A North Carolina homeowner’s failure to read an insurance application does not exempt a local agency from a negligence lawsuit, the state’s Supreme Court ruled recently. The court said the matter must be evaluated by a jury, preventing the agency from escaping liability at this stage.

The dispute involves the J. Kim Hatcher Insurance Agency, which was sued after a policyholder was denied coverage following Hurricane Florence. The case, which dates back nearly ten years, remains active and could continue for several more.

At the center of the legal issue is whether Daniel Jones, the homeowner, was partially at fault for signing a blank insurance application and relying on the agent to complete it properly. According to Justice Anita Earls, who wrote the opinion, state precedent going back a century does not allow for automatic dismissal of such a claim. The ruling partly affirms a 2023 decision from the North Carolina Court of Appeals, which had reversed a trial court’s 2021 dismissal of the suit.

“The core question is whether signing an incomplete insurance form and trusting the agent to fill it in correctly constitutes contributory negligence, regardless of circumstances,” wrote Justice Earls.

The court held that this question should be determined by a jury and not dismissed by a judge early in the proceedings. The Hatcher agency, which operates in Beulaville and Kenansville, argued that Jones contributed to the situation by not reviewing the application. But the justices found that defense isn’t absolute.

“Whether someone acted reasonably in trusting their agent instead of double-checking the application depends on the specific facts,” the ruling stated. “The nature of the interaction between the policyholder and the agent—before and after the policy was issued—must be considered to determine if it was reasonable for the insured to rely on the agent.”

The events began in 2016, when Jones allowed the Hatcher agency to quote him a homeowners policy for his property in Pender County, near North Carolina’s coast. The producer working with Jones was not named in the lawsuit, though Kyle Hatcher is listed as the agency’s owner.

Initially, the agency arranged a policy with Nationwide. A year later, Jones switched to North Carolina Farm Bureau, but was convinced to return through a GeoVera Specialty policy, which the agency said offered similar coverage at a lower premium. According to the complaint, Jones was instructed to sign a blank application, pay the first premium, and let the agency handle the rest.

The agency reportedly inspected the property and took photos. A year later, Jones renewed the GeoVera policy. The court documents don’t specify why the agent may have failed to include certain property features.

In September 2018, Hurricane Florence hit the region, causing major damage to Jones’ home, including torn-off roof shingles and interior destruction. The family had to relocate temporarily.

Although GeoVera initially indicated the damage would be covered, the insurer later denied the claim. The denial was based on the policy application not disclosing a large pond in front of the house or that the property spanned nearly eight acres and included farmland—details the carrier considered significant misrepresentations.

Jones responded by suing the Hatcher agency, GeoVera, and a surplus lines broker, citing negligence, gross negligence, and seeking punitive damages. A New Hanover County trial judge sided with the agency and dismissed the case, agreeing that Jones had been negligent by signing a blank form.

The Court of Appeals overturned that decision, and both parties appealed to the Supreme Court. The high court agreed with Jones, stating that proving contributory negligence requires evidence that the injured party failed to use reasonable care and that this failure directly led to the harm.

While the court acknowledged that people generally have a duty to read documents before signing, it clarified that Jones’ case was based on negligence, not a breach of contract. Given the homeowner’s past reliance on the agent and the agency’s assurances, it was not unreasonable for Jones to trust the agent to complete the form properly.

“Jones’ allegations of prior dealings and specific assurances from the agency are sufficient to argue that he was reasonably led to trust the agent, and thus may not be contributorily negligent,” the court stated.

Homeowners should be able to expect that an agent, who earns a commission for their service, will handle their responsibilities with care.

“Asking customers to always double-check their agent’s work—regardless of context—is inconsistent with common expectations in society,” the ruling added.

Since there’s no clear evidence that Jones was at fault for the denial, the matter must now be evaluated by a jury.

However, the Supreme Court did disagree with the Court of Appeals on one point. The appeals court had ruled that Jones couldn’t seek punitive damages because he hadn’t identified specific individuals in the agency. But the Supreme Court disagreed, noting that an agent had signed the application on behalf of the agency and had authority to represent the business.

Additionally, the court found that Jones had presented enough facts to support his claims of willful or reckless conduct, meaning his gross negligence claim could also proceed.

Justice Trey Allen wrote a partial dissent. The case will now return to the lower court for further proceedings or possible settlement discussions.