Agents Beware: Homeowner’s Failure to Read Policy Doesn’t Clear Agency of Negligence Claim, North Carolina High Court Says

A North Carolina insurance agency cannot escape a lawsuit brought by a homeowner whose claim was denied because key elements of the property were not mentioned in the coverage application.

In a case that began almost a decade ago and is likely to continue for another few years, the state Supreme Court decided in May that a move to dismiss the lawsuit against J. Kim Hatcher Insurance agency is not proper under 100-year-old case law. The decision partly upholds a 2023 North Carolina appeals court ruling that had overturned a trial court’s 2021 order dismissing the homeowner’s lawsuit.

“The question presented in this case is whether a person is contributorily negligent for signing a blank insurance application and trusting his or her agent to complete it carefully, no matter the circumstances,” Supreme Court Justice Anita Earls wrote for the court.

The question must be weighed by a jury, the high court noted. The Hatcher agency, based in Beulaville and Kenansville, argued that the property owner, Daniel Jones, contributed to the misrepresentation and the coverage denial by signing the application without reading the policy. But the justices said that defense does not always apply.

“After all, if a customer can never trust their agent, what is the point of hiring the agent to begin with?” the court noted.

The agency representative had reportedly told Jones that all the homeowner needed to do was sign the blank application and pay the first premium – and the agency would take care of the rest. Hatcher inspected the property and took photographs. A year later, Jones renewed the GeoVera policy. In September 2018, Hurricane Florence severely damaged the property, ripping shingles off the roof and damaging interiors and belongings, the court explained. The family was forced to live elsewhere for a period of time.

After initially saying it would pay the claim, GeoVera later balked, informing Jones that the insurance application did not mention the fact that a large pond was on the property, directly in front of the house, and that the property covered almost eight acres of land, including some farmland. That constituted a material misrepresentation, the carrier said.

After the denial, Jones filed suit against the Hatcher agency and GeoVera, charging negligence and gross negligence.

Topics Agencies Homeowners North Carolina