Does Travel Insurance Adequately Protect Tourists Who Visit The North Carolina Coast From Hurricane Related Losses?

Hurricanes create all sorts of insurance disputes here in the Tar Heel state.  I previously wrote about a number of these issues in the wake of Hurricane Irene last August, and a troubling article I recently stumbled upon in the Chicago Tribune shines a light on a yet another hurricane-related insurance issue: Does travel insurance cover losses incurred by a renter whose family vacation to the North Carolina coast has been interrupted by a hurricane?  In the case of Chicagoan Laura Miller, whose long-planned family vacation to Topsail Beach happened to coincide with Hurricane Irene, the answer to this question was surprising and disappointing ...

Mike Causey Announces Bid For North Carolina Insurance Commissioner At Dare County Press Conference

Earlier this week, Greensboro Republican Mike Causey formally announced his candidacy for the post of North Carolina Insurance Commissioner.  I previously wrote about Mr. Causey's background and qualifications here, and he revealed a little more about himself during his Dare County press conference on Monday:

Why did the Guilford County resident travel to Manteo to kick off his campaign?  One of the most contested issues in the race will be the ratemaking method used in North Carolina, which gives the Insurance Commissioner a great deal of power in setting property insurance rates - a topic near and dear to North Carolina's coastal residents, who face the risk of hurricanes every year.

The reason I started here is to bring focus on the problems of insurance in the coastal counties.  And I’m giong to be spending a lot of time in eastern North Carolina.

Mr. Causey was scheduled to attend more campaign events at other locations along the coast on Tuesday and Wednesday.

Familiar Face To Enter The Race For North Carolina Insurance Commissioner

Incumbent North Carolina Insurance Commissioner Wayne Goodwin now has a second Republican challenger heading into the 2012 campaign season.  Mike Causey, a seasoned campaigner from Guilford County, recently filed papers with the North Carolina Board of Elections indicating he will run for the position.  This will mark the fourth attempt by Mr. Causey to be elected to the position, having lost previously in 1992, 1996, and 2000 to former longtime Insurance Commissioner Jim Long.  In addition to his campaigns for Insurance Commissioner, Mr. Causey also ran for the state senate in 2002, a seat won that year by Democrat Katie Dorsett.

©iStockphoto.com/pgangler

Although Mr. Causey has struggled to win his previous campaigns for elective office, he has remained politically active at both the state and local level.  Earlier this year, he was appointed by Tom Tillis, Speaker of the North Carolina House of Representatives, to a four year term on the Public Officers and Employees Liability Insurance Commission.  He also currently serves on the Guilford County Agricultural Advisory Board.

What Are The Legal Risks Presented By The Use Of Social Media?

Earlier this week, I had the pleasure of speaking on a "Blogging Panel" at Arrowpoint Capital's Workers Compensation Summit in Charlotte, North Carolina.  I was honored to serve alongside expert bloggers Jay Kreuger, Chief Strategy Officer of PMSI, and Liz Horgan, who runs Strategic Social Media.  The panel was skillfully emceed by Arrowpoint's Director of Corporate Communications, Kedar Bryan.

 ©iStockphoto.com/YuriyKirsanov

As the only "blawger" on the bloggers' panel, I focused my remarks on the legal risks presented by blogging specifically, and by social media more generally.  Although social media presents many new and exciting opportunities for communication, it is a medium that should be approached with caution due to the potential for legal liability.  For instance, social media-based defamation claims become more prevelant all the time.  If you don't believe me, just ask Courtney Love, who settled a defamation-by-Twitter claim earlier this year for a reported $430,000.  Or ask Amy Alkon, a California advice columnist threatened with a $500,000 lawsuit for accusing a TSA agent of rape on her blog after the TSA agent patted her down during a search at the airport.

North Carolina Department Of Insurance Has "Change Of Opinion" Regarding UM/UIM Arbitration

As discussed in my October 23 post (based on my colleague Jennifer Welch's excellent summary), the North Carolina Rate Bureau announced earlier this fall that the Department of Insurance had approved several changes to the standard personal auto policy.  The most noteworthy change had to do with the arbitration provision contained in the UM/UIM section of the policy - no longer would arbitration be mandatory whenever the insured asked for it. 

This was huge news for auto insurers and personal injury attorneys alike, because UM/UIM arbitration has long been viewed (rightly or wrongly) as unfairly pro-insured.  Insurers were thrilled with the change, plaintiff's attorneys dismayed.

©iStockphoto.com/DNY59

Well, according to a November 10 Circular from the North Carolina Rate Bureau, the Department of Insurance "has had a change of opinion" concerning the change to the UM/UIM arbitration provision:

The Department of Insurance (Department) has advised the Rate Bureau that the Department has had a change of opinion regarding some of the revised policy language included in the revisions announced in Circular Letter A-11-5 and that it will soon formally advise the Rate Bureau of the Department’s withdrawal of the approval of the filed changes dealing with UM and UM/UIM arbitration.  The Rate Bureau is in discussions with the Department and is working to resolve the differences.  HOWEVER, THE CHANGES ANNOUNCED IN CIRCULAR LETTER A-11-5 WILL, IN ALL LIKELIHOOD, NOT BE EFFECTIVE APRIL 1, 2012 AS ORIGINALLY ANNOUNCED.  As soon as this matter is resolved, the Rate Bureau will notify all member companies by circular letter of the Personal Auto Policy revisions and the new effective date.

