White Lies when Completing an Application for Insurance

The Hazards of a “White Lie”

At many different times in our busy lives we have been faced with completing an application for insurance (car, house, property) with its multitude of what appear to be ‘silly’ questions.  Questions like, “How far from your property is the nearest fire hydrant?  or, “Have you ever smoked?  or, Does anyone beside the applicant reside in the dwelling?  Normally we just breeze through them without much thought.  However, ‘silly’ as these questions may appear, the insurance company is asking them for a very valid reason – to accurately determine the premium cost for the policy being requested.  If you fail to accurately answer these questions or tell white lies, the insurance could legally cancel the policy, thus depriving you of the benefits your may have paid for.

In a recent case considered by the Ohio Supreme Court (Nationwide Mutual Fire Insurance Company v. Pusser, 2020-Ohio-2778), Barbara Pusser was driving a car owned and insured by her sister, Diane Lapaze, who was living with her in the Pusser home.  On the application for the car insurance Diane Lapaze indicated that she lived alone at the address of the Pusser house.  Unfortunately, while driving a vehicle insured in the name of Diane Lapaze, Barbara Pusser struct and killed a pedestrian.

It is a common insurance industry practice to incorporate the application for insurance right into the policy as part of its terms.  Because this was the case for Diane Lapaze’s policy, Nationwide filed suit asking the Court to rule that the policy was void because no one other than Diane Lapaze was listed on the application as a member of her household.  After lower courts denied their motion, Nationwide appealed to the Ohio Supreme Court.

After reviewing the case file, the Supreme Court ruled in Nationwide’s favor and declared the policy void, meaning Barbara Pusser had no insurance to cover her potential liability for fatally striking a pedestrian.

How does this apply to you?  Pay close attention and completely answer the questions on an application for insurance; don’t cut any corners by not accurately answering the questions in hope of getting a lower premium.  You just might find out at the worst possible time that you don’t have the coverage you thought you had paid for.

If you have any questions concerning your insurance policies, coverage or how to handle any potentially inaccurate or incomplete insurance applications, please contact Mike Sandner at msandner@pselaw.com.

AUTHOR: Mike Sandner
msandner@pselaw.com