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When Applying For Auto Insurance Be Completely Honest or Risk Having No Coverage When You Need It

Auto insurance policies are contracts formed between a company that is willing to risk that the policyholder (and other policy holders) will pay out more in premiums than the company will have to make in payouts because of accidents the insured may be responsible for during the term of the policy.  One of the more important aspects the company considers before issuing a policy and establishing the cost of the premium is the previous driving record of the insured, and others who may be operating vehicles insured under the policy. Most policy applications ask the applicant to state who, besides himself or herself, resides in the household and may be operating the vehicle(s) to be insured, so that their driving records may be checked.

But what happens when the applicant / insured of the policy has neglected to accurately list the people who reside in his household, and one of those persons has caused an accident? Must the company pay the under the terms of the policy?

A recent decision in the Virginia Supreme Court said no. In the case of Portillo v. Nationwide Mutual Fire Ins. Co., the Court said the applicant’s failure to list a 21 year old nephew who resided with him as a household resident in the application was a material misstatement of fact that voided the policy. Therefore, when the nephew caused an accident, Nationwide did not have to pay the claim or defend the case.