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Jones-Smith v. Safeway Insurance – Material Misrepresentation Could Void Auto Insurance

In 49 states in this country – including this one – plus the District of Columbia, it’s illegal to drive without insurance. Even so, about 12 percent of all drivers in the U.S. are not insured. crashedbumper2.jp

Florida has one of the worst rates of uninsured drivers nationally. Here, 1 in 4 drivers has no insurance.

That has meant that uninsured motorist claims, which are filed when someone is injured by a driver who lacks insurance, totaled $2.6 billion in 2012. That was an increase of 75 percent from 10 years earlier.

Part of the reason these claims are so high is that even drivers who have insurance may not actually have coverage – or enough coverage – for the incident that resulted in injury. Sometimes it comes down to the facts of the crash. Other times, it comes down to the identity of the driver and what type of plan they purchased and the details of that policy coverage.

In the case of Jones-Smith v. Safety Insurance Company, the Mississippi Supreme Court determined an auto insurance policy central to a pending car accident lawsuit was void because the insured, driver’s mother, had made a material misrepresentation when she purchased the policy.

According to court records, a 16-year-old boy was driving a large pickup truck owned by his mother when he crashed into a smaller passenger vehicle. The occupant of that vehicle (who did not own the car she was driving) was seriously injured.

After the crash, the teen’s mother informed the insurance company of the crash and sought defense and indemnification. However, the insurance company filed a motion for declaratory judgment, asserting the mother failed to identify the teen in her application for auto insurance.

When she first filled out the application, she was asked to identify all regular, frequent drivers of covered vehicles – AND the names of all residents in her household who were aged 14 or older. She did not list the name of her 15-year-old son in her application, despite the fact he did live with her.

Had she disclosed this fact, her auto insurance would have been much higher than the premium she was issued. It’s not clear whether she knew that fact, but the insurer insisted this was a material misrepresentation that rendered the policy void.

In response to the motion for declaratory judgment by the insurer, injured plaintiff and her mother (who owned the vehicle) filed an answer and counterclaim, asserting teen driver was at fault and he was covered by his mother’s auto insurance carrier.

Trial court, however, granted summary judgment to the insurance company, finding insured’s failure to disclose her son on the application was a material misrepresentation.

This decision was later affirmed by the Mississippi Supreme Court. One dissenting justice asserted it was the vehicle – not the teen – that had insurance coverage that should therefore be extended to the victim. The majority, however, disagreed.

It was noted that while voiding the policy has negative repercussions on innocent people, the court could not treat insurance companies any differently than any other party who enters into a contract. In line with contract law, when one party gives false information or omits the truth, that’s a form of fraud that voids the policy.

That in essence makes the driver an uninsured driver, which means victim now must turn to her own insurance company to recover through the UM policy. Most auto insurance policies come standard with UM/UIM coverage, though it is not required if insured signs a waiver.

Given the high number of uninsured drivers, though, and also situations like this, it’s always wise to carry this additional layer of protection.

Call Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights. Now serving Orlando, West Palm Beach, Port St. Lucie and Fort Lauderdale.

Additional Resources:

Jones-Smith v. Safety Insurance Company, Sept. 3, 2015, Mississippi Supreme Court

More Blog Entries:

Three Sisters, Two Others Killed, Boy 6 Critically Injured in Horrific Florida Crash, Aug. 30, 2015, Orlando Car Accident Attorney Blog

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