The Ohio Supreme Court recently standard a case that offers problems with massive implications for insurers looking for to void guidelines based upon misstatements in coverage applications: (1) whether or not “an insurance policy sufficiently warns the insured of the consequences of guarantee misstatements where the policy states that it ‘can be held void ab initio,’” and (2) whether or not an insurer is required to void a coverage and go back an insured’s top rate earlier than bringing a declaratory judgment action to claim a coverage void ab initio.
In Nationwide Mutual Fire Insurance Co. V. Pusser, No. 2018-1137, an vehicle policy utility requested candidates to disclose all household participants of riding age. It stated, “I . . . Remember that misrepresentation of records on this software, which include failure to reveal a driving force or member of the household, could void a few or all of my coverages.” (emphasis introduced). The coverage integrated the utility and said that “[i]f it’s far determined that a warranty made via the policyholder is inaccurate, this policy can be held void ab initio, or void back to the date of inception, upon return of the policyholder’s top class.” (emphasis delivered.)
The insured did no longer reveal that her sister, who changed into over 16, lived with her. The sister became worried in a deadly accident whilst using the insured’s vehicle. The insurer sued searching for a declaration that it did no longer need to offer insurance to the victim’s estate. The trial court docket granted precis judgment to the insurer, finding the policy void ab initio. An Ohio court docket of appeals reversed, making use of the two prong take a look at set forth in Allstate Ins. Co. V. Boggs, 27 Ohio St. Second 216, 271 N.E. 2d 855 (1971), and holding that the words “could” and “may” were not clear and unambiguous statements that a misstatement at the application could render the coverage void ab initio. The insurer also did now not declare the policy void and return the top rate to the policyholder.