A homeowner in North Carolina has successfully challenged an insurance agency’s attempt to dismiss a lawsuit after his hurricane-damaged property claim was denied due to omissions in the application.
The state Supreme Court ruled last month that Hatcher Insurance agency—owned by J. Kim Hatcher and based in Beulaville and Kenansville—can’t have the case thrown out under century-old precedent. This upholds part of a 2023 appellate court decision that overturned a 2021 trial court dismissal.
Supreme Court Justice Anita Earls summarized the issue: whether a person can be considered contributorily negligent for signing a blank application and trusting the agent to complete it properly. The court held that a jury, not a judge, must determine that, since it depends on the facts of the case.
Hatcher argued that homeowner Daniel Jones was partially at fault because he signed without reviewing the application. But the Court emphasized that whether Jones was justified in relying on his agent—or should have suspected a mistake—depends on their interactions before and after issuance.
The dispute began in 2016, when Jones sought an HO insurance quote for his Pender County home. The unnamed agency producer arranged a policy through Nationwide. The next year, Jones switched back to Farm Bureau, but the agency offered him a GeoVera policy with similar coverage at a lower premium. The agent instructed Jones to sign the blank application and submit the first payment, promising to complete the rest.
After inspecting Jones’s property and taking photos, the agency renewed the GeoVera policy in 2017. The court didn’t detail why some property details were omitted.
In September 2018, Hurricane Florence damaged the house—ripping off shingles and harming interiors and possessions. Initially, GeoVera agreed to pay, but later denied the claim, saying the application failed to disclose a large pond in front of the home and the property’s nearly eight-acre size, including farmland—material omissions according to the insurer.
Jones then sued Hatcher, a surplus lines broker, and GeoVera, alleging negligence and gross negligence, and seeking punitive damages. The trial judge dismissed the case, agreeing with Hatcher’s argument that Jones’s failure to read the application amounts to contributory negligence.
In 2023, the Court of Appeals reversed that dismissal, and both sides appealed to the Supreme Court. The high court affirmed the reversal, ruling that to claim contributory negligence, a defendant must show the plaintiff could have prevented the harm through reasonable care. Although individuals must generally read documents before signing, Jones’s claim was based on negligence—not contract law—and he had been assured by his agent that everything was being handled properly, just as the agency had done previously. Those assurances and prior conduct could lead a jury to find he was justified in trusting his agent and not negligent.
The court stated that homeowners reasonably expect agents—who earn commissions—to handle applications diligently. Forcing clients always to review every detail undermines the point of using an agent.
Because it’s unclear whether Jones contributed to his own loss, the matter must be settled by a jury.
The Supreme Court also disagreed with the Court of Appeals that Jones couldn’t seek punitive damages due to not naming individuals; it found the agent who signed the application had authority to bind the agency. The court further explained that since Jones adequately alleged misconduct to support punitive damages, his gross negligence claim also stays, and the contributory negligence defense fails.
Justice Trey Allen dissented on some points. With the Supreme Court’s ruling, the case is now headed back to the trial court for further proceedings or settlement discussions.