9 Fla. L. Weekly Supp. 745a
Insurance — Personal injury protection — Cancellation of policy — Notice of cancellation occasioned by failure to pay premium for newly added vehicle did not invalidate preexisting coverage for two other vehicles, including the vehicle involved in accident, where coverage for the two vehicles was paid in full through the end of the policy period — Independent and severable contract is created when new vehicle is added to a policy of insurance and separate premium charged therefor — When separate premium attributable to the additional vehicle has not been paid, insurer is within its rights to cancel that policy for nonpayment and deny coverage thereunder, but nonpayment for additional vehicle does not render original coverage inoperative — Error to enter summary judgment in favor of insurer
CHRISTINA GOMEZ, Appellant, v. PROGRESSIVE EXPRESS INSURANCE COMPANY, Appellee. Circuit Court, 19th Judicial Circuit (Appellate) in and for St. Lucie County. Case No. 01-CA-000768. L.T. No. 00-CC-1832. July 19, 2002. Appeal from County Court, St. Lucie County, Thomas J. Walsh, Jr., Judge. Counsel: Glenn M. Blake, Blake, Torres & Mildner, P.A., Fort Pierce, for Appellant. Matt Hellman, Matt Hellman, P.A., Plantation, for Appellee.
(PER CURIAM.) Effective January 1, 1999, Plaintiff-Appellant, Cristina Gomez was an insured under an automobile policy of insurance issued by Defendant-Appellee, Progressive Express Insurance Company (R. p. 44, 50). As of February 2, 1999, the policy provided coverage for two vehicles, a 1994 Plymouth Voyager and a 1986 Hyundai Excel, and named Christina Gomez and Jairo Gomez as listed drivers thereunder (R. 50) [Attachment A][*]. The policy period extended to January 22, 2000 and the Appellee makes no claim that the policy premiums relative to the previously mentioned vehicles were not paid through that date (Id., Brief of Appellee, p. 6). On October 11, 1999, the Appellant sought additional coverage for another vehicle, a 1987 Chevrolet Nova (R. 51) [Attachment B]. On November 1, 1999, the Appellee sent a Notice of Cancellation to the Appellant stating that the “Cancellation will take effect 11/16/99 12:01 A.M.” (R. 52) [Attachment C]. The notice further stated that “You can prevent this cancellation by sending the premium due Progressive before the effective date shown above. If you allow this cancellation to take effect, you will lose important insurance coverage. Don’t neglect this financial protection.” (Id.) The Notice set forth two hundred, thirty-seven dollars ($237.00) as the amount of the “unpaid balance” and “minimum payment” (Id.). However, the notice also stated that “You will be billed for the premium which covered the time between your last payment and your cancellation date”. (Id.) Immediately below the notice was a detachable payment coupon that included the notice date of November 1, 1999 and the cancellation date of November 16, 1999 (Id.). The payment coupon also set forth $237.00 as the amount of the “unpaid balance” and “minimum payment” (Id.).
On November 22, 1999, the Appellant sustained personal injuries as a result of an automobile accident involving the 1994 Plymouth Voyager (R. 1, 2, 7). Thereafter, the Appellant submitted a claim to the Appellee for payment of Personal Injury Protection benefits under the policy of insurance (R. 2). The claim was subsequently denied by the Appellee (Id.). On April 28, 2000, the Appellant instituted an action for breach of contract and declaratory judgment in the County Court for St. Lucie County (R. 1). On March 21, 2001, the Appellee filed a Motion for Summary Judgment wherein it stated that it was entitled to judgment as a matter of law inasmuch as the policy of insurance issued to the Appellant was rightfully cancelled by the Appellee for nonpayment of premiums and that no insurance coverage therefore existed on November 22, 1999, the date of the accident (R. 44, 48). On April 26, 2001, a hearing was held on the Motion for Summary Judgment before the Honorable Thomas Walsh, Judge for the County Court of St. Lucie County (R. Volume 2). On May 16, 2001, Summary Judgment was entered (R. 77). On June 4, 2001, the Appellant filed a Notice of Appeal of the judgment to the Circuit Court for the 19th Judicial Circuit pursuant to Rule 9.030(c)(1), Florida Rules of Appellate Procedure.
It is undisputed that, on October 11, 1999, the Appellant had pre-existing coverage under her policy of insurance with the Appellee for the 1994 Plymouth Voyager and 1986 Hyundai Excel automobiles and that such coverage was paid in full through the end of the policy period on January 22, 2000. On October 11, 1999, Appellant sought insurance coverage for the 1987 Chevrolet Nova. The Appellant maintains that the Notice of Cancellation issued by the Appellee was occasioned by her failure to pay the premium on the Chevrolet (Brief of Appellant, p. 7). The Appellee does not contend otherwise (Brief of Appellee, p. 6).
