SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Piermount Iron Works, Inc. v. Evanston Insurance Company (A-19-08)

Argued November 17, 2008 -- Decided January 29, 2009

LaVECCHIA, J., writing for a unanimous Court.

The issue in this appeal is whether Evanston Insurance Company, a surplus lines insurance carrier, must be held to N.J.A.C. 11:1-20.2(j)’s regulatory penalty of automatic renewal because it did not provide the insured, Piermount Iron Works, Inc., notice of nonrenewal of its umbrella policy of excess commercial liability insurance.

To enhance the coverage provided through its primary commercial liability insurance policy, Piermount, a construction contractor, obtained excess liability insurance coverage from Evanston. The expiration date of the 2001 umbrella policy was March 13, 2002. It contained a provision stating that if Evanston decided not to renew, it would send a notice of nonrenewal “not less than 30 days before the expiration date or such other period as may be required by law.” It is undisputed that Evanston did not send a notice of nonrenewal to Piermount.

Piermount’s insurance broker, which knew when the umbrella policy was set to expire, submitted a renewal application to Evanston. The application stated that Piermount had secured primary insurance coverage with Lexington, a New Jersey domestic insurer. That was inaccurate, however, because Lexington had refused Piermount a renewal-quote offer until a premium arrearage was paid. Thus, at the time Piermount submitted its renewal application to Evanston, Piermount’s primary insurer had not yet made an offer to write a renewal policy to cover the time period required for the umbrella application to Evanston. That information was not made known to Evanston.