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Kates v. Workmen's Auto Ins. Co.5/10/1996
EPSTEIN, Acting P. J.
Does Insurance Code section 660 extend the period of an automobile policy written with a three-month term when the insured fails to pay the premium on time after a warning that coverage will expire unless the premium is paid? We conclude that it does not. Since the trial court ruled that coverage is extended in this situation, we reverse.
FACTUAL AND PROCEDURAL SUMMARY
This action was tried on stipulated facts and we take our summary from the stipulation of the parties. The policy at issue was purchased by Gordon Dreyer in November 1984 from Workmen's Auto Insurance Company (Workmen's) through the Hatcher Insurance Agency. It had an original policy period of November 9, 1984, to May 9, 1985. Dreyer paid the premium to renew the policy for three months, extending the coverage period to August 9, 1985, at 12:01 a.m.
On July 10, 1985, Workmen's sent Dreyer the document on which this case turns. Untitled, the form advised the insured: "To renew your policy, check one renewal payment option and return a copy of this notice with your payment for the amount shown for that option. If your payment is not received by 08/09/85 your policy cannot be renewed without a lapse in coverage." The form had a series of boxes which indicated the policy number, the August 9, 1985, expiration date of the policy, and the premium amount to be paid, respectively, for three-month, six-month, and one-year renewals. The form instructed the insured to check one of these renewal options to renew the policy.
Dreyer did not recall whether he received this notice, but he failed to pay the premium before August 9, 1985. According to its terms, the policy expired at 12:01 on the morning of that date. At 9:10 that evening, Dreyer struck pedestrian Sadie Kates. Dreyer failed to notify Workmen's of this accident.
On August 19, 1985, Workmen's sent Dreyer a notice that the policy had expired. Three days later, on August 22, 1985, Dreyer delivered a premium check to the Hatcher Insurance Agency, which sent it to Workmen's. After receiving the check, Workmen's reinstated the policy for the period of August 23, 1985, to November 23, 1985. This period did not include the date of the accident with Kates, August 9, 1985. Later, on October 18, 1985, Workmen's sent Dreyer a notice of nonrenewal based on the fact that he had a suspended driver's license under another name.
Kates's attorney tendered her claim to Workmen's on August 25 and 28, 1985. On March 12, 1986, Workmen's notified Dreyer that it was reserving its right to deny coverage for the claim. Two weeks later, Workmen's notified Dreyer by certified mail that it was denying coverage for the accident. Kates filed a personal injury action against Dreyer on April 15, 1986 (Kates v. Dreyer (Super. Ct. L.A. County, 1986, No. C595947)).
Dreyer did not tender the defense of the Kates action to Workmen's, which did not provide a defense. In September 1990, an arbitrator appointed pursuant to Code of Civil Procedure section 1141.10 et seq., awarded Kates $250,000 in her action against Dreyer. On November 26, 1990, Dreyer filed a request for a trial de novo in that action. Kates and Dreyer reached a settlement, and on the day set for trial they jointly petitioned to withdraw the request for trial de novo and to reinstate the arbitration award. The court granted the petition, and its minute order notes that the case was settled by stipulation that the arbitration award be reinstated. Dreyer assigned any claim or cause of action he had against Workmen's to Kates in exchange for a covenant not to execute on the arbitration award. In April 1991, the trial court in the Kates action entered
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