Greenway v. North Carolina Farm Bureau Mut. Ins. Co.
| Citation | 241 S.E.2d 339,35 N.C.App. 308 |
| Decision Date | 21 February 1978 |
| Docket Number | No. 7717SC135,7717SC135 |
| Court | North Carolina Court of Appeals |
| Parties | James E. GREENWAY and wife, Alice F. Greenway v. NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY and William A. Pleasant. |
Ramsey, Hubbard & Galloway by Mark Galloway, Roxboro, for plaintiffs-appellants.
Henson & Donahue by Perry C. Henson and Ronald G. Baker, Greensboro, for defendant-appellee, North Carolina Farm Bureau Mut. Ins. Co.
Jordan, Wright, Nichols, Caffrey & Hill by R. Thompson Wright, Greensboro, for defendant-appellee, William A. Pleasant.
The first issue raised by this appeal is whether "Unprotected Dwelling Endorsement A," providing for reduction of coverage by 25% If there were not a telephone upon the premises, was unenforceable. Plaintiffs first attack endorsement "A" on the ground that it is restrictive of the coverage provided in the standard fire insurance policy (G.S. 58-176), and therefore violates G.S. 58-177(3), which provides in pertinent part:
(Emphasis added.)
There is no statutory definition of "restrictive." The word, construed in light of the statutory object and not in a narrow or technical sense, was intended to cover any clause or provision included in or appended to the standard fire policy whereby an essential provision of the standard fire policy, materially influencing the rights of the insured, is limited or modified. Glover v. Insurance Co., 228 N.C. 195, 45 S.E.2d 45 (1947), held a provision in a fire insurance policy restrictive of the standard policy provisions. The standard policy insured for all direct loss by fire. The provision excluded coverage for loss by a fire originating on a neighbor's property whenever the insured's property was within a specified distance of the neighbor's combustible property. The provision thus restricted coverage to compensation for certain kinds of fire while the standard policy provided coverage for loss by all fires. The premium assessment was most certainly based on the general coverage of the standard policy provisions. The Glover court made the distinction between the limiting provision, which was truly restrictive in character, and one that is "descriptive of the sole risk classification" underwritten by the insurer. 228 N.C. at 198, 45 S.E.2d at 47. It is clear that an insurer may insure only such properties as are situated outside the limits set out in a limiting provision, which provision is descriptive, not restrictive, of the standard coverage. What an insurer may not do is promise general coverage, receive appropriate premium payment and then restrict coverage by a restrictively limiting provision.
It is clear, from an examination of the face of the standard policy and of the "Unprotected Dwelling Endorsement A" at issue in the case sub judice, that the endorsement is descriptive of the coverage agreed to and paid for under the standard policy provisions rather than restrictive. Both the application and the standard policy classify the dwelling to be insured as " 10A," unprotected and rural, and both indicate the charge of a discounted premium. The standard policy clearly indicates the "Unprotected Dwelling Endorsement" Code Number, "257-4(11-70)," on its face. The classification 10A determined the house to be "unprotected," an insured-risk rural dwelling far from a fire department. The acceptance of the endorsement's conditions for 100% Coverage gave plaintiffs the discounted premium. The plaintiffs are clearly wrong in their collateral contention that the endorsement was invalid because there was no increased risk involved. The insurer's risks in insuring a dwelling in a rural area far removed from a fire station are obviously greater than of insuring a dwelling close to a station; the risks of insuring a remote dwelling without telephone communication are obviously greater than of insuring such a dwelling with adequate, immediate communication. Therefore, we hold that the endorsement provision was reasonable because tied to increased risk, and in nowise restrictive of anything in the standard policy, which nowhere promises 100% Compensation. The provision is descriptive of the coverage contemplated in and charged for by the standard policy.
Plaintiffs' argument that the endorsement provision was waived because defendant-insurer,...
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