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American Liberty Financial Services3/2/2001
under the contract, there would have been no cancellation in any event - that Cooper could have avoided cancellation by simply paying the required installment.
ALFS's argument is flawed in a number of respects. The recent amendment to § 27-605, requiring advance notice of an intent to cancel a motor vehicle liability policy for non-payment of premiums, necessarily destroys the parallelism that the company seeks to create - that the Legislature never intended to require advance notice when cancellation is due to non-payment of premiums. Indeed, with that amendment, adoption of ALFS's position would mean that premium finance companies would have greater leeway to cancel a policy than the insurance company itself, and we can find no evidence that the Legislature ever intended that to be the case.
Putting that amendment aside, however, as it was not in effect when this contract was made, the analysis remains flawed for another, converse, reason. Prior to the amendment to § 27-605, the law clearly exempted insurance companies writing motor vehicle liability insurance from the requirement of advance notice of intent to cancel when the cancellation was based on non-payment of premiums. The fact that such an exemption was expressed indicates a recognition by the General Assembly that insurance companies themselves had been accepting premiums in installments, for otherwise the exemption for cancellation (as opposed to non-renewal) would have been unnecessary. The premium finance law, however, from the beginning, specifically required such notice. This indicates to us that, at least until 2000, the Legislature intended to treat premium finance companies differently than insurance companies in this regard; rather than expressly exempting the premium finance companies from the requirement of advance notice of intent to cancel, as it had for insurance companies, it expressly mandated such notice. No reasonable purpose would be served by such a distinction if premium finance companies were able to make the cancellation retroactive, to a date prior not only to the end of the notice period but even to the date of the notice itself.
The effect of a retroactive cancellation, as we have indicated, is to leave the customer uninsured for a period of time, which is not only directly at odds with the mandate of compulsory insurance but would leave the customer (1) subject to the civil penalties noted and, (2) if the customer were to have driven the car during the period knowing or having reason to know that there was no insurance, to the prospect of criminal penalties as well. Worse, as this case well illustrates, it retrospectively removes insurance that, in fact, was in effect when a claim-producing accident occurred. When all of this is taken into account, we have no doubt that, when the General Assembly provided that, upon the expiration of the 10-day period, the premium finance company could "thereafter" cancel, it meant that the specified effective date of the cancellation could not be earlier than the expiration of the notice period. No other interpretation is reasonable. For these reasons, we shall affirm the judgment for $22,500 entered against ALFS.
JUDGMENT OF CIRCUIT COURT AFFIRMED, WITH COSTS.
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