Morey v. Educator & Executive Insurers, Inc.

Paul W. Brown, J. Clearly, the insurance policy in question was not renewed by the insured, and lapsed, by reason of nonpayment of the premium, on March 1, 1973, at 12:01 a. m. Payment of the delinquent premium on March 20th was ineffective to reinstate coverage retroactive to March 1, 1973, so as to provide coverage for the accident of March 17th. R. C. 3937.30 through 3937.39, upon which appellee relies, were written to prevent the arbitrary and unwarranted cancellation of autmobile insurance policies. R. C. 3937.-31 requires such policies to be issued for policy periods of two years or to be guaranteed renewable for successive policy periods totaling not less than two years. A policy, however, though “guaranteed renewable” for successive policy periods, is renewed in fact by the timely payment of premiums. The policy in this case, although renewable, was not renewed. The statutory requirement of notice of cancellation, contained in R. C. 3937.32,2 does not require notice to ter — 199 — mínate coverage where a policy has “lapsed.” “Cancellation” is a term of precise definition, and refers to the termination of a policy by act of either or both of the parties to it, prior to the ending of the policy period. The term “lapse,” on the other hand, refers to the termination of a policy because its policy period has expired. Peterson v. Truck Insurance Exchange (1974), 65 Wis. 2d 542, 223 N. W. 2d 579; Beha v. Berger (1927), 130 Misc. 235, 237, 223 N. Y. Supp. 726. See also 6 Couch on Insurance 2d 316, Section 32:92; Shiaras v. Chuff (1974), 18 Ill. App. 3d 722, 310 N. E. 2d 481. A notice of cancellation is required by R. C. 3937.32 only when the company terminates coverage under an insurance policy frior to the exfiration of the term, for which it was written, and then for one of the reasons enumerated in R. C. 3937.31. Nor, absent policy language so providing, must an automobile liability insurance policy issued in the state of Ohio contain a “grace period” for the payment of renewal premiums. See State Farm Mutual Auto. Ins. Co. v. Robison (1970), 11 Ariz. App. 41, 461 P. 2d 520. We hold that where an automobile liability insurance policy has lapsed and terminated for nonpayment of the renewal premium, R. C. 3937.30 through 3937.39 do not require the insurance company which issued said insurance policy to send a notice of cancellation to the policyholder. The judgment of the Court of Appeals is reversed, and the order of the Superintendent of Insurance reinstated. Judgment reversed. O’Neill, C. J., Herbert and Stern, JJ., concur. Corrigan, Celebrezze and W. Brown, JJ., dissent. Footnotes [2] R. C. 3937.32 provides, in part: “No cancellation of an automobile insurance policy is effective, unless it is pursuant to written notice to the insured of cancellation. * * *”