Failing to Disclose Information in an Insurance Application Can Void Coverage
In the case of Nationwide Mut. Fire Ins. Co v. Pusser, the importance of being thorough and accurate in the application for insurance is made exceedingly clear. In this 2020 opinion, the Ohio Supreme Court was asked to consider the question, was the specific language in an insurance policy sufficient to warn the insured that misstatements as to warranties in her application for the policy rendered the policy void from the beginning (“void ab initio”).
This case involved an automobile-insurance policy issued by Nationwide Insurance to Diane Lapaze. Barbara Pusser is Lapaze’s sister and was living with Lapaze at the time of the insurance application. On August 12th, 2012, Pusser was driving the car owned by Lapaze when she struck and killed a pedestrian, Robert D. Boak.
The initial application for insurance asked Lapaze if she was the only member of the household. Her answer to that question stated that she was the only member of the household, failing to list Pusser as living there. Nationwide Insurance filed a declaratory judgment in the Mahoning County Court of Common Pleas claiming that it had issued the policy in reliance on the information in Lapaze’s application. They argued that, becuase of Lapaze’s mistatements, the policy was “void ab initio” or void from the start. The policy itself contained language that said:
“If it determined that any warranty made by the policyholder is incorrect, this polict may be held void ab initio”
The Trial Court granted summary judgement for Nationwide. In considering the matter, the Supreme Court began its’ analysis by reiterating the general deference to freedom of contract. “Contracts are to be interpreted so as to carry out the intent of the parties, as that intent is evidenced by the contractual language.” Skivolocki v. E. Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 374 (1974), paragraph one of the syllabus; see also Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos., 86 Ohio St.3d 270, 273, 714 N.E.2d 898 (1999).
Upon consideration, the Supreme Court found the language to be clear and unambiguous and held that since the insurance policy involved in this case plainly stated that a breach of a warranty in the application for the policy rendered the policy void ab initio – the Court had no choice but to uphold the lower Court’s finding. This underscores the importance of being thorough and truthful in the insurance application process. Even innocent omissions can lead to situations in which insurance coverage is voided.
Dennis P. Sawan
Licensed in Ohio and Georgia
Christopher A. Sawan
Licensed in Ohio and Michigan