Crump v. Unigard Ins. Co., 83 A.D.2d 880 (1981)
A premium finance agency that strictly complies with the Banking Law provisions for canceling insurance policies is not required to adhere to additional cancellation procedures applicable to insurers under the Vehicle and Traffic Law.
Summary
This case addresses whether a premium finance agency, having followed the Banking Law’s requirements for canceling an insurance policy, must also comply with the Vehicle and Traffic Law’s provisions applicable to insurers. The Court of Appeals held that the agency’s compliance with the Banking Law was sufficient, as the Legislature intended different cancellation procedures for insurers and premium finance agencies. The court emphasized the detailed procedures outlined in the Banking Law specifically for premium finance agencies and found no basis to impose additional insurer requirements on them. The court affirmed the Appellate Division’s order.
Facts
A premium finance agency financed an insured’s insurance premium. The insured defaulted on payments. The premium finance agency sent a notice of intent to cancel to the insured as per the Banking Law, followed by a notice of cancellation upon continued non-payment. After cancellation, a loss occurred which the insurer denied coverage for based on the cancellation.
Procedural History
The lower court ruled in favor of the insurance company and finance agency. The Appellate Division affirmed, holding that the premium finance agency complied with the Banking Law and did not need to comply with the Vehicle and Traffic Law. The case then went to the Court of Appeals of New York.
Issue(s)
Whether a premium finance agency, having complied with the cancellation requirements of the Banking Law, must also comply with the cancellation requirements imposed on insurers by the Vehicle and Traffic Law.
Holding
No, because the Legislature established distinct procedures for policy cancellation by insurers and premium finance agencies, and compliance with the specific, detailed procedures of the Banking Law is sufficient for premium finance agencies.
Court’s Reasoning
The Court reasoned that the Legislature intentionally created separate and distinct procedures for canceling policies by insurance companies and premium finance agencies. The Court emphasized the detail in Banking Law § 576, subd 1, indicating a specific legislative intent for premium finance agencies. The court stated, “The Legislature has indicated that the procedures to be followed in canceling a policy differ for insurers and premium finance agencies, and given the detailed procedures specifically applicable to premium finance agencies, we conclude that it would be inappropriate to require such agencies to comply with all additional procedures imposed upon insurers”. The Court deferred to the legislative intent to create a streamlined process for premium finance agencies, finding that imposing additional burdens would undermine the purpose of the Banking Law provisions. The court also noted that certain arguments made by appellants were not preserved for review and therefore not addressed.