A Florida car accident can not only raise important questions about legal liability among drivers and passengers, but also about the responsibility of an insurance company to indemnify a policy holder. In State Farm v. Cockram, the U.S. District Court for the Middle District of Florida considers whether a driver who failed to disclose certain information in applying for insurance coverage can rely on that coverage after being sued for his role in a crash.
In September 2008, Richard Cockram and Eric Powers were involved in an accident in Labelle, Florida. Powers later sued Cockram and State Farm for negligence, seeking roughly $250,000 in damages. State Farm then filed a motion for summary judgment, asking the court to rule that it the company was not obligated to cover Cockram for the accident.
Although Cockram had completed an application for car insurance with State Farm a little more than a month before the accident, the company argued that it had rescinded his policy prior to the crash. Specifically, State Farm claimed that Cockram lied in his insurance application by failing to disclose that he had been arrested and charged with DUI in August 2008. Rather, Cockram wrote “0” in response to questions about the number of “minor violations” and “major violations” he had committed in the previous three years.
According to Cockram, he didn’t disclose the DUI charge because he did not think he was guilty. Nevertheless, a jury convicted him in March 2009 and Cockram’s license was suspended for one year as a result.
As the court explained, Florida law related to misrepresentations in insurance applications and contracts provides that “[i]f the insurer would have altered the terms of the policy had it known the truth, or the misrepresentation materially affects risk, a nonintentional misstatement in an application will prevent recovery under an insurance policy.” Moreover, the burden is on an insurance company seeking to invalidate a policy to prove the misrepresentation, its materiality and the company’s reliance on the misrepresentation.
Here, the court found that it remained unclear whether Cockram made a misrepresentation in the application and, if so, whether than misrepresentation was material. State Farm provided an affidavit from one of its insurance underwriters in which she stated that the company would not have issued the policy to Cockram had it been aware of his DUI arrest. However, the court noted that State Farm did not provide a copy of its underwriting guidelines to show that the company’s policy was to decline applications for insurance by drivers who have been charged with DUI.
Furthermore, the court found that the application that Cockram completed was ambiguous because it did not define the terms “minor violations” and “major violations” nor indicate which, if any, types of arrests and convictions qualify under each term. “Under Florida law, ambiguities in insurance contracts are resolved in favor of the insured,” the court explained.
As a result, the court denied State Farm’s motion for summary judgment. After an accident, an insurance policyholder is often in a very vulnerable position. The South Florida insurance attorneys at Anidjar & Levine, have vast experience representing clients in car accident cases and insurance disputes throughout the region, including in Ft. Lauderdale, Pompano Beach and Hialeah. Call our Fort Lauderdale office today at 800-747-3733.
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