Last week, my post, Carolina Coverage – Are All These Documents Really Necessary, highlighted the Chavis case, in which the North Carolina Supreme Court ruled the Plaintiffs were justified as a matter of law in refusing to sign an overly broad release for records. But when it comes to producing documents requested by an insurance company, it is important to understand courts focus on whether the request is reasonable.

Consider another property damage case from the same year, Moore v. North Carolina Farm Bureau Mutual.1 In this case, the Plaintiff owned a grocery store and was also a farmer. The grocery store was damaged by fire, but the office in the back of store survived. The office was smoke and water damaged and the records were in a metal file box in the office. The insurance company asked for an examination under oath and requested records. Moore cooperated by attending the examination but he failed to compile all the documents requested by the insurance company. At the examination, he explained it was farming season and made a statement about the records:

Because your company has refused to make any advancements to me, the only source of income I have for my family is the sale of my soybean crop and I simply cannot take any time away from harvesting that crop to attend to the bookkeeping necessary to have these documents in a presentable form. I have brought with me what documents I am able to furnish which did not require substantial time on my part to obtain. I advise each of you present at this hearing that all of my other bookkeeping, accounts and paper work are presently located in the office within my store which is located on Highway 70 East, approximately 2 to 3 miles from the location of this Courthouse. These documents are available for inspection by representatives of your company at the present time. I would be glad to leave the Courthouse and go with representatives of the North Carolina Farm Bureau to my place of business located on Highway 70 East and to permit the examination and/or copying of any documents which I have in my office at the present time.

Moore’s offer to allow the insurance company to inspect the records at his office fell short. The court determined the insurance company was entitled to a directed verdict in its favor because Mr. Moore failed to cooperate by not furnishing requested documents. Compliance was a condition precedent for payment under his policy.

The court wanted these items delivered to the insurance company promptly:

  • US Federal and North Carolina State Income Tax Returns for three prior years
  • Any financial statements that pertain to the business
  • Documents regarding your accounts
  • All deeds to all property owned by you
  • Banking records
  • Inventories concerning your business for the past three years and
  • Sales and receipts (for the business) for three years but he didn’t do it promptly and requested, instead, that the insurance company come to him.

The court distinguished Chavis by stating that in Chavis the issue was whether the scope and extent of the documents requested was reasonable. Here, Mr. Moore did not object to the scope of the request, he objected to the time and place of production. The record showed Mr. Moore could have complied with the request for production by bringing the file cabinet approximately 2-3 miles to the courthouse. Offering the documents at a later date was not acceptable to the court.

This claim was rejected, not because of the merits, but because the policyholder chose not to comply with a condition precedent to payment. It is a critical difference; one that can make the difference in a policyholder’s rights to benefits. If you feel your insurance company is making unreasonable requests for documents, contact our office for assistance.

1 Moore v. N. Carolina Farm Bureau Mut. Ins. Co., 82 N.C. App. 616, 620-21, 347 S.E.2d 489, 491 (N.C. Ct. App. 1986).