Central to the decision of the instant case is whether the additional coverage sought for the Chevrolet constitutes a separate contract of insurance or whether it is subsumed within the previous contract of insurance relative to the Plymouth and Hyundai. While the instant matter appears to be a case of first impression with respect to the interplay of such additional coverage and the notice requirements of Section 627.728(3)(a), Florida Statutes, it has been addressed in the context of uninsured motorist coverage under Section 627.727(1), Florida Statutes. The line of cases that have addressed this issue were generally concerned with whether the addition of vehicles to a policy after the change in state law requiring informed rejection of uninsured motorist coverage constituted an independent contract of insurance to which the informed rejection provision applied or whether it constituted a minor modification of a pre-existing contract to which the informed rejection provision was inapplicable (or with respect to which a prior rejection of uninsured motorist coverage for other vehicles was operative).
The necessary starting point of the inquiry has generally turned on the legal effect of adding another vehicle. It has been held that the addition of another vehicle and the payment of additional premiums therefor so fundamentally alters the terms of the original agreement that it cannot be considered a mere “renewal” of the original agreement but, instead, constitutes a separate contract. Thus, in Hartford Accident and Indemnity Company v. Sheffield, 375 So.2d 598, 600 (Fla. 3rd DCA 1979), it was noted:
The differences in premium and coverage between the two policies thus require the conclusion that the second was not a “renewal” of the first. [FN2] Russell v. State Farm Mutual Automobile Ins. Co., 47 Mich.App. 677, 209 N.W.2d 815 (1973); Springfield Fire & Marine Ins. Co. v. Hubbs-Johnson Motor Co., 42 S.W.2d 248, 252 (Tex Com. App. 1931). See also United States Fire Ins. Co. v. Van Iderstyne, 347 So.2d 672 (Fla. 4th DCA 1977), in which the court held that an endorsement to a pre-existing policy which simply covered an additional automobile for an additional premium, constituted a “separate and severable” contract which required the company to offer UM coverage upon its issuance. Cf. State Farm Mutual Automobile Ins. Co. v. Glover, 202 So.2d 106 (Fla. 4th DCA 1967).
Likewise, in U. S. Fidelity & Guaranty Company v. Waln, 395 So.2d 1211, 1213-1214 (Fla. 4th DCA 1981), the Fourth District Court of Appeal observed as follows:
The controlling law was established in Hartford Accident and Indemnity Co. v. Sheffield, 375 So.2d 598 (Fla.3d DCA 1979). In that case a policy containing lower liability limits than a preceding one, as to which uninsured motorist coverage had been expressly waived, was not a renewal policy within the contemplation of the statute. Accordingly, uninsured motorist insurance was available in the same amount as the bodily injury liability coverage. The test established by the Sheffield court, which we adopt, was whether the original policy has been changed “in any material respect.” If it has, then the policy is “new” rather than a “renewal” and the insurance company is required to provide the insured with an opportunity to reject uninsured motorist coverage or to elect a decreased amount.
Interestingly, the Appellee does not dispute that the addition of another vehicle does not constitute a renewal of the existing policy. In its appellate brief to this court, the Appellee, in seeking to distinguish this case from Cummins v. Allstate Indemnity Company, 732 So.2d 380, 382-383 (Fla. 4th DCA 1999), states that the instant controversy does not involve a “renewal policy” but rather involves the addition of a third vehicle to an “existing policy” (See, Brief of Appellee, pp. 3-4).
Notwithstanding the characterization of the Appellee, the prevailing case law supports the conclusion that the addition of another vehicle constitutes a “separate policy”. As noted above, the seminal case on this issue is U. S. Fire Insurance Company v. Van Iderstyne, 347 So.2d 672, 673 (Fla. 4th DCA 1977) wherein it was stated:
The exact question has not been answered in Florida but in Idaho it was and we cite Gem State Mutual Life Association v. Gray, 77 Idaho 157, 290 P.2d 217 (1955). In that case a policy was issued in 1941 which had no provision in regard to attorney’s fees for a claimant’s attorney in the event of a successful suit contesting the policy. In 1951 their legislature passed a law providing for such fees. In 1953 the claimant purchased additional coverage under the 1941 policy and later had to litigate the policy with the company. When the successful claimant sought attorney’s fees the company protested the policy did not provide for attorney’s fees and the additional coverage was merely a part of that policy and the law of 1941 was applicable. That court said: “. . . it provides additional insurance separate and apart from that provided by the original policy, for which a separate and additional consideration was agreed upon and paid. Thus it is in effect a severable and independent part of the original contract.”
