If you are a parent with a teen driver, you are probably well aware that insurance rates for newly licensed teenagers can be exorbitant. The high rates charged to drivers in their teens and early twenties are a function of the fact that this age group has the highest accident fatality rate. The process of obtaining auto insurance for a family can be complicated for parents of novice drivers because the teen’s inclusion on the policy might drive up rates. In some cases, an insurance company might require that a teen be expressly excluded from coverage under the policy.
Auto insurance carriers may require applicants for policies to disclose all licensed drivers inside the home and all residents of the home. This disclosure is essential to properly evaluate the risk of loss during the underwriting process and to determine the policy terms. If a driver is not disclosed, this can lead to devastating consequences like denial of claims and even policy rescission. This issue can be complicated for parents because young adults often move in and out of a residence when temporarily living with roommates or attending college. A recent decision by the Florida 5th DCA provides a reminder of the importance of accuracy and forthrightness during the process of applying for auto insurance. Part I of this blog outlines the facts and trial court ruling while Part II discusses the appellate court’s analysis and lessons to be derived from the decision.
In Privilege Underwriters Reciprocal Exchange v. Clark, the insurer (PURE) sought a declaratory judgment that the excess policy issued did not cover the Clarks’ son and that the policy could be rescinded because of a material misrepresentation during the application process. The trial court ruled in favor of the policyholders despite the Clarks’ failure to disclose that their son was residing in the family home at the time of the application process and at the time the collision occurred. However, the appellate court reversed the trial judge based on misrepresentations regarding the drivers living in the Clarks’ home.
The Clarks used an agent associated with an "independent" insurance agency to investigate coverage with competing insurance carriers. The independent agent provided PURE with the Clarks’ existing policies which did not list their son as an insured. Under the excess insurance policy issued by PURE, Mr. Clark was the only listed insured and Mr. and Mrs. Clark were the only listed “operators.” The policy designated an “insured” to be any person indicated as an insured and/or family members. Family members were defined as “a person that lives in your household and is related to you by blood, marriage, registered domestic partnership under Florida law, or adoption.”
We invite you to continue reading Part II of this blog post to learn about the 5th DCA’s ruling and valuable takeaways for policyholders.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].