【正文】 Page 1 73 UMKC L. Rev. 199, * Page 2 14 Del. J. Corp. L. 1, * 16 of 26 DOCUMENTS Copyright (c) 1985 North Carolina Law Review North Carolina Law Review AUGUST, 1985 63 . Rev. 1228 LENGTH: 8130 words SURVEY OF DEVELOPMENTS IN NORTH CAROLINA LAW, 1984: VII. INSURANCE LAW: South Carolina Insurance Co. v. Smith: Employee Exclusion Clauses in Automobile Liability Insurance Policies. NAME: BRENDA JEAN BOYKIN SUMMARY: ... North Carolina39。s Motor Vehicle Safety and Financial Responsibility Act was enacted to help ensure that innocent victims of automobile accidents will be able to recover pensation from the driver who caused their injuries. ... The insurance policy had a clause stating that it covered all sums which Insured shall bee legally obligated to pay as damages because of bodily injury, sickness or disease . . . sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile. ... If an employee is not covered by the state39。s workers39。 pensation system and the employer39。s automobile liability policy contains an employee exclusion clause, the employee potentially is without insurance protection if he is injured through the use of one of his employer39。s vehicles. In this situation, courts have been called upon to decide whether enforcement of the employee exclusion clause violates the spirit, if not also the letter, of the state39。s financial responsibility law. ... The cases upholding an employee exclusion clause as written leave the injured employee with no coverage under either workers39。 pensation or his employer39。s automobile liability policy. ... TEXT: [*1228] North Carolina39。s Motor Vehicle Safety and Financial Responsibility Act n1 was enacted to help ensure that innocent victims of automobile accidents will be able to recover pensation from the driver who caused their injuries. n2 Together with North Carolina39。s pulsory insurance law, n3 the Financial Responsibility Act requires every owner of a motor vehicle to purchase liability insurance covering the owner and all persons using the vehicle with permission. n4 The goal behind the Financial Responsibility Act, however, is not always consistent with a vehicle owner39。s desire to limit his premiums by contraction for exclusions from his automobile insurance coverage. One costsaving provision monly included in automobile liability policies excludes the insurer from liability for injuries to employees of the insured. An employee may be without coverage under either workers39。 pensation or his employer39。s liability policy if the employer39。s policy contains a clause excluding all employees rather than only employees who are covered under the state39。s workers39。 pensation act. n5 In South Carolina Insurance Co. v. Smith, n6 the North Carolina Court of Appeals held that an employee exclusion clause is valid only if workers39。 pensation is available to the employee. This Note examines the issues presented in Smith and concludes that the court reached a sound middle ground between the peting goals of pensating victims of highway negligence and maintaining reasonable insurance costs for drivers plying with North Carolina39。s mandatory automobile insurance laws. Marvin B. Smith was standing in the back of a truck belonging to his employer, who was at the wheel, n7 when a freezer in the truck fell on his foot. n8 He brought suit against his employer, William B. Gore, alleging the Gore39。s negligence had caused the freezer to fall. n9 South Carolina Insurance Company, which had issued Gore a liability policy covering the truck, brought a separate action seeking a declaratory judgment that it was not liable for Smith39。s injuries. n10 [*1229] The policy contained a clause providing: We do not provide Liability coverage for any person: . . . For bodily injury to an employee of that person during the course of employment. n11 Page 3 14 Del. J. Corp. L. 1, * The insurance pany argued that this exclusion relieved it from liability for Smith39。s injuries. Smith, defendant in the declaratory judgment proceeding, n12 maintained that the exclusion clause did not relieve the pany of liability because the clause conflicted with the Motor Vehicle Safety and Financial Responsibility Act. Smith relied on section (e) of the Act, which provides that a motor vehicle liability policy issued in pliance with the Act need not insure against loss from any liability for which benefits are in whole or in part either payable or required to be provided under any workmens39。 pensation law. n13 The trial court granted the insurance pany39。s motion for summary judgment, but the North Carolina Court of Appeals reversed, holding that the exclusion was valid only if workers39。 pensation benefits were available to Smith. n14 In an opinion by Chief Judge Vaughn, n15 the court agreed that the exclusion clause would be valid as written in the absence of a financial responsibility law. n16 The court, however, accepted Smith39。s argument that a policy issued under North Carolina39。s pulsory insurance laws must be construed in light of this law. n17 The court held that section (e) of the Financial Responsibility Act allows an exemption from coverage only insofar as there are benefits available to an employee pursuant to North Carolina39。s Workers39。 Compensation Act. n18 The Act thus did not invalidate the exclusion clause pletely, but rather made its validity contingent on a showing that the injured employee was covered by workers39。 pensation. n19 The court reasoned that this result was consistent with the rationale behind the Financial Responsibility Act of pensating victims of financially irresponsible drivers: Were we to accept plaintiff39。s argument, we would likewise [*1230] be making possible situations wherein an inj