Court Opinion

ID: 9573364
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:53:26.619843+00
Date Added: 2024-06-11T12:35:11.522857
License: Public Domain

TYSON, Judge,
dissenting.
I would affirm summary judgment in favor of defendants. All parties in this transaction were burdened with certain duties. Defendants had a duty to make an application for the insurance coverage specifically requested by plaintiffs. Plaintiffs had a duty to read their insurance policy. Viewing the evidence in the light most favorable to plaintiffs, defendants satisfied their duty, and plaintiffs did not.
I. Agent’s and Insurer’s Duty
“An insurance agent has a duty to procure additional insurance for a policyholder at the request of the policyholder.” Phillips v. State Farm Mut. Auto Ins. Co., 129 N.C. App. 111, 113, 497 S.E.2d 325, 327 (1998) (citation omitted). “[This] duty does not, however, obligate the insurer or its agent to procure a policy for the insured which had not been requested.” Id. (emphasis supplied) (citation omitted). Thus, the *51insurance agent’s duty to a policyholder is limited to the nature of the policyholder’s request to the agent. Id.; see also Bigger v. Vista Sales & Wag., Inc., 131 N.C. App. 101, 505 S.E.2d 891 (1998) (holding that insurance agent who procured requested liability insurance was not liable for failing to recommend workers’ compensation coverage despite a 28-year business relationship between insurance agent and insured).
Plaintiffs’ evidence shows that Mrs. Baggett provided to Summerlin a copy of her existing insurance policy. Mrs. Baggett requested Summerlin to provide “the same coverage” at a cheaper rate. In response to that request, Summerlin quoted a premium and ordered an insurance policy with terms substantially similar to plaintiffs’ existing policy. Both policies expressly excluded coverage for losses due to flood damage.
Plaintiffs’ evidence reveals that Summerlin made no assertion to plaintiffs that their insurance policy included flood coverage. As the majority points out, Mrs. Baggett testified that plaintiffs never asked Summerlin to procure flood coverage. Summerlin never indicated to plaintiffs that the policy covered flood losses. The record is undisputed that Mrs. Baggett specifically requested and knew that Summerlin only replaced the existing coverage. It is equally undisputed that the prior policy also excluded coverage for flood losses.
Plaintiffs argue, and the majority holds, that because: (1) Summerlin knew the property was near the waterfront; and, (2) that he told plaintiffs they had “all risk” coverage, a genuine issue of material fact is raised whether Summerlin assumed an obligation to procure flood insurance. This Court rejected a similar argument in Greenway v. N.C. Farm Bureau Mut. Ins. Co., 35 N.C. App. 308, 241 S.E.2d 339 (1978).
In Greenway, defendant-insurance company insured plaintiffs’ rural home against loss by fire. Plaintiffs’ insurance policy stated that the plaintiffs’ home must be equipped with a telephone system for 100 percent coverage. Plaintiffs’ home burned without a telephone. The insurance company paid 75 percent of the agreed value. Plaintiffs brought suit against the insurance agent and company to recover the balance allegedly due under the insurance policy. Plaintiffs alleged, inter alia, negligence and misrepresentation on the part of defendants.
*52Plaintiff claimed he was never informed of the telephone requirement for full coverage and never discussed rates, but that defendant-agent told him he would have full coverage. The application he signed made no mention of the telephone requirement. Plaintiffs received their policy... but never read it... Defendant-Agent came to the house at least twice while it was under construction, [saw they had no telephone], and never mentioned anything about a telephone [requirement].
Greenway, 35 N.C. App. at 310, 241 S.E.2d at 340-41 (emphasis supplied). Plaintiffs argued that defendants waived the telephone requirement for full coverage. Plaintiffs asserted the insurance company, via its agent, misrepresented to plaintiffs that they had “full coverage,” knew the dwelling did not contain a telephone, and accepted premium payments. Id. In rejecting these arguments, this Court wrote:
There is conflicting testimony as to whether plaintiffs knew of the telephone requirement. This conflict, however, does not raise a material issue of fact. It is clearly not the duty of an insurer or its agent to inquire and inform an insured as to all parts of his policy:
We cannot approve the position that, in the absence of a request, it was the agent’s legal duty to explain the meaning and effect of all the provisions in the policy, or that his failure to inquire ... was a waiver of the requirement. Hardin v. Ins. Co., 189 N.C. 423, 427, 127 S.E.2d 353, 355 (1925).
Greenway, 35 N.C. App. at 314, 241 S.E.2d at 343.
Summerlin assumed the duty to procure an insurance policy with the same or similar coverage as the plaintiffs’ existing policy. Summerlin fulfilled that duty. The existing policy did not contain coverage for flood losses. Plaintiffs could not have reasonably expected Summerlin to procure flood insurance based on Mrs. Baggett’s request to provide insurance in accordance with the existing policy. Moreover, both Summerlin and plaintiffs’ previous insurance agent, McGlaughon, testified that they informed plaintiffs that neither policy contained coverage for flood losses. When the facts are viewed in a light most favorable to plaintiffs, there is no genuine issue of material fact whether Summerlin assumed responsibility to procure flood insurance.
