Insurer Correctly Non-Renewed Homeowner’s Insurance Policy
The South Carolina Court of Appeals has concluded that notice of cancellation of a homeowner’s insurance policy is controlled by S.C. Code § 38-75-1160, not the more general § 38-75-740, and that the mortgage holder was not the homeowner’s agent for purposes of renewing the homeowner’s policy. Bank of New York Mellon Trust Co. v. Grier, 416 S.C. 63 (Ct. App. 2016).
Grier (“Homeowner”) purchased a homeowner’s insurance policy from Nationwide. Bank of New York Mellon Trust Co. (“Bank”) held the mortgage on the property. GMAC serviced the mortgage on behalf of the Bank. Homeowner paid the insurance premium as part of her monthly mortgage payment. Nationwide renewed the policy for several years. However, in January 2011 Nationwide decided to non-renew the policy, which was scheduled to expire March 24, 2011, because the homeowner failed to remedy hazards on the property. Nationwide mailed a Notice of Non-Renewal to Homeowner on January 14, 2011.
On March 11, 2011, a GMAC representative contacted Nationwide about paying the premium for the upcoming renewal. Homeowner alleged in her lawsuit that Nationwide “welcomed the payment in this conversation and stated it would renew the policy if it received the premium.” GMAC issued a check to Nationwide on March 15, 2011, for the same premium it submitted the prior year. However, because no active policy was listed for the homeowner, Nationwide returned the premium to Homeowner by check dated April 1, 2011. On April 6, 2011, a fire destroyed the home.
The homeowner claimed that section § 38-75-740 governed the notice requirement for the non-renewal. That code section addresses the cancellation, non-renewal, and renewal of property and casualty insurance generally, providing in pertinent part that, “a policy written for a term of one year or less may be non-renewed by the insurer at its expiration date by giving or mailing written notice of non-renewal to the insured and the agent of record.” Emphasis added. Section § 37-75-710 provides that § 38-75-740 “applies to all property insurance and casualty insurance . . . except for . . . any other type of property and casualty insurance as to which there are specific statutory provisions of law governing cancellation, non-renewal, or renewal of policies.”
In 2004, the General Assembly enacted the Property and Casualty Insurance Personal Lines Modernization Action. As part of the Act, the General Assembly added Article XIII, titled “Property Insurance Cancellation and Non-Renewal,” to Chapter 75 of the Insurance Code. Within Article XIII is subsection § 38-75-1160(A)(1) which provides that “a cancellation or a refusal to renew by an insurer of a policy of insurance covered in [Article XIII] is not effective unless the insurer delivers or mails to the named insured at the address shown in the policy a written notice of the cancellation or refusal to renew.” No notice to any agent of record is required.
A specific statutory provision prevails over a more general one.” Wooten ex rel. Wooten v. S.C. Dep’t of Transp., 333 S.C. 464, 468, (1999); see also Capco of Summerville, Inc. v. J.H. Gayle Constr. Co., Inc., 368 S.C. 137, 142, (2006) (“Where there is one statute addressing an issue in general terms and another statute dealing with the identical issue in a more specific and definite manner, the more specific statute will be considered an exception to, or a qualifier of, the general statute and given such effect.”). The Court of Appeals, affirming the circuit court, held that because Article XIII is limited to governing the nonrenewal of policies for “property insurance on risks located in this State,” subsection §38–75–1160(A)(1) constitutes one of the “specific statutory provisions” contemplated by subsection §38–75–740 and §38-75-710. Therefore, when an insurer attempts to nonrenew a policy that provides “property insurance on a risk located in this State,” the insurer must follow the procedures outlined in subsection §38–75–1160(A)(1), not those provided in subsection §38–75–740.
Homeowner also argued that GMAC had renewed the policy on her behalf as her agent when it contacted Nationwide regarding payment of the premium. Agency is a fiduciary relationship that arises when one person, a principal, manifests assent to another person, an agent, that the agent shall act on the principal’s behalf and be subject to the principal’s control. Although GMAC, the Bank’s mortgage servicer, submitted the annual premium for the homeowner’s policy to Nationwide, GMAC was not subject to the homeowner’s control. Rather GMAC was acting on behalf of the Bank, not the Homeowner. Because GMAC was not Grier’s agent, the Court of Appeals found the circuit court properly ruled that Grier’s breach of contract claim failed as a matter of law.