{1} Plaintiff appeals from the district court’s grant of summary judgment in favor of Defendant on Plaintiffs breach of contract claim. Plaintiff represents a yet-uncertified class of automobile insurance policyholders who elected to pay their automobile insurance premiums in installments. Defendant is an automobile insurance company that entered into a contract with Plaintiff to provide insurance for her automobile. Plaintiff argues that the installment fees charged to those policyholders who pay their premiums in installments are considered part of the premium and therefore should be described as such in their insurance policies. Because the fees were not included in the stated premium, Plaintiff argues that Defendant breached its insurance contract with her and that she is entitled to damages. We hold that the installment fees in this case are not premium and therefore conclude that the district court did not err in granting summary judgment in favor of Defendant.
BACKGROUND
{2} The material facts of this case are undisputed. Over twenty years ago, Plaintiff entered into a contract for automobile insurance with Defendant. Plaintiffs policy provided her with continuous insurance coverage for a six-month period. Initially, Plаintiffs parents paid the premium in a lump sum amount and renewed the policy every six months.
{3} A few years later, Plaintiff took sole responsibility for paying her automobile insurance premiums. Plaintiff soon realized that she could not afford to pay her premium in a lump sum payment as her parents had done. Plaintiff contacted her insurance agent and asked whether she could pay her premium in installments. The insurance agent then sent a form to Plaintiff so that she could sign up for Defendant’s payment plan, which allowed her to pay her premium in monthly installments. The payment plan also included an installment charge, which has varied throughout the years, but is currently three dollars per month. Although not stated in the policy issued to Plaintiff, both the amount of the monthly premium and the installment fee were included in the form signed by Plaintiff when she agreed to the payment plan. Plaintiff then began paying her automobile insurance premiums in monthly installments and continued to do so for nearly twenty years.
{4} In 2004, Plaintiff filed suit against Defendant alleging breach of contract and seeking classwide relief. Plaintiff argued that the installment fees charged by Defendant were actually considered premium and therefore should have been included in the “total premium” stated on her policy. According to Plaintiff, Defendant’s failure to include such fees in the premium constituted a breach of contract. Upon both parties’ motions for summary judgment, the district court concluded that Defendant’s installment fees were not considered premium and granted Defendant’s motion for summary judgment. Plaintiff appeals.
STANDARD OF REVIEW
{5} We review a district court’s grant of summary judgment de novo. Self v. United
DISCUSSION
{6} In granting Defendant’s motion for summary judgment, the district court observed that this is a modal premium case “with a twist.” According to the district court, unlike other modal premium cases being litigated throughout the country, the installment fee in this ease was disclosed to Plaintiff, and both parties agreed that Plaintiff was aware of the fee. Despite this, Plaintiff argues that because the policy issued by Defendant did not include the installment fees in the “total premium” amount, Defendant has breached its contract with Plaintiff. According to Plaintiff, installment fees are premium and should have been included in the policy. We disagree and affirm the district court’s dismissal of Plaintiffs claims.
{7} We will begin this opinion with a discussion of Plaintiffs argument that the policy itself requires that installment fees be described as part of the premium. Second, we address Plaintiffs argument that state law mandates that installment fees be stated in the policy and, in doing so, will consider case law from other jurisdictions bearing on the question.
Defendant Not Liable for Breach of Contract Based on the Policy Language
{8} Plaintiff asserts that Defendant breached the insurance contract by charging her more than the “total premium” specified in her policy. The term “total premium” is not defined in the policy. Plaintiff argues that the common and ordinary meaning of the term “total premium” includes installment fees and that such fees must therefore be included in the premium stated on the policy. The district court concluded that Plaintiff expressly agreed to the installment fees by entering into a separate contract with Defendant to pay her premium in installments and further that the fees associated with paying in installments are not premium. We agree and conclude that Defendant is not liable for breach of contract based upon the language of the policy.
