Sawyer v. North Carolina Farm Bureau Mutual Insurance

323 S.E.2d 450, 71 N.C. App. 803, 1984 N.C. App. LEXIS 3988

Opinion

WEBB, Judge.

As a general rule, the failure of an insured to pay a premium by the due date results in a lapse of coverage as of the last day of the policy period. Klein v. Ins. Co., 289 N.C. 63, 220 S.E. 2d 595 (1975) and Cauley v. Ins. Co., 219 N.C. 398, 14 S.E. 2d 39 (1944). An insurer may by extensions or periods of grace extend it on any terms he chooses. In this case it is undisputed that the defendant extended a grace period on condition that it receive the premium payment within the grace period. When it did not receive the premium payment it had the right not to renew the policy retroactively. The defendant was not estopped by any course of dealings. All the payments on previous occasions had been received by it within the grace period. It was error not to enter judgment for the defendant.

The appellee argues that he sent one check to pay the premium on two policies and the defendant reinstated the coverage for one of them retroactively to 11 June 1981 but refused to so reinstate the policy on which this action is based. The appellee argues this is not consistent with good honorable business practices. We cannot enforce any business practice for the defendant. It had the right not to reinstate the plaintiff’s policy retroactively and we are bound by that right.

We reverse and remand for a judgment consistent with this opinion.

Reversed and remanded.

Judges Hedrick and Hill concur.