The Ohio Supreme Court issued a significant opinion yesterday holding an auto insurance policy void ab initio (void from the beginning) for a misrepresentation on an insurance application in Nationwide Mut. Fire Ins. Co. v. Pusser, 2020-Ohio-2778. The insured represented on her application that she was the only member of her household. In fact, the insured’s sister lived with the insured and the sister was driving the insured’s car when she struck and killed a pedestrian.
The Supreme Court held that the insurance policy sufficiently warned the insured that a breach of a warranty made by the insured could void the policy because 1. the insurance policy plainly incorporated the application into the policy, 2. the policy provided that answers to the application’s questions are warranties, and 3. the policy stated that information concerning other household operators is a warranty.
The personal injury complaint arising from this accident, Boak v. Pusser, Mahoning County Case No. 16CV00887, alleged that the sister had been drinking, did not stop or report the accident, and claimed the insured negligently entrusted the vehicle to her sister. The Supreme Court’s ruling is significant because it not only voided coverage for the sister, but also eliminated coverage for the insured on the negligent entrustment claim. Moreover, this decision will impact all individuals and businesses who make misrepresentations when applying for any kind of insurance if the policy contains provisions that answers on the application are warranties and the policy can be declared void if a misrepresentation was made in the application. A copy of the Supreme Court’s opinion can be found here.