Judgment against insurer reversed; court questions misrepresentation in purchase of coverage
Tony Price Suffered injuries in a car accident. He was not at fault in causing the accident. He sued the Auto Club--the insurer of the vehicle he was driving--to collect PIP benefits for medical expenses and lost wages. The insurer argued that it did not owe any benefits because the car was owned by Price's mother, Price was not disclosed as a driver, and the car may have been garaged at Price's home and operated by him on a regular basis. The insurer argued that under these facts, it was entitled to void the coverage Price's mother bought, because she had not disclosed that Price would be the regular driver. The insurer argued that Price was complicit in his mother's misrepresentation and that it was motivated by Price's prior drunken-driving conviction.
The trial judge had granted summary disposition to Price, finding no evidence that he had actively misled the insurer or was not an innocent party in securing the insurance coverage. The Court of Appeals reversed. It held that even though there was "no dispute that Price did not personally make any misrepresentations," the circumstantial evidence was adequate to require a jury trial on the issue of Price's innocence in procuring coverage based on his mother's false representations.
Sadly, many people think that once they have procured coverage--regardless of the factual basis under which it is bought, they and their loved ones are protected. Many people don't realize that insurers usually won't investigate the underlying facts until the insurer faces a large claim. And then the coverage that was purchased becomes illusory--even thought it was paid for; good only for the Secretary of State and police.