{ "id": 135640, "name": "DANIEL M. HLASNICK and DARLENE HLASNICK v. FEDERATED MUTUAL INSURANCE COMPANY and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY", "name_abbreviation": "Hlasnick v. Federated Mutual Insurance", "decision_date": "2000-12-21", "docket_number": "No. 78PA00", "first_page": "240", "last_page": "246", "citations": [ { "type": "official", "cite": "353 N.C. 240" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "524 S.E.2d 386", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2000, "opinion_index": -1 }, { "cite": "136 N.C. App. 320", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11239477 ], "year": 2000, "opinion_index": -1, "case_paths": [ "/nc-app/136/0320-01" ] }, { "cite": "857 P.2d 922", "category": "reporters:state_regional", "reporter": "P.2d", "case_ids": [ 10369238 ], "year": 1993, "opinion_index": 0, "case_paths": [ "/p2d/857/0922-01" ] }, { "cite": "560 N.E.2d 549", "category": "reporters:state_regional", "reporter": "N.E.2d", "case_ids": [ 10952557 ], "year": 1990, "opinion_index": 0, "case_paths": [ "/ne2d/560/0549-01" ] }, { "cite": "618 N.E.2d 31", "category": "reporters:state_regional", "reporter": "N.E.2d", "case_ids": [ 10836633 ], "weight": 4, "year": 1993, "pin_cites": [ { "page": "32" }, { "page": "32-33" }, { "page": "33-36" } ], "opinion_index": 0, "case_paths": [ "/ne2d/618/0031-01" ] }, { "cite": "611 N.W.2d 283", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 11512711 ], "weight": 7, "year": 2000, "pin_cites": [ { "page": "283" }, { "page": "284" }, { "page": "285" }, { "page": "284" } ], "opinion_index": 0, "case_paths": [ "/nw2d/611/0283-01" ] }, { "cite": "400 S.E.2d 44", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1991, "pin_cites": [ { "page": "50" }, { "page": "50" } ], "opinion_index": 0 }, { "cite": "328 N.C. 139", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2542714 ], "weight": 2, "year": 1991, "pin_cites": [ { "page": "148" }, { "page": "148" } ], "opinion_index": 0, "case_paths": [ "/nc/328/0139-01" ] }, { "cite": "434 S.E.2d 212", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "pin_cites": [ { "page": "214" } ], "opinion_index": 0 }, { "cite": "334 N.C. 586", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2531602 ], "year": 1993, "pin_cites": [ { "page": "590" } ], "opinion_index": 0, "case_paths": [ "/nc/334/0586-01" ] }, { "cite": "209 S.E.2d 754", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "pin_cites": [ { "page": "756", "parenthetical": "quoting 7 Strong's North Carolina Index 2d Statutes \u00a7 5 (1968)" } ], "opinion_index": 0 }, { "cite": "286 N.C. 148", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563921 ], "year": 1974, "pin_cites": [ { "page": "152", "parenthetical": "quoting 7 Strong's North Carolina Index 2d Statutes \u00a7 5 (1968)" } ], "opinion_index": 0, "case_paths": [ "/nc/286/0148-01" ] }, { "cite": "339 S.E.2d 472", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "473" } ], "opinion_index": 0 }, { "cite": "79 N.C. App. 365", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520789 ], "year": 1986, "pin_cites": [ { "page": "367" } ], "opinion_index": 0, "case_paths": [ "/nc-app/79/0365-01" ] }, { "cite": "346 S.E.2d 268", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "270" } ], "opinion_index": 0 }, { "cite": "82 N.C. App. 448", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8359169 ], "year": 1986, "pin_cites": [ { "page": "450" } ], "opinion_index": 0, "case_paths": [ "/nc-app/82/0448-01" ] }, { "cite": "134 S.E.2d 654", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1964, "pin_cites": [ { "page": "658" } ], "opinion_index": 0 }, { "cite": "261 N.C. 285", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8572987 ], "year": 1964, "pin_cites": [ { "page": "289" } ], "opinion_index": 0, "case_paths": [ "/nc/261/0285-01" ] }, { "cite": "72 S.E. 313", "category": "reporters:state_regional", "reporter": "S.E.", "weight": 2, "year": 1911, "pin_cites": [ { "page": "316" } ], "opinion_index": 0 }, { "cite": "156 N.C. 239", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11270867 ], "year": 1911, "pin_cites": [ { "page": "244" } ], "opinion_index": 0, "case_paths": [ "/nc/156/0239-01" ] }, { "cite": "194 S.E.2d 834", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1973, "pin_cites": [ { "page": "838" }, { "page": "838" }, { "page": "838" } ], "opinion_index": 0 }, { "cite": "283 N.C. 87", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8557714 ], "weight": 3, "year": 1973, "pin_cites": [ { "page": "93" }, { "page": "93" }, { "page": "93" } ], "opinion_index": 0, "case_paths": [ "/nc/283/0087-01" ] }, { "cite": "338 S.E.2d 92", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "98" } ], "opinion_index": 0 }, { "cite": "315 N.C. 341", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4716667 ], "year": 1986, "pin_cites": [ { "page": "350" } ], "opinion_index": 0, "case_paths": [ "/nc/315/0341-01" ] }, { "cite": "524 S.E.2d 386", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2000, "pin_cites": [ { "page": "388" }, { "page": "390" } ], "opinion_index": 0 }, { "cite": "136 N.C. App. 320", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11239477 ], "year": 2000, "pin_cites": [ { "page": "322" } ], "opinion_index": 0, "case_paths": [ "/nc-app/136/0320-01" ] } ], "analysis": { "cardinality": 672, "char_count": 14215, "ocr_confidence": 0.768, "pagerank": { "raw": 2.919998788300584e-07, "percentile": 0.8465383503053653 }, "sha256": "5c76932941f925a28dfe9154789a64a362c012e9f20d0ee90aaef10f3d60bb7e", "simhash": "1:3d8b30f65617955a", "word_count": 2217 }, "last_updated": "2023-07-14T19:31:00.841375+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "DANIEL M. HLASNICK and DARLENE HLASNICK v. FEDERATED MUTUAL INSURANCE COMPANY and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY" ], "opinions": [ { "text": "MARTIN, Justice.\nOn 18 August 1996 Daniel Hlasnick and his wife, Darlene Hlasnick (collectively the Hlasnicks), were injured in an automobile accident in Granville County. Mr. Hlasnick was driving a 1994 Dodge pickup truck carrying Mrs. Hlasnick as a passenger. The accident occurred when a vehicle owned and operated by Norman Smith (Smith) rear-ended the pickup truck. The pickup truck carrying Mr. and Mrs. Hlasnick was owned by Mr. Hlasnick\u2019s employer, RPM Lincoln Mercury, Inc. (RPM). Mr. Hlasnick worked for RPM as a general manager and was allowed to use RPM vehicles for personal errands without permission. Mr. and Mrs. Hlasnick were on a personal errand at the time of the accident.\nSmith tendered the $25,000 limit of his liability insurance policy. Additionally, the Hlasnicks were covered by two personal auto policies issued by State Farm Mutual Automobile Insurance Company (State Farm). The State Farm policies provided $100,000 per person and $300,000 per accident of underinsured motorist (UIM) coverage. Federated Mutual Insurance Company (Federated) insured RPM as an additional insured on a commercial package or fleet policy issued to Glen Burnie Nissan, LLC (Glen Burnie). The policy contained an endorsement provision establishing two levels of UIM coverage: $500,000 to any RPM director, officer, partner, or owner, and his or her family member; and $50,000 to other persons insured.\nOn 25 July 1997 the Hlasnicks brought a declaratory judgment action to determine the amount of UIM coverage under the Federated policy. On 3 November 1998 the trial court granted Federated\u2019s motion for summary judgment. The trial court concluded the Hlasnicks were entitled to $50,000 in UIM coverage from Federated and $200,000 in UIM coverage under each of the two State Farm policies. The trial court further concluded State Farm\u2019s coverage was primary and Federated\u2019s coverage was excess.\nThe Court of Appeals affirmed the trial court\u2019s conclusion that the Hlasnicks were entitled to $50,000 in UIM coverage under the fleet policy. Hlasnick v. Federated Mut. Ins. Co., 136 N.C. App. 320, 322, 524 S.E.2d 386, 388 (2000). The Court of Appeals determined there was \u201cno reason either in the Act or in public policy to prevent an insured from obtaining underinsured motorist coverage in excess of the statutory minimum for employees it considered] particularly valuable.