This has been quite a year for insurance coverage cases in North Carolina. So far in 2014, there have been at least three opinions handed down by the N.C.
Court of Appeals that are worth close examination for their explanations and determinations of insurance coverage in various automobile crash cases.
As you might imagine, finding appropriate coverage for the harms done by a careless or drunk driver is integral part of our practice at DaisleyLaw. Every case s different, and you should always consult an attorney about your particular situation, a quick look at these three cases may help you spot potential concerns with your automobile insurance coverage. (The focus here will be on the first one; other blog comments to follow on the other cases.)
16-year-old Harley Jessup lived with her father in a small farmhouse about a mile away from the residence of her grandfather, Thurman Jessup. Both houses were owned by Grand-dad Thurman, and located on the same farm property owned by him. One night, Harley was injured when a truck driven by her cousin Randall ran off the road into a ditch, causing Harley to be injured severely as she was ejected from the truck. Randall’s insurance company paid out the full limits on Randall’s policy, but that did not begin to cover all of Harley’s expenses from her injuries. Additional coverage was sorely needed, and Harley’s attorneys filed a claim through the Under-Insured Motorist (UIM) portion of the policy owned by Grand-dad Thurman, through North Carolina Farm Bureau.
This may come as a shock, but Farm Bureau said, in essence, “Big Fat No!” It based its denial on the contention that Harley was not a “household resident” of her grandfather as required under Farm Bureau’s standard auto policy. But in the case of North Carolina Farm Bureau vs. Paschal, the North Carolina Court of Appeals told Farm Bureau — “Big Fat No!”
Judge Linda McGee wrote the decision for a unanimous panel. (Full disclosure: I have had the great pleasure of meeting Judge McGee on several occasions, and dining with her and her husband at the NCAJ Annual Convention, and I’m a pretty big fan.) The Court ruled against Farm Bureau’s interpretation, with Judge McGee focusing on previous court decisions which described the term “resident” as being “flexible, elastic, slippery and somewhat ambiguous…” and which has “many shades of meaning.”
Because insurance companies routinely spend a lot of money on lawyers to draft the precise wording of its insurance policies, the courts in North Carolina and other jurisdictions typically hold their feet to the fire whenever the terms of those policies are ambiguous.
When an insurance company, in drafting its policy of insurance, uses a ‘slippery’ word to mark out and designate those who are insured under the policy, it is not the function of the court to sprinkle sand upon the ice by strict construction of the term (against the policyholder)…
Fonville v. Ins. Co. 36 N.C. 495, 497-8 (1978).
Thus, in this new case, the Court of Appeals determined that since Harley lived rent free in a home owned by Graddad Thurman on the same farm property also owned by him, and since her grandfather visited Harley almost every day and provided her with most of her food and clothing, and had the key and free access to Harley’s house, Harley was in fact a “household resident” of the family farm (even though living a mile away from Granddad Thurman’s house). She, therefore, was afforded coverage under the grandfather’s standard insurance policy.
This case was similar to a case handled by DaisleyLaw a few years back, where a young man was horribly injured in a road rage crash. His family came to us after being told by his insurance company there was no coverage at all. We were able to obtain — after our investigation revealed he spent significant time with both his mom and dad (who were at that time separated) — that he qualified as a “family member’ and “household resident” in two households. Eventually, we were able to get the full limits of coverage coverages under his, his mother’s and his dad’s automobile insurance policies.
ADDENDUM: Farm Bureau hasn’t paid anything yet to Harley. It asked the North Carolina Supreme Court for discretionary review, and that request has been granted. So stay tuned!