Lawyers who deal with interpretation of automobile insurance policies know that a fertile source of coverage litigation is the extent to which a family member can be considered as a member of the “household” of a named insured on a policy. This most often arises in the context of underinsured motorist coverage, where attorneys for an injured plaintiff try like the dickens to find additional potential coverage when the liability limits are not going to be enough to pay the whole claim. When children or adolescents are involved, it can often be true that they can be members of more than one household at the same time for coverage purposes.
In the recent Court of Appeals case of North Carolina Farm Bureau Mutual v. Paschal, the issue was whether a granddaughter of the Farm Bureau insured could be considered a “household” member of the grandfather even though they really did not live in the same “house.” Unlike a 1950s sitcom, family units in the real world of the 21st Century often have not only shared custody arrangements between ex-spouses, which often lead to multiple household status for injured kids, but also kids and teens that are shifting caregivers with varying degrees of responsibility and contact with them. In this case, the granddaughter lived in one house on a family farm while the grandfather generally lived in another nearby house, but the whole shebang was considered by some to be a “family farm.” Even though the grandfather did not have legal custody of the girl, he often took care of her, accompanied her to appointments, and provided for her financially. The Court of Appeals reversed the trial court’s grant of summary judgment to Farm Bureau, quoting from previous decisions which held 1) that family members need not reside under the same roof to be members of the same household, and 2) that since the term “resident” of a household is an inherently slippery term, a court should not “sprinkle sand on the ice” by construing that term in favor of the insurer.
Practice point from this decision for lawyers in similar coverage cases – look not only for facts about where the prospective insured sleeps or stays, but also the extent to which that person has physical, emotional, and financial ties to the named insured of the subject policy. This is a highly fact-specific inquiry, so dig up as many facts as you can.
Submitted by David W. Hood, Patrick Harper & Dixon, LLP
