A. No person shall wilfully collect any sum as premium or charge for insurance or other coverage, which insurance or coverage is not then provided or in due course to be provided (subject to acceptance of the risk by the insurer) by a policy issued by an insurer as authorized by the Insurance Code.
B. No person shall wilfully collect as premium, administration fee or other charge for insurance or coverage any sum in excess of the premium or charge applicable thereto as specified in the policy, in accordance with the insurer's applicable classifications and rates then lawfully in effect. This subsection shall not be deemed to prohibit:
(1) the charging and collection by surplus line brokers licensed as such under Article 14 [Chapter 59A, Article 14 NMSA 1978] of the Insurance Code, of the amount of applicable taxes, if any, and policy fee, if any, in addition to the premium required by the insurer; or
(2) the charging and collection by a life insurer of amounts actually to be expended for medical examination of an applicant for life insurance or for reinstatement of a life insurance policy.
History: Laws 1984, ch. 127, § 291.
ANNOTATIONSInstallment payment fees were not premiums. — Where the insurer offered policies with a six-month term and required payment of the premium in a lump sum for the entire term; the insurer required policyholders who wanted to pay premiums in monthly installments to enter into a premium payment agreement with a separate corporation before the insurer would issue a policy that allowed monthly payments; the payee corporation imposed a monthly service charge to cover the increased costs of monthly billing and payment; the payee corporation's monthly bills reflected the service charge as an amount separate from and in addition to the monthly installment of the prorated lump-sum premium; and the policy included an endorsement amending the policy period to one calendar month, continuing for successive monthly periods, if the premium was paid when due, the monthly service charge was not a premium. Nellis v. Farmers Ins. Co. of Ariz., 2012-NMCA-020, 272 P.3d 143, cert. denied, 2011-NMCERT-011.
Where plaintiff could not pay plaintiff's automobile insurance premium in a lump sum, plaintiff signed up for defendant's payment plan which allowed plaintiff to pay the premium in installments; and the amount of the monthly premium and the installment fee were included in the form plaintiff signed for the payment plan, the installment fee was not part of the total "premium" for the insurance. Nakashima v. State Farm Mut. Auto. Ins. Co., 2007-NMCA-027, 141 N.M. 239, 153 P.3d 664, cert. denied, 2007-NMCERT-003, 141 N.M. 401, 156 P.3d 39.
Installment payment fees were supported by consideration. — Where the insurer offered policies with a six-month term and required payment of the premium in a lump sum for the entire term; the insurer allowed policyholders who wanted to pay premiums in monthly installments to enter into a premium payment agreement with a separate corporation; the payee corporation imposed a monthly service charge to cover the increased costs of monthly billing and payment; and the policy that allowed monthly payments included an endorsement amending the policy period to one calendar month, continuing for successive monthly periods, if the premium was paid when due, the monthly service charge was supported by consideration. Nellis v. Farmers Ins. Co. of Ariz., 2012-NMCA-020, 272 P.3d 143, cert. denied, 2011-NMCERT-011.
Parol evidence rule did not prevent enforcement of premium payment agreement. — Where the insurer required policyholders who wanted to pay premiums in monthly installments to enter into a premium payment agreement with a separate corporation before the insurer would issue a policy that allowed monthly payments; the payee corporation imposed a monthly service charge to cover the increased costs of monthly billing and payment; the policy issued by the insurer did not specify any service charge to be paid by policyholders who bought insurance on a monthly basis; although the policy declaration provided that no fees were payable with respect to the policy, it referred to the premium payment agreement with the payee corporation; and the policy included a merger clause and an endorsement amending the policy period to one calendar month, continuing for successive monthly periods if the premium was paid when due, the policy was only partially integrated and the parol evidence rule did not prevent the proof and enforcement of the premium payment agreement. Nellis v. Farmers Ins. Co. of Ariz., 2012-NMCA-020, 272 P.3d 143, cert. denied, 2011-NMCERT-011.
Coverage limits not increased where multiple premiums not paid. — Where an insured owned two vehicles covered under a liability policy and was in an accident while driving a non-owned vehicle, there was no requirement under this section that the policy's coverage limits be doubled because, while the insured paid two separate premiums for his owned vehicles, he did not pay multiple premiums for non-owned vehicle coverage. Slack v. Robinson, 2003-NMCA-083, 134 N.M. 6, 71 P.3d 514, cert. quashed, 2004-NMCERT-003, 135 N.M. 321, 88 P.3d 261.