Supreme Court of North Carolina Defines Requirements for Qualifying As An Insured As A “Resident”

The Supreme Court of North Carolina has ruled that, for an individual to qualify as an insured as a “resident” of the same “household” of the named insured, the individual must demonstrate that they actually resided in the same dwelling as did the named insured for a “meaningful period of time.” N.C. Farm Bureau Mut. Ins. Co. v. Martin, 851 S.E.2d 891 (N.C. 2020).

A woman and her daughter sued a third party for negligence in connection with an automobile accident. After the third party’s insurer paid coverage limits, the underlying plaintiffs sought additional coverage under two other policies, including a homeowners’ policy that named the woman’s mother-in-law and the mother-in-law’s late husband as insureds. The woman and her daughter claimed coverage as “family members” of the named insured because they were “residents” of the named insured’s “household.” The insurer filed a declaratory judgment action and the parties filed cross-motions for summary judgment. The Court of Appeal affirmed summary judgment in favor of the insurer.

On appeal, the Supreme Court noted that the policy listed insureds as any “family member,” which the policy in turn defined as “a person related to you by blood, marriage, or adoption who is a resident of your household.” Based on common dictionary definitions of “resident” and “household”—the policy itself did not define these terms—the Court reasoned that, even though determining residence of a household is a fact intensive inquiry, a critical prerequisite is that the party seeking coverage must show that they actually lived in the same dwelling as the insured for a “meaningful period of time.” The Court then noted the undisputed evidence that the mother and daughter resided on the same family farm as the named insured, but in a separate dwelling which was a three-to-five-minutes-walk from the named insured’s dwelling, that those dwellings had separate addresses and post office boxes, and that the parties lived and slept primarily in their separate dwellings with separate clothing, furniture, and personal belongings in the separate residences. The Court therefore concluded that the parties could not be “residents” of the same “household,” and affirmed summary judgment in favor of the insurer.