 and requested an investigation of her claim by the Pennsylvania Insurance Department. On March 1, 1983, an initial determination was issued in favor of Capitol. Following a formal hearing on June 20, 1983, however, this determination was reversed and an
[ 87 Pa. Commw. Page 641]
order was issued directing Insured to pay the premium due for the period from August 22, 1982 through February 22, 1983 and directing Capitol to pay for all valid claims within the same time period. Capitol was also ordered to "cease and desist its practice of not delivering or mailing to its insureds a Notice of Cancellation whenever it attempts to terminate an automobile liability insurance policy at any point in the policy period other than the twelve-month anniversary date."
We agree with the Commissioner that this case is governed by Federal Kemper Insurance Co. v. Insurance Department, 79 Pa. Commonwealth Ct. 345, 469 A.2d 344 (1984). This Court held in Kemper that the provisions of the Act of June 5, 1968 (Act), P.L. 140, as amended, 40 P.S. §§ 1008.1-1008.11, do not permit insurance companies to cancel or fail to renew automobile insurance policies which have been in effect for less than one year for nonpayment of premiums*fn3 without providing a formal cancellation notice meeting the requirements of Section 5 of the Act, 40 P.S. § 1008.5.
Capitol admits that its notice did not comply with the requirements of Section 5, but asserts that its notice did constitute an "offer to renew", and that Section 6 of the Act, 40 P.S. § 1008.6, therefore applies. Section 6 provides that a manifestation of willingness to renew by an insurer precludes application of any other provision of the Act. The error in this argument is palpable, because Kemper held that "under the terms of the Act, renewal can only occur upon the expiration of twelve months of insurance coverage. . . ." Id. at 349, 469 A.2d at 346 (emphasis in original). This holding was based principally on the language of Section
[ 87 Pa. Commw. Page 6421]
(2) of the Act, 40 P.S. § 1008.1(2), which defines the term "renewal" or "to renew" and which provides, in pertinent part, that
any policy with a policy period or term of less than twelve months . . . shall for the purpose of this act be considered as if written for successive policy periods or terms of twelve months.
Obviously, if a policy must be in effect for at least twelve months in order to be "renewed", an offer to renew after six months is meaningless.*fn4
Capitol next attempts to distinguish Kemper from the case at bar on factual grounds, asserting that a distinction should be drawn on the basis that nearly five months had passed since the six month "expiration date" of Insured's policy when she had her accident, as opposed to less than three weeks in the case of the insured in Kemper.*fn5 We do not consider the mere passage of time to affect the Kemper rationale, as long as the one year anniversary date of a policy has not yet arrived.
Finally, Petitioner urges that Kemper should apply only to required insurance, such as personal injury protection, and not to collision coverage, which is generally optional with an insured. There is no basis for making this distinction either in the language of Kemper or in the language of Section 1(2) of the Act referred to above. Although in general the equities underlying the Act may be stronger in cases of personal injury, we think the more logical interpretation
[ 87 Pa. Commw. Page 643]
of the Kemper decision is that it applies to all types of insurance covered under the Act, i.e., to "bodily injury and property damage liability, comprehensive, and collision coverages and to the provisions therein, if any, relating to medical payments and uninsured motorists coverage," 40 P.S. § 1008.2.
For the reasons given above, we affirm the decision of the Commissioner.
Now, February 25, 1985 the decision and order of the Pennsylvania Insurance Commissioner in the above captioned matter dated December 7, 1983, No. P83-4-12, is hereby affirmed.
This decision was reached prior to the resignation of Judge Williams, Jr.