Appeal from Circuit Court of Champaign County. No. 94L1723. Honorable Thomas J. Difanis, Judge Presiding.
Released for Publication March 1, 1996.
Justices: Honorable Robert J. Steigmann, J., Honorable Rita B. Garman, J., Honorable James A. Knecht, J., Concurring. Justice Steigmann delivered the opinion of the court: Garman and Knecht, JJ., concur.
The opinion of the court was delivered by: Steigmann
The Honorable Justice STEIGMANN delivered the opinion of the court:
In November 1994, plaintiff, Marketview Motors, Inc. (Marketview), a car dealership that held a lien on a certain vehicle, filed an action for declaratory judgment against defendant, Colonial Insurance Company of California (Colonial), seeking a judicial determination that the vehicle was covered under an insurance policy issued by defendant. In April 1995, the trial court granted summary judgment for Colonial, finding it had given Marketview proper notice of cancellation of the insurance policy on the vehicle, in accordance with section 143.15 of the Illinois Insurance Code (Code) (215 ILCS 5/143.15 (West 1992)). Marketview appeals, arguing that section 143.15 of the Code requires an insurance company to provide at least 10 days' actual notice before cancellation due to nonpayment of premiums becomes effective. We agree and reverse.
In February 1994, Lawrence T. Miller purchased a 1987 Chevrolet Monte Carlo on which Marketview retained a lien. Miller procured an automobile insurance policy from Colonial for the car. Subsequently, Miller failed to pay the premium due on the policy and, on March 17, 1994, Colonial mailed Marketview, as the lien holder, a notice of cancellation of the policy as required by section 143.14 of the Code (215 ILCS 5/143.14 (West 1992)).
The notice purported to cancel the policy as of 12:01 a.m. on March 28, 1994. At approximately 5:15 a.m. on March 28 or March 29, 1994 (the record reflects disagreement between the parties as to the date of the accident), the 1987 Monte Carlo was involved in an accident which, Marketview alleges, resulted in a $4,427.08 loss. As the designated loss payee of the policy, Marketview demanded payment from Colonial, pursuant to Colonial's claim procedures. However, Colonial denied coverage, asserting that it had cancelled Miller's policy as of 12:01 a.m. on March 28, 1994, and had provided all necessary parties with proper notice of the cancellation.
After Marketview filed suit against Colonial for coverage under the policy, each party filed a motion for summary judgment. In April 1995, the trial court conducted a hearing on the motions and ordered summary judgment in favor of Colonial. The court concluded that the policy was effectively cancelled at 12:01 a.m., on March 28, 1994.
Section 143.15 of the Code provides as follows:
"All notices of cancellation of insurance as defined in subsections (a), (b) and (c) of Section 143.13 must be mailed at least 30 days prior to the effective date of cancellation to the named insured and mortgagee or lien holder, if known, at the last mailing address known to the company. All notices of cancellation shall include a specific explanation of the reason or reasons for cancellation. However, where cancellation is for nonpayment of premium, at least 10 days['] notice of cancellation shall be given. " (Emphasis added.) 215 ILCS 5/143.15 (West 1992).
Marketview argues that section 143.15 of the Code should be interpreted to provide 10 days' actual notice of cancellation because interested parties must be allowed sufficient time to arrange for the protection of their interests in property. Specifically, Marketview asserts that had it been afforded 10 days' actual notice, it would have either encouraged Miller to pay his premium, advanced him the premium, or obtained other insurance coverage on the vehicle pursuant to the loan agreement with Miller.
A basic principle of insurance law requires an insurance company, when sending a notice of cancellation, to strictly comply with policy provisions and any applicable statute. ( Bates v. Merrimack Mutual Fire Insurance Co. (1992), 238 Ill. App. 3d 1050, 1051, 605 N.E.2d 626, 627, 178 Ill. Dec. 832; Green v. J.C. Penney Auto Insurance Co. (7th Cir. 1983), 722 F.2d 330 (interpreting Illinois law); Conley v. Ratayzcak (1980), 92 Ill. App. 3d 29, 34, 414 N.E.2d 500, 503, 46 Ill. Dec. 616; 43 Am. Jur. 2d Insurance §§ 382, 388 (West 1982).) Accordingly, the issue in this case is whether section 143.15 of the Code requires an insurance company ...