The Office of General Counsel issued the following opinion on February 7, 2005, representing the position of the New York State Insurance Department.
Re: Payment of Premium as of Postmarked Date
After a cancellation notice for non-payment has been issued, is the premium considered paid as of the date it is postmarked or the date it is received by the insurer?
The premium is generally considered paid as of the date of the postmark.
This inquiry is of a general nature.
N.Y. Ins. Law § 3425 (McKinney Supp. 2005), which applies to personal lines insurance, and its companion N.Y. Ins. Law § 3426 (McKinney Supp. 2005), which applies to commercial insurance, provides for a 15 day grace period. If the insured remits the premium within those fifteen days, the insurer must accept the payment and continue the policy. Neither section, however, addresses the specific question of whether the premium is deemed to have been submitted as of the date of postmark or the date that it is received by the insurer. It is the position of the Insurance Department that both statutes should be interpreted so as to afford the greatest protection to the consumer. Thus, the premium is considered to be remitted as of the date it is postmarked.
This position is supported by the courts decision in Government Employees Insurance Company v. Solaman, 597 NYS2d 990 (N.Y. Sup.Ct. 1993). The court held that the mailing by the insured of the premium after receipt of a proper cancellation notice but prior to the cancellation date was sufficient to keep the policy in effect. In its decision, the court relied on the "Postal Acceptance Rule," that in the absence of any limitation or provision to the contrary in the offer [to provide insurance under a properly issued policy], the acceptance of the offer is complete and the contract [the insurance policy] becomes binding upon both parties when the offeree [insured] deposits the acceptance by the payment of premium in the post office. In other words, unless the insurer requires payment by a particular method or otherwise limits payment methods, payment of the premium is assumed complete at the time the insured mails the payment.
The date the premium is postmarked, provided it is within the statutory fifteen days or a longer period provided by the insurer, is the date that should be used as the payment date after a proper notice of cancellation has been mailed.
For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.