Stringer v. State Farm Mutual Automobile Insurance Company
In Stringer v. State Farm Mutual Automobile Insurance Company (2009) 386 S.C. 188 687 S.E.2d 58, the plaintiff paid the full premium for a six-month automobile policy to State Farm, but a policy adjustment during the policy period caused his premium to increase and State Farm sent him a bill for the premium increase with notice that the policy would be cancelled unless he paid the increase on or before a specified date. The notice stated that payment after the due date would reinstate the policy, but there would be no coverage for the period between cancellation and reinstatement. (Id., 687 S.E.2d at p. 59.)
The plaintiff was involved in an automobile accident with an uninsured driver two days after his policy was cancelled, but he paid the premium increase after the accident and made a claim under the policy. State Farm denied the claim on the ground the policy was not in effect when the accident occurred. (Ibid.)
The trial court ruled there was uninterrupted coverage under the policy, based in part on the policy's provision that " 'payments must be made on or before the end of the current policy period.' "
The trial court in Stringer construed that sentence to mean the insured was entitled to uninterrupted coverage as long as he paid the premium increase by the end of the current policy period. (Id., 687 S.E.2d at p. 60.)
The Stringer court concluded the "trial court erred in isolating the statement 'payments must be made on or before the end of the current policy period,' from its proper context. ... In proper context, this sentence clearly refers to renewal and provides that payments of renewal premiums must be made before the end of the current policy period. This sentence does not contemplate whether the insured's payment of an additional premium before the expiration of the current policy period provides for uninterrupted coverage." (Stringer, supra, 687 S.E.2d at pp. 60-61.)