Additional Vehicles Must Be Added to Policy For Coverage
Batts v. Lumbermen Mutual Casualty Insurance Co.
192 N.C. App. 533 (2008)
North Carolina Court of Appeals
This case involves a question of insurance coverage for a vehicle recently purchased by the insured and the plaintiffs, Johnny and Gloria Batts (the Batts). The plaintiffs had an automobile insurance policy through the defendant, Lumbermen Mutual Casualty Insurance Company (Lumbermen).
The Batts filed an action against Lumbermen in Pitt County Superior Court because they denied a claim of coverage to the Batts’ recently purchased truck. Plaintiffs moved for declaratory judgment regarding whether the insurer was required to provide coverage, and the trial court granted summary judgment in the Batts’ favor. It is from that order that Lumbermen appealed.
The defendant issued a personal automobile insurance policy to the plaintiffs in May 2003. The policy contained a stipulation that for a newly acquired additional or replacement automobile to be covered under the policy, the plaintiffs must ask Lumbermen to insure the new automobile within 30 days after the Batts become the owners.
Following the issuance of the insurance policy, the plaintiffs purchased a 2002 Chevrolet truck from Greenville Nissan on June 29, 2003. Plaintiff Gloria Batts signed a Title Application for the truck, a representative of Greenville Nissan signed a “Dealer’s Reassignment of Title to a Motor Vehicle” form, and Greenville Nissan also delivered the certificate of title to the lienholder. After the required documents were signed, the plaintiffs took possession of the vehicle on the same day.
On July 15, 2003, the North Carolina Department of Motor Vehicles (NCDMV) issued a registration card for the Chevrolet Avalanche in the names of Johnny and Gloria Batts. Less than a month later, on August 13, 2003, Mrs. Batts was in a single vehicle accident which resulted in damage to the Chevrolet truck. On that same day, Mrs. Batts notified Kinston Insurance of her accident, however, this was the first notice that the insurance agent had that Batts had purchased the Chevrolet truck.
Lumbermen denied the plaintiffs’ claim for damages resulting from the accident, on the grounds that the Chevrolet truck was not a covered vehicle under the Batts’ policy, because the Batt’s had not asked Lumbermen to insure the vehicle within 30 days after the plaintiffs became owners of the vehicle.
The trial court based its grant of summary judgment for the plaintiffs on the reasoning of Insurance Co. v. Hayes, 276 N.C. 620 (1970). The trial court relied on a quote from Hayes which stated that “ownership to a motor vehicle passes when a duly assigned certificate of title is delivered to the transferee or lienholder.” In this case, the plaintiff argued that the best evidence of that date is the date of issue of the vehicle’s registration card, which was July 15, 2003. The plaintiffs notified the defendant of the accident on August 13, 2003, which is within 30 days of July 15, 2003.
Thus, the trial court concluded that the notification to defendant of the accident did occur within the 30-day period required by the insurance policy. Accordingly, the trial court concluded that the Batts’ policy covered losses from the accident.
In reviewing the trial court’s judgment, the Court of Appeals reversed and concluded that, pursuant to N.C. Gen. Stat. § 20-72(b), the issuance of a registration card for a vehicle by the NCDMV is not a necessary requirement for ownership interest to vest in the purchaser of a vehicle. The Court stated that the trial court misread and misapplied the holding in Hayes. The Court based its reasoning on the provisions of N.C. Gen. Stat. § 20-72(b), which states:
“No ownership interest in a motor vehicle passes to the purchaser of the vehicle until: (1) the owner executes, in the presence of a person authorized to administer oaths, an assignment and warranty of title on the reverse of the certificate of title, including the name and address of the transferee, (2) there is an actual or constructive delivery of the motor vehicle, and (3) the duly assigned certificate of title is delivered to the transferee. In the event a security interest is obtained in the motor vehicle from the transferee, the requirement of delivery of the duly assigned certificate of title is met by delivering it to the lien holder.”
N.C. Gen. Stat. § 20-72(b) (2007). Essentially, the comprehensive terms provided by the statute require three elements that must be satisfied in order for an ownership interest in a motor vehicle to pass to the purchaser of the vehicle.
In this case, the trial court based their order on the issuance of a registration card, which is not listed as one of those three requirements. The facts show that all three of these requirements were completed at the dealership on the date of the purchase of the vehicle. Thus, once those three requirements of § 20-72(b) were satisfied, the ownership interest in the vehicle was transferred to the plaintiffs and they then became the vehicle’s owner.
The Court of Appeals reversed the decision of the trial court, and found that the three requirements for the ownership interest in the Chevrolet truck to pass to the plaintiffs, as set forth in N.C. Gen. Stat. § 20-72(b), were satisfied on the date of the purchase, June 29, 2003. The Court also found that the fact that the NCDMV did not issue the registration card for that vehicle until July 15, 2003 was irrelevant to the analysis for notice purposes.
Because the plaintiffs did not notify Lumbermen that they had purchased the Chevrolet truck within the 30 days following June 29, 2003, the vehicle was not covered under the Batts’ existing auto insurance policy. Thus, when the accident occurred on August 13, 2003, there was no insurance coverage for the Chevrolet truck.
The key to this case is knowing the importance of giving notice to an insurer when circumstances change. Just like you would discontinue insurance if you sold a vehicle, you should always make sure that any new vehicle purchased is also covered by your existing policy. If the plaintiffs had taken just a few minutes to make that phone call in the days after purchasing the vehicle, then the damage to the vehicle may have been covered.