{9} Initially we observe that “[t]he insurance contract was agreed upon, and the premium set, before any installment arrangement was offered.” Sheldon v. Am. States Preferred Ins. Co.,
{10} Plaintiff agrees that the legal effect of the separate document allowing her to pay her premium in installments hinges on whether the insurance policy itself permits installment payments. Specifically, Plaintiff’s insurance policy provides that
[t]he policy period is shown under “Policy Period” on the declarations page and is for successive periods of six months each for which yоu pay the renewal premium. Payments must be made on or before the end of the current policy period. The policy period begins and ends at 12:01 A.M. Standard Time at the address shown on the declarations page.
Plaintiff argues that Defendant’s use of the word “payments” in the plural allows policyholders to pay on an installment basis. We reject Plaintiffs interpretation of this term,
{11} In further support of her assertion that the policy itself allows for installment payments, Plaintiff argues that because the declarations page of her policy references her payment plan, the policy must allow for installment payments. We disagree. We observe that if Plaintiff had not entered into a separate agreement to pay her premium in installments, such references to a payment plan would not have appeared on her policy. Such language therefore cannot be construed as allowing for installment payments because it only appears on the policy after a policyholder has entered into an agreement with Defendant regarding installment payments.
{12} Plaintiff argues that even if the insurance policy does not allow for installment payments, an integration clause within the insurance policy bars any additional agreements. The integration clause within Plaintiffs insurance policy provides that “this policy contains all of the agreements between [the policyholder] and [Defendant] or any of [Defendant’s] agents.” However, as Defendant correctly observes, an integration clause only covers antecedent and contemporaneous agreements; it does not foreclose the possibility of future agreements. 6 Arthur Linton Corbin, Corbin on Contracts §§ 573-74 (interim ed.2002); cf. Bell v. Lammon,
{13} Plaintiff next argues that the payment plan agreement cannot be considered a contract because the agreement was not supported by adequatе consideration. “Consideration adequate to support a promise is essential to enforcement of the contract and must be bargained for by the parties.” Romero v. Earl,
{14} Additionally, Plaintiff argues that because Defendant cancels policies for failure to pay the installment fees, such fees must be considered premium. Conversely, the district court concluded that Defendant does not cancel policies for failure to pay installment fees. Plaintiff argues that this conclusion is contrary to the record. In support of her assertion, Plaintiff points to the deposition testimony of one of Defendant’s employees. The deposition testimony reveals that when a policyholder submits an installment payment that does not cover the amount due, Defendant first applies the payment to the installment fee and then the remaining amount to the premium. Depending on the remaining balance owed on the premium, Defendant may send out a cancellation notice, or it may simply indicate the shortage on the next bill. Plaintiff argues that, based on this practice, failure to pay the installment fees will inevitably result in cancellation. While hypothetically this may be true, we observe that the policy is not actually cancelled for failure to pay the installment fees, but for failure to pay .the premium. Moreover, we do not perceive the payment of installment fees to be “optional,” as policyholders do enter into a separate agreement with Defendant for installment payments and failure to pay the installment fees when due would be a breach of that agreement. We are therefore not convinced that Defendant’s procedures for dealing with short payments somehow mаke its installment fees part of the premium.
{15} Finally, Plaintiff argues that the meaning of the term “total premium” on the insurance policy clearly encompasses installment fees and that such fees should therefore have been included in the premium stated on the policy. We disagree.
{16} Where, as here, a contract does not define a term, we will give the term its “common and ordinary meaning.” Battishill v. Farmers Alliance Ins. Co.,
{17} We agree with the district court’s conclusion that the installment fees are not consideration for a contract of insurance but, instead, cover the expense of allowing policyholders to pay their premiums in installments. A number of considerations support this conclusion.
{18} First, payment of installmеnt fees is not a prerequisite to obtaining automobile insurance coverage from Defendant. We observe that an individual can obtain insurance coverage without paying the installment fees by paying his or her premium in a lump sum. Indeed, if Plaintiff had not contacted her insurance agent regarding installment payments, she would have paid Defendant solely the premium as stated on the policy. Because individuals are in no way obligated to pay the installment fees, aside from then-own financial and/or personal preference, the installment fees cannot be considered consideration for the procurement of insurance and are therefore not premium. Compare
{19} Second, Defendant’s cancellation policy lends further support to our conclusion that installment fees are not premium. We observe that when a policyholder cancеls his or her insurance, he or she is refunded any unearned premiums. However, the installment fees paid by the policyholder are not refunded.
