Precedent in insurance law has long held that if an insured makes a material misrepresentation when applying for auto insurance – or any kind of insurance, really – the company may void the policy on these grounds.
This was the issue in Jones-Smith v. Safeway Insurance Company, where a plaintiff struck and seriously injured by a teen driver operating his mother’s vehicle claimed damages against mother’s auto insurance policy.
Problem was, when mother had applied for that insurance coverage, the application required her to promise she had listed all names of regular frequent users of the household vehicles – as well as any other residents in the home who were over the age of 14. She signed a paper indicating she had done so. But she had not. The name of her 15-year-old son was not on that application, and if it had been, her insurance coverage would have been much higher.
So when plaintiff sought damages, the insurance company said the policy was void.
Now this may seem inherently unfair to the plaintiff. After all, she is the one struck by an allegedly reckless teen driver whose mother is accused of failing to properly list all potential drivers. But that does not mean she is totally without remedy. It is possible she may seek recompense through her own insurer’s Uninsured Motorist (UM) policy, which is standard in most auto insurance packages. Essentially, the recent ruling of the Mississippi Supreme Court in this case has rendered the teen to be an uninsured driver, as the policy is not valid. That therefore leaves plaintiff open to pursue this other option.
According to court records, the facts of this case date back to 2002. That’s when the mother first signed that application for auto insurance. At no time since she signed that application omitting her son’s name did she add him as a driver to her policy.
The following year, when he was 16, he was driving a large pickup truck owned and insured under his mother’s policy. In so doing, he collided with a car driven by plaintiff.
After the crash, the insurer sought a declaratory judgment indicating the policy was voidable because of the mother’s material misrepresentation. Plaintiff filed an answer and counterclaim, alleging the teen driver was at-fault and he was covered under his mother’s policy.
The judge granted summary judgment as a matter of law in favor of the insurer, based on that material misrepresentation by defendant’s mother on her insurance application.
Plaintiff appealed, but the ruling was upheld by the Mississippi Supreme Court.
The court did not that when the issue of voiding an insurance policy for these purposes was first addressed by that state court back in 1876, there was acknowledgement that judges had been reluctant to invalidate insurance policies when doing so would deny innocent beneficiaries the right to recover. However, the problem is that courts can’t treat insurance contracts any differently than other types of contracts. Further, the desire to avoid an “unpalatable result” is not considered a sound principle of contract law. So in turn, just like any other contract, it becomes invalid if either one of the parties made key misrepresentations during the application process.
One justice did dissent, on the grounds that it was the vehicle – not the driver – that was properly insured and from which plaintiff should be allowed to recover.
In either case, plaintiff should explore alternative methods of compensation if possible. An experienced injury lawyer will be able to help her achieve this goal.
If you have been injured in an accident, contact the Hollander Law Firm at (888) 751-7770 for a free and confidential consultation. There is no fee unless we win.
Jones-Smith v. Safeway Insurance Company, Sept. 3, 2015, Mississippi Supreme Court
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