Drivers who fail to disclose material information when applying for auto insurance may save money on premiums in the short-term, but may lose out on coverage completely when their misrepresentations are discovered. ZAC’s Michael Schwartz recently obtained summary disposition in a lawsuit involving this very issue.
A woman applied for automobile insurance with our client, Everest National Insurance Company, in October 2015. On the application, she represented that she was the only person residing at her address. After the policy was issued, the woman’s brother was involved in a motor vehicle accident and submitted a claim for benefits under his sister’s coverage. After determining that he resided at her address at the time of application, Everest rescinded the policy and issued a premium refund check. Had the insured disclosed that her brother lived with her at the time of application, the six-month policy premium would have increased substantially.
The brother brought a first-party no-fault action against the insurance carrier, and Michael filed a motion for summary disposition, arguing that disclosure by the applicant of all members over the age of 14 was a necessary condition to extending insurance coverage. Because rescission of the policy ab initio was properly executed, the absence of binding coverage at the time of the accident precluded plaintiff from obtaining benefits from Everest under the policy.
The court issued a written opinion granting the motion, and all claims against Everest were dismissed.