*53II. Insured’s Duty
There appears to be issues of fact: (1) whether Summerlin advised plaintiffs that they had no flood insurance, and (2) whether plaintiffs understood that “all risk” coverage excluded coverage against flooding. Resolving those factual disputes in plaintiffs’ favor does not help plaintiffs’ case.
The majority’s opinion points out that policyholders in North Carolina are under a duty to read their insurance policies.
‘[A]n insurance agent is not required to affirmatively warn his customers of provisions contained in insurance policies.’ 16C J. Appleman, Insurance Law and Practice § 9168 at 176 (1981). (citation omitted). Persons entering contracts of insurance, like other contracts, have a duty to read them and ordinarily are charged with knowledge of their contents. Setzer v. Ins. Co., 257 N.C. 396, 401-02, 126 S.E.2d 135, 138-39 (1962).
Nationwide Mut. Ins. Co. v. Edwards, 67 N.C. App. 1, 7-8, 312 S.E.2d 656, 661 (1984). “[T]he receipt and retention of the policy by the insured has been held to preclude the right to a reformation.” 43 Am. Jur. 2d Insurance § 371 (1982). Where a party has reasonable opportunity to read the instrument in question, and the language of the instrument is clear, unambiguous and easily understood, failure to read the instrument bars that party from asserting its belief that the policy contained provisions which it does not. Setzer, supra.
The North Carolina Court has frequently said that where no trick or device had prevented a person from reading the paper which he has signed or has accepted as the contract prepared by the other party, his failure to read when he had the opportunity to do so will bar his right to reformation.
Setzer, 257 N.C. at 401, 126 S.E.2d at 139; see also, Welch v. Ins. Co., 196 N.C. 546, 146 S.E. 216 (1928) (Insured was not entitled to relief for insurance agent’s alleged misrepresentation as to policy coverage where insured had a copy of the policy for four months prior to the loss); Gordon v. Fidelity and Casualty Company of N.Y., 238 S.C. 438, 120 S.E.2d 509 (1961) (Insured was not entitled to relief for fraud and deceit on the basis that the representations of the insurance agent were at variance with the actual policy terms, where insured had a copy of his policy for more than eight months, with full opportunity to learn the contents and coverage provided therein).
*54In this case, plaintiffs do not contend that the provisions were ambiguous or difficult to understand. However, plaintiffs contend that they were misled into believing they had flood coverage, and are excused from their failure to read the policy.
The majority’s opinion cites R-Anell Homes, Inc. v. Alexander & Alexander, Inc., 62 N.C. App. 653, 303 S.E.2d 573 (1983), to support the existence of a genuine issue of material fact of whether Summerlin negligently misled plaintiffs to believe they had flood insurance. In R-Anell Homes, plaintiff purchased a blanket building insurance policy and a building contents policy with defendant-insurance company. During renovations, plaintiff removed the Southern Bell telephone system from his building and installed his own telephone system. Plaintiff called defendant-insurance company and told him about the new telephone system and asked “about getting insurance coverage.” Id. at 655, 303 S.E.2d at 575. According to plaintiffs evidence, an employee of the insurance company stated that the system was “part of the building and was covered under the blanket policy on the building” and that “defendant need not extend the coverage on the building contents policy.” Id. The employee affirmatively represented that plaintiff had coverage for the new telephone system. This was incorrect advice, and directly contrary to the language of the insurance contract. Under these facts, this Court held that “a jury could find that plaintiffs reliance on defendant’s presumably superior knowledge of the insurance business was reasonable, and defendant was not contributorily negligent.” Id. at 659, 393 S.E.2d at 577.
In Elam v. Smithdeal Realty Co., 182 N.C. 641, 109 S.E. 632 (1921), plaintiff purchased an automobile insurance policy through defendant insurance agency. The insurance agent affirmatively represented that plaintiff’s policy contained automobile collision coverage. This advice was contrary to the express language of the policy. Plaintiff suffered an accident, and the insurance company denied coverage. The evidence showed that at the time of the accident the policy was one week old, and had not been delivered directly to the plaintiff. The Court held that these facts created a jury question as to whether defendant negligently misled plaintiff into believing coverage existed, and whether plaintiff had sufficient opportunity to discover the exclusions of his policy, excusing his failure to read the policy
In the present case, plaintiffs contend that the label “all risk” on two insurance binders, and Summerlin’s assertion that they had *55“all-risk” coverage obligated Summerlin to procure flood insurance. The label “all risk” only appears on the 1993 and 1995 insurance binders. The binders expressly state that coverage under the binder is temporary, and that the binders are superceded upon issuance of the final insurance policy. The words “all risk” do not appear on any insurance policy. The flood exclusion is clearly set forth in the insurance policy.
Unlike the insurance agents in R-Anell Homes and Elam, Summerlin never affirmatively represented to plaintiffs that they had flood insurance. Mrs. Baggett testified that there was no discussion with Summerlin about flood insurance until shortly before Hurricane Bertha hit the North Carolina coast. Furthermore, plaintiffs had the policy in their possession, several years prior to the date of the loss. Summerlin did not have a duty to point out the exclusions in the written insurance policy where those exclusions did not negate a particular coverage specifically requested by plaintiffs. I would hold it unnecessary to look beyond the plain language of the insurance contract, which expressly excludes coverage for flood losses.
I would affirm the decision of the learned trial court. For these reasons, I respectfully dissent.