What brought on this important "change of opinion" just weeks after the Rate Bureau published its original circular?  Neither the Rate Bureau nor the Department of Insurance has provided an explanation publicly, but interested observers would love to know what brought on this change of heart.

Who Are "You”? Universal Insurance v. Bruton Farms: The Varying Meanings Of A Defined Term

"Who Are 'You'?" asks Nationwide's Nick Empson, J.D., C.P.C.U., in today's guest post.  No, Nick's post isn't about the famous album and song by his fellow countrymen, The Who.  Rather, in today's post, Nick delves into the meaning of "You" for purposes of determining insurance coverage.  As the basis for his analysis, Nick takes a look at a recent decision from the North Carolina Court of Appeals.  Thank you, Nick, for your helpful review of this new case!

 

A recent decision of the Court of Appeals (Universal Ins. Co. v. Bruton Farms Dev. Co., LLC. (November 2011)) creates no new law, but revisits an issue of great significance to the insurance professional that is seldom litigated; the meaning of “you”. (1)

 

“You” is a defined term, usually the first defined term, in most insurance policies.  The North Carolina Personal Auto Policy defines “you” as: “1. The named insured shown in the declarations; and 2. The spouse if a resident of the same household.”  The North Carolina Homeowners’ Policy contains exactly the same definition.  The Bruton Farms case involved the inter-play of the “Other Insurance” clauses of two Commercial General Liability (CGL) policies.  The CGL defines “you” as: “the named insured shown in the Declarations, and any other person or organization qualifying as a named insured under this policy.”  The “Other Insurance” clauses of the two policies were, of course, identical; both stating that they were excess where there was other, primary insurance available to “you”.  Universal, the plaintiff, argued that the effect of the identical wording of the two clauses was such that they cancelled each other out and should not be considered. (2)

 

   The Court demurred, holding:

While the wording of the clauses in the two policies may be identical, the effect of the application of that wording differs between the policies because of the different identity of the ‘Named Insured’ under each policy.. . thus, the two policies are not mutually repugnant and can be applied to determine which carrier provides primary coverage.

This holding was in line with the Court’s earlier decision in Iodice v. Jones, 113 N.C. App 76, 514 S.E.2d 291 (1999) a case involving the application of the “Other Insurance” clauses of two Personal Auto Policies providing Underinsured Motorist Coverage.  Here the Court found that, although the policies had identical wording, the wording did not have identical meanings since the effect of the clauses, referring (as in Bruton Farms) to “you”, defined as the named insured, varied when each policy’s named insured was substituted for “you.”

The Court’s decision in Bruton is soundly reasoned, but there is an interesting difference between the CGL and the North Carolina Personal Auto and Homeowners’ policies.  Unlike the CGL, both the Auto and the Homeowners’ policies begin the Definitions section of the policy by stating what the term “you” “refers to”. The Homeowner’s policy then goes on to state:

 

        “In addition, certain words and phrases are defined as follows: ..."

In other words, there is a suggestion that, although the policy states what the term  “you” refers to, this should not be taken as a definition.  The Personal Auto policy goes even further.  After stating what the term “you” “refers to”, it goes on to say:

 

Other words and phrases are defined.  They are boldfaced when used.

“You” is never boldfaced.   Why this anomaly?  Perhaps it is because If “you” were always applied to mean “the named insured and the spouse if a resident of the same household”, many policy provisions would be rendered meaningless.  This is because the definition-which-is-not-a-definition uses the conjunctive “and” between the named insured and resident spouse.  If “you” always has to mean both of these parties, then many of the policy provisions which are meant to apply where either of them is involved would not apply.  For example, the owned vehicle exclusion applies to any vehicle, other than a covered auto, which is “owned by you”.  If applied as suggested, the exclusion would only be effective in situations where the subject vehicle was titled in the name of both the named insured and resident spouse where, surely, it is meant to apply if it is titled in the name of either. It will be interesting to see if an enterprising plaintiff attorney ever makes this argument. Of course, the simplest thing would be to make it clear that “you” is a defined term and then add to the conjunctive (“and”) the disjunctive (“or”) so that “you” is defined as the named insured and/or resident spouse.  But then,  in insurance, nothing is ever simple.

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 1. In a particularly well-written and well-reasoned opinion, the Court actually deals with a number of issues and provides an excellent summary of the law relating to the duty to defend.

² Where “Other Insurance” clauses both apply on an excess basis, the well-established law is that they are deemed “mutually repugnant” and will apply concurrent pro rata. See, e.g., Alliance Mutual Ins. Co. v. NY Central Ins. Co., 70 N.C. App. 140, 318 S.E.2d 524 (1984), although this was not the result sought by Universal.

North Carolina Insurance Law Newsletter - Misrepresentations By Insureds

The Fall 2011 North Carolina Insurance Law newsletter is hot off the presses!  Click here to check out an overview of North Carolina statutes governing misrepresentations made by insureds on their insurance applications.  And feel free to subscribe to the quarterly newsletter by filling in the box to the right.  ==>