eNotes: Liability – January 2023 – North Carolina

SIGNIFICANT CASE SUMMARIES

North Carolina Case Summary

Ha v. Nationwide Gen. Ins. Co.
North Carolina Court of Appeals
No. 2022-NCCOA-783

Decided: December 6, 2022

An insurer may cancel a homeowners’ policy by mailing a notice of cancellation.

Background

Plaintiff contacted Nationwide on April 1, 2015 to inquire about purchasing a homeowners’ policy for his residence. Nationwide issued a policy the same day. An inspector from Nationwide’s underwriting department inspected the property on April 14, 2015 and prepared a report which identified numerous hazards. Nationwide elected to cancel the policy. Nationwide mailed a letter to the Plaintiff on May 22, 2015, identifying hazards and informing the Plaintiff that if the hazards were not remedied, the policy would be cancelled at 12:01 a.m. on June 6, 2015. Plaintiff never received the letter. Thereafter, on July 24, 2015, a fire destroyed the home. Plaintiff presented a claim, which Nationwide denied, citing the cancellation of the policy.

Plaintiff filed suit against Nationwide for breach of contract, seeking a declaratory judgment that the policy was not properly cancelled. The Trial Court found that Nationwide properly cancelled the policy and dismissed Plaintiff’s lawsuit. The Court of Appeals reversed, holding that the word “furnishing” in N.C. Gen. Stat. § 58-41-15(c) required actual delivery and/or receipt by the insured. The Supreme Court of North Carolina vacated the judgment of the Court of Appeals and remanded for determination of whether other statutes governed cancellation. On remand, the Trial Court held that N.C. Gen. Stat. § 58-41-15 did not apply; rather, the Court held that N.C. Gen. Stat. § 58-44-16 applied to a homeowners policy and that the mailed cancellation was proper. Plaintiff appealed.

Holding

Article 41 of Chapter 58 of the General Statutes of North Carolina is limited in its applicability. N.C. Gen. Stat. § 58-41-10 provides that the provisions of Article 41 do not apply to certain policies, including policies written for residential risks under Article 36. N.C. Gen. Stat. § 58-41-15 does not apply to cancellation of the policy because the policy in question was written on a HO3 form which was authorized by the Rate Bureau Commissioner, pursuant to Article 36.

N.C. Gen. Stat. § 58-44-16(f)(10) provides that policies “may be cancelled at any time by th[e] insurer by giving to the insured a five days’ written notice of cancellation . . . .” The word “giving” is not defined, so it is to be given its plain meaning so long as it is reasonable to do so. The plain meaning of “giving” includes the act of mailing notice of cancellation to the insured and does not require proof that the notice be actually received by the insured. The General Assembly included provisions for other types of insurance policies where notices of cancellation were to be sent by certified mail and/or where actual receipt by the insured was required. However, they included no such provision in Article 44. Thus, the General Assembly intended mailing of a notice of cancellation to be sufficient for purposes of Article 44.

Questions about this case can be directed to Patrick O’Grady at (804) 566-3570 or pogrady@tthlaw.com.