No Retroactive Coverage for Accident Through Truck Driver's Own Fraud

 

In North Carolina Farm Bureau Mut. Ins. Co. v. Simpson, 2009 WL 1986822 (N.C.App), defendant Simpson was the owner and operator of a tractor-trailer. In early 2004, Simpson had liability insurance on the vehicle through plaintiff, North Carolina Farm Bureau Mutual Insurance Company. The policy expired on April 30, 2004. Simpson attempted to renew the policy for a period of six months, but Farm Bureau notified Simpson by a letter dated May 25, 2004, that his check for premium had bounced. Soon thereafter, Farm Bureau notified Simpson of the policy's expiration, effective April 30, 2004.

 

On October 15, 2004, Simpson negligently struck a vehicle owned by the North Carolina Department of Transportation (DOT). At the time of the accident, there was no insurance on Simpson's vehicle. That same afternoon, Simpson went to a local Farm Bureau office and tendered the past due premium on the policy. Simpson testified in his deposition that he consciously decided not to tell the insurance agent that he had been in an accident because he knew it would increase his rates.

 

Two weeks after the accident, Farm Bureau issued a policy covering Simpson's vehicle, effective 12:01 a .m. on October 15, 2004. Farm Bureau was not notified of the accident until it received a letter from counsel for Harrington, the operator of the DOT vehicle, dated November 5, 2004. Simpson never notified Farm Bureau about the accident and did not respond to their inquiries after Farm Bureau was notified by DOT.

 

On November 3, 2006, Farm Bureau filed an action seeking a declaratory judgment that it had no coverage applicable to the claims arising out of the October 15, 2004, accident. Farm Bureau and Harrington moved for summary judgment. On April 15, 2008, the trial court entered an order declaring that Farm Bureau provided liability coverage in favor of Harrington for the accident.

 

Farm Bureau appealed, contending that the trial court erred in granting summary judgment in favor of Harrington.

According to the court, because at the time of the accident there was no policy of insurance providing liability insurance on Simpson's vehicle, the question presented was whether Simpson could retroactively procure such coverage, effective back to the time of the accident, by his own admittedly fraudulent conduct.

 

The North Carolina appeals court determined that Simpson could not retroactively procure coverage for the accident through his own fraud. Due to Simpson's failure to pay his premium, there was no policy of insurance in full force and effect at the time of the accident. Further, Simpson fraudulently obtained the policy later that afternoon by deliberately concealing the fact that he had been in an accident earlier that day.

 

Thus, the appeals court reversed and remanded, holding that the trial court erred in finding that there was coverage under plaintiff's policy for the accident. Bottom of Form