\u201d Id. at 326, 524 S.E.2d at 390. Additionally, the Court of Appeals reversed the trial court\u2019s determination that State Farm\u2019s coverage was primary.\nThis Court allowed discretionary review to consider (1) whether Federated\u2019s two-tiered UIM coverage is valid under the North Carolina Motor Vehicle Financial Responsibility Act; (2) whether Federated met the minimum requirements of the North Carolina Motor Vehicle Financial Responsibility Act in gaining Glen Burnie\u2019s selection of UIM coverage; and (3) whether Daniel Hlasnick was an RPM officer as defined within the Federated policy.\nThe Hlasnicks contend the Court of Appeals erroneously determined that Federated\u2019s UIM coverage endorsement provision was valid under the North Carolina Motor Vehicle Safety and Financial Responsibility Act. See N.C.G.S. \u00a7\u00a7 20-279.1 to .39 (1993) (the Financial Responsibility Act). More particularly, the Hlasnicks argue the policy violates the Financial Responsibility Act because, although the UIM provision provides the statutorily mandated \u201cfloor\u201d of UIM coverage to all persons insured, it impermissibly grants $500,000 in UIM coverage to RPM directors, officers, partners, and owners. We disagree and affirm the Court of Appeals on this issue.\nAt the outset we note that the parties to a contract of insurance generally \u201chave the right to limit or expand their liability by writing policies with narrow or broad coverage.\u201d 4 Eric Mills Holmes, Holmes\u2019Appleman on Insurance 2d \u00a7 22.1, at 352 (1998) [hereinafter Holmes]. Indeed, our state\u2019s legal landscape recognizes that, unless contrary to public policy or prohibited by statute, freedom of contract is a fundamental constitutional right. American Tours, Inc. v. Liberty Mut. Ins. Co., 315 N.C. 341, 350, 338 S.E.2d 92, 98 (1986); Nationwide Mut. Ins. Co. v. Aetna Life & Cas. Co., 283 N.C. 87, 93, 194 S.E.2d 834, 838 (1973); Stephens v. Hicks, 156 N.C. 239, 244, 72 S.E. 313, 316 (1911).\nWithin the context of automobile insurance, however, the Financial Responsibility Act prohibits the issuance of UIM coverage in limits \u201cless than the financial responsibility amounts for bodily injury liability as set forth in G.S. 20-279.5.\u201d N.C.G.S. \u00a7 20-279.21(b)(4) (1993) (amended 1997). Section 20-279.5 sets forth the minimal limits for liability insurance coverage as follows:\nif the accident has resulted in bodily injury or death, to a limit, exclusive of interest and cost, of not less than twenty-five thousand dollars ($25,000) because of bodily injury to or death of one person in any one accident and, subject to said limit for one person, to a limit of not less than fifty thousand dollars ($50,000) because of bodily injury to or death of two or more persons in any one accident....\nN.C.G.S. \u00a7 20-279.5(c) (1993) (amended 1999).\nThus, automobile insurance policies subject to the Financial Responsibility Act must provide a minimal \u201cfloor\u201d of UIM coverage. The issue in the present case is therefore whether, once Glen Bumie provided the statutorily required floor of UIM coverage to all persons insured, it was entitled, upon payment of additional premiums, to provide additional UIM coverage for RPM directors, officers, partners, and owners.\nThe Financial Responsibility Act expressly permits the insured to select a higher limit of UIM coverage than the minimal floor of coverage required by the statute. See N.C.G.S. \u00a7 20-279.21 (b)(4). Indeed, the insured is permitted under the statute to categorically reject any UIM coverage. Id. Moreover, it is generally accepted that the insured should be able to negotiate for a \u201cpolicy provision which is more favorable than that prescribed by statute.\u201d 4 Holmes \u00a7 22.1, at 363. This Court has held that the purchase of insurance coverage in excess of the minimal requirements of the Financial Responsibility Act is voluntary and allowed under the Act. See Nationwide Mut. Ins. Co. v. Aetna Life & Cas. Co., 283 N.C. at 93, 194 S.E.2d at 838; Nationwide Mut. Ins. Co. v. Roberts, 261 N.C. 285, 289, 134 S.E.2d 654, 658 (1964). See also Nationwide Mut. Ins. Co. v. Massey, 82 N.C. App. 448, 450, 346 S.E.2d 268, 270 (1986); Government Employees Ins. Co. v. Herndon, 79 N.C. App. 365, 367, 339 S.E.2d 472, 473 (1986).