James v. Integon | Underinsured Motorist Coverage | Material Misrepresentation

In James v. Integon, decided by the Court of Appeals on July 2, 2013, the court addressed issue of an insured's misrepresentation.

The plaintiff was injured in an auto accident and he sought UIM benefits, after the liability carrier paid its minimum limits ($30,000). The insurer took the position that the policyholder (the plaintiff's fiancee) failed to list the plaintiff on the policy, as a person who resided with the policyholder, and that thus the plaintiff did not have UIM coverage. The lower court ruled for the plaintiff, finding that the insurer did not prove that the insured committed fraud in the policy application (which would have required the insured to disclose all adults living with her).

On appeal, the court held that fraud was the wrong standard. "It is unnecessary to prove that the insured had an intent to deceive in order to prove material misrepresentation." The court relied heavily on older cases holding that the insured loses coverage for amounts in excess of the "minimum" required by statute, where the insured commits a misrepresentation in the policy application. (This line of authority might in fact be suspect. Subsequent cases clarified that where the UIM coverage is equal to the liability limits, then this UIM coverage is not truly "excess.") The insurer presented evidence that the plaintiff lived with the policyholder (his fiancee) at the time of the application. (There was also evidence that the policyholder added another driver to the policy, but the significance of this is not clear, as the court held that scienter was not required to defeat coverage.) The court remanded for a jury trial.

John Kirby has handled numerous cases involving uninsured and underinsured motorist coverage, and claims involving misrepresentation by the insured.


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