That's a Long Commute -- Bronx Accident With South Carolina Uninsured

UM – SOUTH CAROLINA POLICY – POLICY RENEWAL OFFER – SELF-TERMINATING STATE – STAY OF ARBITRATION
Matter of Esurance Co. v. Birikorang
(Sup. Ct., Bronx Co., decided 7/18/2008)

So here's what happens when someone with three Zabasearch addresses in the Bronx apparently buys a personal auto policy in South Carolina.

On February 18, 2006, a Dodge van owned and operated by Christopher Gay of 317 Alexander Avenue, Spartanburg, S.C., struck a Honda vehicle owned and operated by Eva Birikorang. According to the police report, Gay produced an insurance card for his van with an Allstate policy number.

The Allstate policy was a renewal policy, effective February 12, 2006. Apparently Mr. Gay did not pay his renewal premium on time, and there was a policy reinstatement after a 9-day lapse of coverage from February 12-21, 2006, a period enveloping the accident date. Allstate denied liability coverage to Gay based on that lapse. Birikorang filed a UM claim with Esurance, her auto insurer, and demanded arbitration.

Esurance commenced this special proceeding to stay that UM arbitration, arguing that Allstate was required but had failed under applicable South Carolina law properly to cancel the policy. Allstate counter-argued that South Carolina is a "self-terminating state" and that in instances of unaccepted renewal policy offers (i.e., non-payment of the renewal premium), South Carolina law does not require prospective cancellation notices. Allstate's renewal policy bill had stated, "This notice reflects your renewal offer premium. If you want your insurance coverage to continue and do not want it to end, please make sure we receive the Minimum Amount Due by the end of the day (midnight) on February 11, 2006 or your policy will end at 12:01 a.m. Standard Time on February 12, 2006." Additionally, the policy endorsement page of the renewal policy had further stated, "If we offer to renew your policy and your required premium payment isn't received when due you will have rejected our renewal offer. This means that the insurance coverage described in the renewal offer and any endorsements to the renewal offer will not become effective." Allstate received Mr. Gay's renewal premium on February 22, 2006, hence the 9-day lapse in coverage.

Applying South Carolina law, Bronx County Supreme Court Justice Alexander Hunter agreed with Allstate's position and dismissed Esurance's petition to stay the UM arbitration as to Allstate. Finding that there was a lapse in Gay's coverage at the time of the accident, the Court rejected Esurance's argument that South Carolina law required both a manifestation by Allstate of its willingness to renew the policy, as well as a demonstration by some overt act that Mr. Gay intended to cancel the policy.