\nThe Financial Responsibility Act nowhere mandates that UIM coverage be equivalent for all persons insured under an automobile insurance policy. Appellants suggest the absence of authorizing language means the legislature did not intend to allow multiple levels of UIM coverage in the same policy. We disagree. In the absence of statutory proscription or public policy violation, it is beyond question that parties are free to contract as they deem appropriate\u2014 enabling legislation is not required. Cf. Nationwide Mut. Ins. Co. v. Aetna Life & Cas. Co., 283 N.C. at 93, 194 S.E.2d at 838. As we have stated, \u201c \u2018[w]here the language of a statute is clear and unambiguous, there is no room for judicial construction and the courts must give it its plain and definite meaning, and are without power to interpolate, or superimpose, provisions and limitations not contained therein.\u2019 \u201d State v. Camp, 286 N.C. 148, 152, 209 S.E.2d 754, 756 (1974) (quoting 7 Strong\u2019s North Carolina Index 2d Statutes \u00a7 5 (1968)) (emphasis added). Put simply, it is within the province of the legislature, not this Court, to place any new or additional restrictions on the issuance of UIM coverage not mandated by the Financial Responsibility Act.\nAppellants nonetheless argue that section 20-279.21(b)(4)\u2019s definition of \u201cunderinsured highway vehicle\u201d prohibits the issuance of multi-tier UIM coverage. N.C.G.S. \u00a7 20-279.21(b)(4) provides:\nAn \u201cuninsured motor vehicle\u201d as described in subdivision (3) of this subsection, includes an \u201cunderinsured highway vehicle\u201d which means a highway vehicle with respect to the ownership, maintenance, or use of which, the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner\u2019s policy.\nN.C.G.S. \u00a7 20-279.21(b)(4) (emphasis added).\nAppellants assert this statutory language shows the legislature contemplated UIM coverage for \u201cvehicles\u201d rather than \u201cpersons.\u201d Although the statutory scheme for liability insurance is vehicle-oriented, UIM insurance is person-oriented under the Financial Responsibility Act. Harrington v. Stevens, 334 N.C. 586, 590, 434 S.E.2d 212, 214 (1993); Smith v. Nationwide Mut. Ins. Co., 328 N.C. 139, 148, 400 S.E.2d 44, 50 (1991). In Smith we stated that the liability provisions of N.C.G.S. \u00a7 20-279.21(b)(2) require a policy to insure people \u201c \u2018using any such motor vehicle or motor vehicles . . . against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles.\u2019 \u201d Smith, 328 N.C. at 148, 400 S.E.2d at 50 (quoting N.C.G.S. \u00a7 20-279.21(b)(2) (1993) (amended 1997)) (alterations in original). In contrast, \u201cthe [uninsured motorist] (and by incorporation, the UIM) coverage is offered \u2018for the protection of persons insured who are legally entitled to recover damages from owners or operators of uninsured motor vehicles.\u2019 \"Id. (quotingN.C.G.S. \u00a7 20-279.21(b)(3) (1993) (amended 1997)) (alteration in original).\nThe validity of multi-tier UIM coverage is an issue of first impression in North Carolina. Although there is a paucity of decisions generally addressing this question, our research has located appellate decisions affirming the principle of multi-tier coverage. See, e.g., Preferred Risk Mut. Ins. Co. v. Federated Mut. Ins. Co., 611 N.W.2d 283 (Iowa 2000); Allstate Ins. Co. v. United Farm Bur. Mut. Ins. Co., 618 N.E.2d 31 (Ind. Ct. App. 1993); Auto-Owners Ins. Co. v. United Farm Bur. Mut. Ins. Co., 560 N.E.2d 549 (Ind. Ct. App. 1990); Cullum v. Farmers Ins. Exch., 857 P.2d 922 (Utah 1993).\nIn Preferred Risk Mut. Ins. Co. v. Federated Mut. Ins. Co., Thomas and Holly Peterson were injured in an automobile accident with ah uninsured motorist. 