As used in the Insurance Code "premium" means the consideration for insurance or for an annuity, by whatever name called. Any "assessment," or any "membership," "policy," "survey," "inspection," "service" or similar fee or other charge in consideration for an insurance or annuity contract or procurement thereof is part of the premium.
History: Laws 1984, ch. 127, § 333.
ANNOTATIONSCross references. — For the Insurance Code, see 59A-1-1 NMSA 1978 and notes thereto.
Installment fees. — Installment fees charged to those policyholders who pay their premiums in installments are not consideration for insurance and that such fees are not charged in connection with the procurement of insurance. Installment fees are associated with the privilege of paying a premium in installments and are not for the actual purchase of insurance itself. Nakashima v. State Farm Mut. Auto Ins. Co., 2007-NMCA-027, 141 N.M. 239, 153 P.3d 664.
Installment 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..
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.
Stacking. — When an automobile insurance policy states that premiums for uninsured motorist coverage with respect to additional vehicles under the policy are included in another premium, a reasonable insured might understand that more than one premium is charged, more than one coverage is purchased, and that stacking would be permitted. Since an insurer conceptualizes and drafts the insurance contract, the insurer has an obligation to express clearly its intent not to allow stacking, to its agents who sell the policy and, more importantly, to the insureds to whom it issues the agreements it prepares. Rodriguez v. Windsor Ins. Co., 1994-NMSC-075, 118 N.M. 127, 879 P.2d 759.