Auto Insurance Coverage for Family Members
Integon National Insurance Co. v. Villafranco
228 N.C. App. 290 (2013)
North Carolina Court of Appeals
The insurer, Integon National Insurance Company (Integon), sought to deny liability for injuries sustained by passengers in a vehicle that was insured under Elizabeth Villafranco’s (Villafranco) name. At the time of the accident, the vehicle was being driven by Villafranco’s fourteen-year-old son, Ramses Vargas (Vargas). The main question that the Court of Appeals faced was whether the automobile insurance policy provided coverage to a minor child of the primary individual listed on the policy.
The plaintiff, Integon, filed a declaratory judgment action seeking to determine its liability insurance coverage for personal injury claims arising out of the accident. Integon then filed a motion for summary judgment. The court ruled in favor of defendants, passengers Wick and Williams, and held that the insurance policy did provide liability coverage of $50,000.00 per person, and $100,000.00 per accident. It is from that order that the plaintiff Integon appealed.
Villafranco’s son, Vargas, was driving her 1998 Buick with four passengers, Gary Sly (Sly), Hunter Strickland (Strickland), Tyler Wick (Wick), and Christopher Cole Williams (Williams). Vargas lost control of the vehicle, and it ultimately overturned. All of the passengers were injured in the accident, and sought to recover against the insurance policy held by Villafranco. Integon filed a declaratory judgment action to determine whether the liability insurance policy covered the passengers in the vehicle, and it was their argument that Vargas, as a minor and without a valid driver’s license, was not an insured under the terms of Villafranco’s insurance policy.
Typically, when the North Carolina Court of Appeals reviews an order of summary judgment, the review is de novo (begun anew), and viewed in the light most favorable to the non-moving party. However, in this case, the parties stipulated that there were no genuine issues as to any material fact, and thus, the Court only had to interpret the language contained in the policy.
The language in Villafranco’s policy which was at issue stated, “We will pay damages for bodily injury or property damage for which any insured become legally responsible because of an auto accident.” The policy further defined “Insured” as: (1) You or any family member for the ownership, maintenance or use of any auto or trailer; or (2) Any person using your covered auto.” Key Definitions included: (1) “You” and “Your” are defined as “the named insured in the declarations”; (2) “family member” is defined as “a person related to you by blood, marriage or adoption who is a resident of your household;” and “covered auto” is defined as “any vehicle shown in the declarations.”
North Carolina case law currently places the burden on showing insurance coverage on the party who is seeking benefits under such coverage. Fortune Ins. Co. v. Owens, 351 N.C. 424 (2000). If the court determines that the insurance policy affords coverage for a particular claim or injury, “the burden then shifts to the insurer to prove that a policy exclusion excepts the particular claim from coverage.” Hobson Constr. Co. v. Great Am. Ins. Co., 71 N.C. App. 586, (1984). Courts also usually interpret insurance contacts in accordance with the intent of each party, and if there is no ambiguity, then the plain and accepted meaning of the policy language will be accepted. Integon Gen. Ins. Corp. v. Universal Underwriters Ins. Co., 100 N.C. App. 64 (1990).
In this case, the named insured on the policy was Elizabeth Villafranco, and the covered automobile was her 1998 Buick. Vargas, as Villafranco’s son and as a resident of Villafranco’s household at the time of the accident, would fit as a “family member” within the definitions as set forth within the policy. Thus, the court held that Vargas was covered by the policy.
The North Carolina Court of Appeals ultimately affirmed the judgment of the trial court, and held that the insurer, Integon, was liable for the injuries suffered by the passengers in the vehicle, because covered was extended to family members using the vehicle.
The Court also spoke at length about the terms of the policy, and the implication of the North Carolina Financial Responsibility Act (NCFRA). The terms of the NCFRA, which were designed to “compensate innocent victims of financially irresponsible motorists,” are included in every automobile insurance policy written in North Carolina. Sutton v. Aetna Cas. & Sur. Co., 325 N.C. 259 (1989). N.C. Gen. Stat. § 20-279.21(b)(2) states:
“Such owner’s policy of liability insurance: Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, or any other persons in lawful possession, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle…”
Thus, there are strong public policy implications when addressing insurance coverage and extension of such coverage to family members. In this case, the insurer tried to deny liability to avoid paying the claim. However, the Court, in using the plain language contained in the policy, ruled that the insurance company was liable for up to $50,000.00 per person and $100,000.00 per accident.