This is the reasoning we must apply here, the additional coverage for the added car with the concomitant additional premium constituted a separate and severable contract issued on October 29, 1973. The legislature said policies issued then must have what Appellee claims so we affirm the trial court’s ruling.
See also, Maxwell v. U. S. Fidelity & Guaranty Company, 399 So.2d 1051, 1055 (Fla. 1st DCA 1981) [Ervin, J., specially concurring].
The reasoning set forth in U. S. Fire Insurance Company v. Van Iderstyne, supra, was ultimately adopted by the Supreme Court of Florida. Thus, in Fireman’s Fund Insurance Company v. Pohlman,485 So.2d 418, 420 (Fla. 1986), the court observed as follows:
In [United States Fire Insurance Company v. Van Iderstyne, 347 So.2d 627 (Fla. 4th DCA 1977)], the court determined that the addition of an automobile to an existing policy of insurance along with an additional premium constituted a separate and severable contract issued on the date of the endorsement. Similarly, we now hold that, under the facts of this case, the addition of an automobile to an existing policy of insurance along with an additional premium constitutes a separate and severable contract of insurance. Thus, Pohlman is entitled to recover uninsured motorist protection benefits pursuant to coverage on the vehicle added to the policy on February 27, 1981.
Based upon the foregoing authority, it is apparent that, where a new vehicle is added to a policy of insurance and a separate premium charged therefor, an independent and severable contract has been created. It follows that, when the separate premium attributable to the additional vehicle has not been paid, the insurer is well within its rights to cancel that policy for nonpayment and deny coverage thereunder. Consequently, in the present case, had the Appellant been involved in an automobile accident while operating the Chevrolet Nova, the Appellee could have quite legitimately denied coverage based on the failure of the Appellant to pay the separate premium on that policy. However, assuming that the Appellant has paid premiums that accurately reflect the risk assumed by the Appellee with respect to insuring the other two vehicles through January 22, 2000, the mere fact that she has failed to pay the premium reflecting the risk associated with the Chevrolet on what is essentially a separate contract is no bar to recovery. It is indeed ironic that, had the Appellant not added the third vehicle, this case would not have even arisen. She would have been involved in an accident with a vehicle for which the premiums had been paid and the Appellee would have been hard pressed to deny coverage. Nevertheless, the Appellee contends that her failure to pay for additional coverage renders her original coverage inoperative. However, adopting the position of the Appellee would arguably render the insurance policy for which Appellant paid valuable consideration an illusory contract.
The foregoing analysis assumes that the $237.00 requested by the Appellee in its Notice of Cancellation reflects a premium amount that is representative of the additional risk associated with insuring the third vehicle. This would appear to be a reasonable assumption given the fact that the premium amount attributable to the vehicle in the October 11, 1999 addition to the policy is $296.00 (R. 51). Had the amount requested in the Notice of Cancellation embraced risks beyond those posed by the operation of the Chevrolet, it would be expected that the amount demanded in the Cancellation Notice would have exceeded this sum.
However, it certainly may be arguable that the amount requested did reflect at least partial payment for the risks posed by the other two vehicles or the addition of Ronald F. Gomez-Oliverous to the policy on October 11, 2000 (Id.). Under such circumstances, the language of the Supreme Court, in Fireman’s Fund Insurance Company v. Pohlman, 485 So.2d 418, 420-421 (Fla. 1986), is instructive:
It is possible that an endorsement which either adds a premium or adds both a premium and a vehicle constitutes the issuance of a new policy incorporating a statutory amendment into its terms. A court must examine the risk covered by the additional premium. In this instance, the fact that the increased premium is covering the risk involved with insuring an additional vehicle leads to the conclusion that a separate and severable contract was entered into on the date of the endorsement. Conversely, if an additional premium was charged to reflect the risk of insuring all of the vehicles at increased liability coverage, the endorsement would constitute the issuance of a new contract incorporating the statutory amendment into its terms. In such a case, the risk covered would pervade the entire contract thus supporting a finding that a new contract was issued.
It is therefore apparent that the Notice of Cancellation was ineffective to invalidate insurance coverage for which Appellant had already paid. It appears from the current state of the record that the amount demanded in the Notice of Cancellation reflects the premium corresponding solely to the coverage of the 1987 Chevrolet Nova. As such, it constitutes a separate contract the nonperformance of which by the Appellant does not excuse the nonperformance of the Appellee of its obligations relative to the separate contract governing the other two vehicles.
The order of the trial court granting the Motion for Summary Judgment is therefore reversed and the cause remanded for proceedings not inconsistent with this opinion. (FENNELLY, ROBY, JJ. and HERSHEY, Acting Circuit Judge, concur.)
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*Editor’s note: Attachments are not included in this report.
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