{20} Finally, we observe that insurance rates are associated with the transfer of risk. 5 Lee R. Russ and Thomas F. Segalla, Couch on Insurance § 69:1, at 69-5 (3d ed. 2005) (“The amount of the premium varies in proportion to the risk assumed.”); see also NMSA 1978, § 59A-1-5 (1984) (“ ‘Insurance’ is a contract whereby one undertakes to pay or indemnify another as to loss from certain specified contingencies or perils, or to pay or grant a specified amount or determinable benefit in connection with аscertainable risk contingencies!)]”). Installment fees, on the other hand, are not associated with any sort of transfer of risk but, instead, cover the costs associated with a payment plan. We therefore hold that installment fees are not considered premium under the language of Plaintiffs insurance policy.
{21} It is for these reasons that we conclude that the district court correctly ruled that Defendant is not liable for breach of contract based on the policy language.
Defendant Not Liable for Breach of Contract Based on the Insurance Code
{22} Plaintiff argues that even if the pоlicy itself does not evidence a breach of contract by Defendant, the Insurance Code, interspersed throughout NMSA 1978, §§ 59A-1-1 to -59-4 (1984, as amended through 2006), clearly demonstrates that Defendant has breached its contract with Plaintiff. Under the Insurance Code, “[n]o 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.” Section 59A-16-24(B). Plaintiff argues that because the Insurance Code definition of “premium” clearly encompasses installment fees, Defendant has violated New Mexico law by not including its installment fees as part of the “total premium” stated in the policy. Additionally, Plaintiff argues that even if the installment fees are not “premium,” Section 59A-16-24(B) also requires administration fees to be specified in the policy and that this term must include installment fees. The district court concluded that the Insurance Code’s definition of “premium” does not include installment fees and that Defendant’s fully disclosed installment fees comport with the requirements of the Insurance Code. We agree.
{23} The Insurance Code defines “premium” as “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.” Section 59A-18-3. Plaintiff argues that the installment fees charged by Defendant are indeed service fees associated with the procurement of insurance, which constitute “premium” as defined in Section 59A-18-3. We agree with the district court that Defendant’s installment fees are not consideration for insurance and that such fees are not charged in connection with the procurement of insurance. Rather, as discussed previously, the installment fees are associated with the privilege of paying a premium in installments and are not for the actual purchase of insurance itself.
{24} There are only two published cases addressing the question of whether installment fees constitute premium in the insurance law context. In Blanchard, policyholders sought review of an insurance commissioner’s opinion that installment fees were not premium and therefore did not need to be included on automobile insurance policies.
{25} Four years later, a different circuit of the Louisiana Court of Appeal was presented with the same issue. See Cacamo v. Liberty Mut. Fire Ins. Co.,
{26} We find the reasoning in Blanchard and Cacamo both persuasive and helpful to our anаlysis. Further, we are not persuaded by Plaintiffs argument that New Mexico’s statutory definition of “premium” is so materially different from Louisiana’s as to warrant a different outcome in New Mexico. In Louisiana, “premium” is defined as
all sums charged, received, or deposited as consideration for the purchase or continuance of insurance for a definitely stated term, and shall include any assessment, membership, policy, survey, inspection, service or similar fee or charge made by an insurer as a part of the consideration for the purchase or continuance of insurance.