611 N.W.2d at 283. The Petersons were operating an automobile insured by Thomas\u2019 corporate employer through Federated Mutual Insurance Company. Id. at 284. The policy provided uninsured motorist (UM) coverage of $100,000 to corporate directors, officers, partners or owners but no UM coverage to all other insureds. Id. The Iowa Supreme Court affirmed \u201cthe practice of providing different limits of uninsured motorist coverage for different categories of insureds.\u201d Id. at 285. The Court further held that, because the named insured did not decline coverage, UM coverage was required at the minimum level established by Iowa statute. Id. Consequently, the Court concluded the Petersons were entitled to UM coverage equal to the statutory minimum. Id. at 284.\nSimilarly, courts in other jurisdictions have upheld multi-tier liability coverage. For example, in Allstate Ins. Co. v. United Farm Bur. Mut. Ins. Co., Joseph Lubovich insured his car with United Farm Bureau Mutual Insurance Company. 618 N.E.2d at 32. Although the policy provided liability coverage to the insured, his employees, and members of his household, among others, of $100,000 per person and $300,000 per accident, the policy contained a clause that reduced the amount of liability coverage for permissive users to the minimum level mandated by Indiana\u2019s financial responsibility law, $25,000. Id. at 32-33. The Indiana Court of Appeals held, among other things, that the policy\u2019s multi-tier coverage did not violate public policy and was otherwise valid. Id. at 33-36.\nIn the present case, the Federated policy provided UIM coverage meeting the minimum statutory requirements. Glen Bumie, the purchaser of the fleet policy, paid additional premiums to provide higher limits of UIM coverage to certain persons insured in excess of the statutory floor. Because the provision of additional or supplemental UIM coverage in excess of the statutory floor is permissible under North Carolina law, we affirm the Court of Appeals\u2019 conclusion that Federated\u2019s two-tiered UIM coverage endorsement provision is valid and enforceable. As to the remaining issues briefed by the parties before this Court, we conclude discretionary review was improvidently allowed.\nAFFIRMED IN PART; DISCRETIONARY REVIEW IMPROVIDENTLY ALLOWED IN PART.", "type": "majority", "author": "MARTIN, Justice." } ], "attorneys": [ "Thompson, Smyth & Cioffi, L.L.P., by Theodore B. Smyth, for plaintiff-appellants.", "Teague, Campbell, Dennis & Gorham, L.L.P., by Mallory T. Underwood, for defendant-appellee Federated Mutual Insurance Company.", "DeBank & Honeycutt, by Douglas F. DeBank, for defendant-appellant State Farm Mutual Automobile Insurance Company." ], "corrections": "", "head_matter": "DANIEL M. HLASNICK and DARLENE HLASNICK v. FEDERATED MUTUAL INSURANCE COMPANY and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY\nNo. 78PA00\n(Filed 21 December 2000)\nInsurance\u2014 automobile \u2014 UIM\u2014fleet policy \u2014 two-tiered coverage\nThe Court of Appeals correctly concluded that a two-tiered UIM coverage endorsement was valid and enforceable where the purchaser of a fleet policy paid additional premiums to provide higher limits of UIM coverage to certain persons insured in excess of the statutory floor. The Financial Responsibility Act nowhere mandates that UIM coverage be equivalent for all persons insured under an automobile policy and the Act expressly permits the insured to select a higher limit of UIM coverage than the minimal floor required by the statute.\nOn discretionary review pursuant to N.C.G.S. \u00a7 7A-31 of a unanimous decision of the Court of Appeals, 136 N.C. App. 320, 524 S.E.2d 386 (2000), affirming in part and reversing and remanding in part a judgment entered 3 November 1998 by Ellis (B. Craig), J., in Superior Court, Wake County. Heard in the Supreme Court 12 September 2000.\nThompson, Smyth & Cioffi, L.L.P., by Theodore B. Smyth, for plaintiff-appellants.\nTeague, Campbell, Dennis & Gorham, L.L.P., by Mallory T. Underwood, for defendant-appellee Federated Mutual Insurance Company.\nDeBank & Honeycutt, by Douglas F. DeBank, for defendant-appellant State Farm Mutual Automobile Insurance Company." }, "file_name": "0240-01", "first_page_order": 288, "last_page_order": 294 }