Cleveland, Ohio (May 8, 2020) -This week,
inNationwide Mut. Fire Ins. Co. v. Pusser, 2020-Ohio-2778,
the Ohio Supreme Court held that an insured's misrepresentation
in an auto insurance application rendered the auto policy
voidab initio(i.e.from the beginning). The insured
inPusserstated on her application she was the only member of her
household, when in fact she lived with her sister. The sister drove
the insured's vehicle (a covered auto under the auto policy)
and struck and killed a pedestrian. The personal injury complaint
arising from this accident,Boak v. Pusser, Mahoning County
Case No. 16CV00887, alleged that the sister had been drinking, did
not stop or report the accident, and claimed the insured
negligently entrusted the vehicle to her sister.
In holding the auto policy was voidab initio, the Ohio Supreme Court provided three main reasons. First, the insurance policy incorporated the insured's application - which contained the inaccurate information - as part of the policy. Second, the policy defined "warranty" to include the representations made in the insurance application. Third, the policy also defined "warranty" to include representations regarding household operators.
Because the policy was voidab initio, the policy provided no coverage for the negligence claim against the insured's sister who operated the vehicle, and provided no coverage for the negligent entrustment claims against the insured.
This decision will impact all individuals and businesses who make misrepresentations when applying for any kind of insurance (not just auto insurance) if the policy contains provisions stating that answers on the application constitute "warranties," and that the policy can be declared void if a misrepresentation was made in such an application.
Originally published 9 May, 2020
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