The case of Safeway Insurance Co. v. Dukes et al is a good example of why uninsured motorist coverage is so important for drivers everywhere. The case demonstrates how even when a driver and/or vehicle seem to have coverage, a loophole in the policy could render it void, leaving the injured parties scrambling for compensation of medical bills, lost wages and pain and suffering.
When that happens, uninsured/ underinsured motorist coverage, which is paid for by the victim in addition to minimum insurance requirements, intercedes and makes up for the difference, up to policy limits. Consider that in Florida, 1 in 4 drivers is not insured, and many of those who do have insurance only carry the bare minimum. Or, you could run into a situation like this.
According to Mississippi Supreme Court records, it all came down to the auto insurance policy of the at-fault driver’s vehicle’s owner. The at-fault driver was the boyfriend of the insured. Insured first applied for coverage in 2012, and in that application, listed only herself as a “regular, frequent driver” of the car, while making no mention of the boyfriend. The policy was issued.
Auto insurance can follow both the vehicle or the driver, depending on the policy and the circumstances of the situation and the details of the policy.
The car accident happened months after the policy was issued, while insured’s boyfriend was driving the vehicle with her permission. He struck another vehicle and seriously injured a four-year-old boy. Insured girlfriend was in the vehicle at the time of the accident.
The child’s mother, on his behalf, filed a lawsuit against the at-fault driver. This prompted the insured to file a claim with her insurance company. On that claim, she indicated her boyfriend was a “regular” driver of the car. The insurer defended the boyfriend in court, but only under a reservation of rights (meaning it reserved the right to recoup those cost and not be responsible for damages if it was later determined by a court that it wasn’t liable).
Insurer then filed a third-party complaint for declaratory judgment against its insured, the driver and the child’s mother. Neither the at-fault driver nor the insured responded to the complaint, and so the trial court entered a default judgment against them. Insurer then filed a motion for summary judgment. In that motion, insurer asserted its insured made a false representation on her insurance application because she didn’t list her boyfriend as a regular driver of the car. That rendered the policy void due to material misrepresentation and false warranty. The company indicated that had the boyfriend been listed on the policy, it would have issued a premium at more than 200 percent higher, based on his driving record. The company also pointed out the couple’s refusal to cooperate with the investigation and defense.
Trial court denied motion for summary judgment. Although the court did find insured made a false representation and the pair had failed to cooperate, the insurer was still liable to pay $25,000 in liability damages, as even an accident caused by an “excluded” driver would still warrant $25,000 in coverage.
The state supreme court reversed, finding that the material misrepresentation voided the policy, and that meant insurer couldn’t be compelled to pay anything.
If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.
Safeway Insurance Co. v. Dukes et al , Dec. 10, 2015, Mississippi Supreme Court
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