La.Rev.Stat. Ann. § 22:5(13) (West, Wеstlaw through 2006 Sess.). Plaintiff argues that the key difference between Louisiana’s definition and New Mexico’s is that Louisiana does not define “premium” as consideration for insurance “by whatever name called,” as New Mexico does. See § 59A-18-3. Although the Louisiana statute does not use the same catchall phrase as the New Mexico statute does, the language of the Louisiana statute does not suggest that “premium” is limited to only those types of charges described in the statute. This is demonstrated by the fact that the statute includes the phrase “or similar fee or charge” after listing the possible charges оr fees included in the term “premium.” See La.Rev.Stat. Ann. § 22:5(13). Moreover, the pertinent language in both statutes states that “premium” includes any fees or charges that are consideration for insurance. See § 59A-18-3; La. Rev.Stat. Ann. § 22:5(13). Indeed, both statutes define “premium” in this manner. See § 59A-18-3; La.Rev.Stat. Ann. § 22:5(13). We are therefore not persuaded that the reasoning in Blanchard and Cacamo is somehow limited by the uniqueness of Louisiana’s statutory definition of “premium.”
{27} Plaintiff urges us to rely on case law and administrative decisions from other jurisdictions that purportedly recognize that installment fees are considered premium. Plaintiff first points to a recent California Insurance Commissioner’s opinion dealing with a lawsuit similar to the case at bar. The district court in that lawsuit referred the question of whether finance charges imposed on policyholders who pay insurance in installments constituted “premium” to the California Department of Insurance (“DOI”). The DOI then allowed briefing by interested parties and held hearings on the subject. After considering the various arguments on the issue, the DOI decided that installment fees are considered part of the premium under California law. Plaintiff asks this Court to adopt the reasoning of the DOI.
{28} Initially we observe that the term “premium” is not defined in the California Code. The DOI was therefore not limited by statutory language when determining the meaning of “premium.” Interestingly, the DOI did consider a definition of “premium” quite similar to our own and concluded that if California had such a definition, installment fees would not be considered “premium” in
{29} Additionally, although we are mindful of the fact that, like California’s, New Mexico’s Insurance Code serves to protect consumers, see N.M. Life Ins. Guar. Ass’n v. Quinn & Co.,
{30} Plaintiff also argues that a line of cases, mostly in California, dealing with the dеfinition of “gross premiums” for tax purposes supports her assertion that installment fees are premium. As Plaintiff asserts, a number of state court decisions have held that installment fees are considered “gross premiums” for tax purposes. See, e.g., Metro. Life Ins. Co. v. State Bd. of Equalization,
{31} Additionally, Plaintiff argues that the district court’s decision conflicts with a line of New Mexico cases. We disagree. In Nellis v. Farmers Insurance Co. of Arizona, No. CV-2003-02564, slip op. at 4-6 (2d Jud. Dist. Jan. 28, 2005), the district court granted the plaintiffs motion for summary judgment based on breach of contract and found that service charges constituted premium under the plaintiffs insurance policy. What is significant in that case is that the monthly payment agreement did not mention a service fee and there was no evidence that the plaintiff understood that a fee would be charged and/or acquiesced to the fee. Id. at 2-3., Moreover, the insurance policy had only a one-month term, and the district court found it unclear as to why a service charge would be imposed where the plaintiff was not
{32} Similarly, Plaintiffs reliance on Azar v. Prudential Insurance Co. of America,
{33} Finally, Plaintiff argues that even if the installments are not considered “premium” under the Insurance Code, such fees must be deemed an “administration fee” that, like the premium, must be stated on the policy. See § 59A-16-24(B). We observe, however, that the administration fee mentioned in Section 59A-16-24(B) is specifically defined as a “charge for insurance or coverage.” As we have previously discussed, the installment fees in the instant matter are not charges fоr insurance, but rather separate fees related to the payment option selected by the policyholder. Such fees are not a prerequisite to obtaining coverage, and it is certainly possible to obtain insurance coverage from Defendant without having to pay the fees. We therefore conclude that the installment fee is not an “administration fee” as described by Section 59A-16-24(B). Defendant has therefore not violated the Insurance Code, and we hold that the district court correctly granted summary judgment in favor of Defendant.
CONCLUSION
{34} The district court’s grant of summary judgment in favor of Defendant and dismissal of Plaintiffs claim are affirmed.
{35} IT IS SO ORDERED.