Patricia W. Holden, a partner in the firm’s Mt. Laurel office, recently obtained summary judgment in a matter involving an alleged misrepresentation on an insurance application.

The matter arose out of a one vehicle accident.  The vehicle owner sought collision coverage for the damage to her vehicle.  When she applied for her policy, she represented that she was single.  She failed to disclose that she was married, and in fact, it was her husband who had been driving the vehicle when the accident occurred.

In its investigation, the insurance company discovered that the vehicle owner was married and failed to disclose her husband on the policy application and therefore, denied her claim.  She in turn filed suit claiming that the request for benefits was improperly denied.  At the close of discovery, Attorney Holden filed a motion for summary judgment arguing that not only had the plaintiff failed to disclose her husband on the policy application, she also made post loss misrepresentations during deposition when she claimed not to know that her husband had a suspended driver’s license when she applied for the policy.

Attorney Holden also presented evidence of materiality in the form of an affidavit from an insurance company representative who attested that the policy premium would have been significantly higher had the husband been disclosed on the application.  In response, the plaintiff argued that her husband lived in a different state and only visited New Jersey a few times a year.  She admitted he would drive her car when he would come to visit but would only stay a week or two.  Therefore, she argued he was not a resident of her household and did not need to be disclosed.

On reply, Attorney Holden argued that the plaintiff was aware that her husband had a suspended license when she applied for her policy because her previous insurance company had dropped her after her husband had an accident with another vehicle she owned and she likewise failed to disclose him on that policy.  The prior carrier sent her a letter indicating the reason for the cancellation/non-renewal of her policy was that her husband was a bad risk due to his license status.

The plaintiff’s policy with Attorney Holden’s insurance company client incepted on the day the previous policy terminated.  The trial judge found that based on the application language, the plaintiff’s husband needed to be disclosed on the policy and that the knowing failure to do so was material to the risk.  The judge included in his recitation of the facts that plaintiff had knowledge that her husband was a bad risk having acknowledged that she received the cancellation letter from her prior carrier.  The judge also briefly mentioned the plaintiff also made post loss misrepresentations when she was not forthcoming about her marital status or her knowledge of her husband’s license status though same were not dispositive in the judge’s ruling.

If you have questions or would like more information about material misrepresentations in the insurance application process and an insurance carrier’s rights with respect to same, please contact Patricia Holden at pholden@c-wlaw.com or (856) 761-3800.