Life insurance policy properly terminated

Where a North Carolina statute requires a life insurer to mail a letter to the insured’s last known post-office address “in this State,” but the insured here had informed the carrier that she had moved out-of-state and the carrier’s letter was sent to the insured at her new address, that was sufficient to comply with the statute. The purpose of the statute was to provide notice before cancelling a policy.

Background

A North Carolina statute regulating life insurance companies states that “[n]o life insurance corporation doing business in this State” may cancel a life insurance policy within one year of default unless it satisfies certain notice requirements. One of the requirements is that the notice be “duly addressed and mailed, postage paid, to the person whose life is insured … at his or her last known post-office address in this State.”

The question is whether an insurer is required to send a cancellation-of-insurance letter to an address where it is undisputed the insured no longer lived. The district court granted summary judgment to the carrier.

Analysis

The statute’s purpose, as evidenced by the titles of the section and the enabling act as well as the statute’s effect, is to ensure that life insurance companies doing business in North Carolina provide their insureds with notice before canceling their policies for nonpayment. Farm Bureau did exactly that.

It sent Ms. Whitmire her November 2016 semiannual policy bill. The letter informed Ms. Whitmire that she had a premium payment due on Nov. 23, 2016. Moreover, it was mailed 16 days before the premium’s due date. It was not until Dec. 28, 2016 – 51 days after the mailing of the relevant notice – that Farm Bureau sent a letter to Ms. Whitmire informing her that her policy had lapsed due to nonpayment.

Nevertheless, Mr. Whitmire argues that Farm Bureau was required to provide notice to Ms. Whitmire at her last known address in this state even though it is undisputed that Ms. Whitmire was living out of state, and even though Farm Bureau had been notified of Ms. Whitmire’s change of address. In other words, Mr. Whitmire asserts that if an insured purchases a policy in North Carolina listing her address in this state, then moves to another state and informs the insurer via a change-of-address form from the United States Postal Service of her new address in another state, the insurer still must send any future cancellation notices to the last known address in this state—even though it is undisputed that she is no longer living in this state. That’s poppycock.

Applying an inflexibly literal reading of the statute would contravene the North Carolina General Assembly’s purpose, which must ultimately control this court’s interpretation. Applying a literal interpretation of the statute’s language would not put Ms. Whitmire on notice at all. Rather it would have Farm Bureau send “notice” to an address where it knows she no longer resides.

As Farm Bureau argues, a rigidly literal reading of the words “in this State” would require insurers to implement burdensome and nonsensical notice policies. Farm Bureau asserts that, under such a reading, for every payment period a life insurer would be required to send two notices to any insured who moves out of state: one to the insured’s actual out-of-state address, and the other to the insured’s former address in North Carolina.

Affirmed.

Concurring opinion

Wilkinson, J., concurring:

I write separately to note the efforts Southern Farm made to notify Ms. Whitmire that her premium payments were due. In view of these efforts, I do not think the company can possibly be judged guilty of an unfair or deceptive trade practice and liable for the pertinent treble damages thereto.

Dissenting opinion

Richardson, J., dissenting:

North Carolina General Statute § 58-58-120 prohibits an insurer from immediately terminating a life insurance policy for premium nonpayment unless it first sends notice to the insured’s “last known post-office address in this State.” The question presented here is whether sending notice to the insured’s address in a different state satisfies this requirement.

The majority finds that North Carolina would not blindly apply the statute’s “inflexible” language. The statute’s language is indeed inflexible. But because that language inescapably requires notice be sent to a North Carolina address — the insured’s last known post-office address “in this state” — I believe that North Carolina would not ignore this clear statutory instruction based on some imagined statutory purpose. So I respectfully dissent.

Whitmire v. Southern Farm Bureau Life Insurance Company, Case No. 21-1643, Oct. 26, 2022. 4th Cir. (Wynn), from EDNC at Raleigh (Myers). Joseph Mattia for Appellant. Aaron Edward Pohlmann for Appellee. VLW 022-2-226. 25 pp.