STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., APPELLANT,
v.
JANET C. GREEN, APPELLEE
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State Farm challenged a summary judgment declaring that its insured, Janet Green, had valid coverage for an automobile accident occurring on February 1, 1985, even though her premium payment was made after the grace period expired. The court held that the grace period cannot be extended by operation of law, and since payment was made after the twenty-two day grace period ended, coverage had lapsed.
The court held that the grace period cannot be extended by implication, and since Green's payment was made after the twenty-two day grace period expired, her policy had lapsed and provided no coverage for the accident that occurred during the lapse.
[1] An insurance policy's duration, when clearly and unambiguously stated, will not be altered by incidents related to premium payment timing.
[2] A grace period for insurance premium payments is an act of grace and cannot be extended by implication.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“It is improper, however, under contract law to extend an act of grace by implication.”
Establishes the core legal principle that grace periods cannot be extended beyond their stated terms
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Join FLexlaw to unlock all legal intelligenceState Farm issued a six-month insurance policy to Green expiring on January 12, 1985 at 12:01 a.m. The expiration notice provided a twenty-two day gra…
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CAMPBELL, Judge.
Appellee, Janet C. Green, filed a petition for declaratory judgment below seeking a declaration of her rights under an insurance policy issued by State Farm Mutual Insurance Company (hereinafter referred to as “State Farm”) for damages arising out of an automobile accident which occurred on February 1, 1985. Appellee alleged in her petition that prior to February 1, 1985, she received an expiration notice from State Farm which stated that the subject insurance policy had expired on January 12, 1985. The expiration notice provided for a twenty-two day grace period within which to make premium payments without a lapse in coverage. Appellee admitted in her petition that the grace period expired at 12:01 a.m., February 3,1985, and that the premium payment was tendered at 1:07 p.m. on Monday, February 4, 1985.
Appellee argued in her declaratory judgment petition that the grace period expired on a Sunday, therefore, payment made any time on the following Monday would be considered a timely payment. State Farm filed answers and defenses and argued that the payment was not made within the grace period. Cross-motions for summary judgment were filed. A hearing was held. The court granted appellee’s motion for summary judgment.
State Farm contends that the trial court erred in entering summary judgment in favor of appellee because appellee’s insurance policy had lapsed for nonpayment of the premium. We agree and reverse.
The specific terms of the policy in issue provided that State Farm would insure appellee for a term of six months, from 12:01 a.m., July 12, 1984, until 12:01 a.m., January 12, 1985. There existed no provision in the insurance contract for an extension of the coverage or a right to renew. The expiration notice was merely an “offer to contract.” Since appellee did not accept the offer to renew her insurance contract within the twenty-two day grace period, the offer to contract was withdrawn by State Farm on the twenty-second day. Appellee, in arguing that the grace period should be extended, asks this court to stack “grace” on “grace.” It is improper, however, under contract law to extend an act of grace by implication.
The expiration and renewal notice specifically said “last notice.” The notice provided that if the premium payment occurred after the twenty-two-day grace period, State Farm would inform the insured if the payment was accepted and, if so, when coverage would begin. The notice also provided that there would be no coverage for accidents occurring between the date and time of expiration and the date and time the insured’s coverage would again become effective. The expiration date shown on the expiration notice was January 12, 1985.
The duration of an insurance policy, when fixed by clear and unambiguous language, will not be altered by some incident bearing upon the effectiveness of the policy such as a premium payment occurring on a nonconforming date. Safeco Insurance Co. of America v. Oehmig, 305 So. 2d 52, 56 (Fla. 1st DCA 1975), citing State Farm Mutual Automobile Insurance Co. v. Veenschoten, 272 So. 2d 201, 202 (Fla. 2d DCA 1973). Since the language in the renewal notice was clear and unambiguous, the accident in issue, which occurred on February 1, 1985, was not covered under the policy.
The judgment below is reversed and the cause remanded for entry of a judgment in accordance with this opinion.
RYDER, A.C.J., and CAMPBELL and FRANK, JJ., concur.
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Reddick v. Globe Life & Accident Ins. Co., 575 So. 2d 207 (Fla. 1st DCA 1990)…of the offer, which had made performance of the condition precedent necessary to interim coverage, the policy had lapsed on July 28, 1972, and an August 1, 1972 loss was not covered. A case to like effect is State Farm Mut. Auto. Ins. Co. v. Green, 500 So. 2d 563 (Fla. 2d DCA 1986), review denied, 508 So. 2d 14 (Fla.1987). There, State Farm sent Green an expiration and renewal notice in the latter part of January, 1985, advising Green that her automobile insurance had expired on January 12, 1985, but allowin…1 / 2
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Reddick v. Globe Life & Accident Ins. Co., 596 So. 2d 435 (Fla. 1992)…occurred on August 1, 1972. This decision was correct because the notice stated that coverage stopped on the due date if the payment was not postmarked within twenty days thereafter. The court in State Farm Mutual Automobile Insurance Co. v. Green, 500 So. 2d 563 (Fla. 2d DCA 1986), review denied, 508 So. 2d 14 (Fla.1987), reached a similar conclusion. In that case, the insurance policy had expired on January 12, 1985. However, the insured had received a “last notice” providing that if the premium were paid…
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Nationwide Mut. Fire Ins. Co. v. Smith, 28 So. 3d 943 (Fla. 1st DCA 2010)….090(a) are not applicable in this case. By extending the payment deadline to the next business day, the trial court stacked “grace” upon “grace,” which cannot be done by implication under contract law. See State Farm Mut. Auto. Ins. Co. v. Green, 500 So. 2d 563, 564 (Fla. 2d DCA 1986). However, even if the payment deadline was not extended, the trial court properly entered summary judgment for the insured because appellant’s bank received the insured’s electronic payment file before the cancellation date a…
Authorities Cited
- Safeco Ins. Co. OF Am. v. Oehmig, 305 So. 2d 52 (Fla. 1st DCA 1974)
- State Farm Mut. Auto. Ins. Co. v. Veenschoten, 272 So. 2d 201 (Fla. 2d DCA 1973)