insured under an auto policy causes an accident, and submits claims for defense and indemnity
benefits and well as for collision coverage to the insured vehicle. The insured driver is the named
insured’s adult son (or daughter), residing in the named insured’s household. The vehicle driven by
the insured at the time of the accident is listed in the policy as a “covered auto,” reportedly
registered to the named insured. Upon investigation, however, it is discovered that (1) the vehicle
was actually registered to the insured child who was driving it, and (2) the insured child had an
abysmal driving record when the insurance application was submitted – a record so poor that the
insurance company never would have issued the policy if those facts had been disclosed. In the
insurance application, the named insured had stated that all scheduled vehicles were registered in
his own name, and that all drivers residing in his household had good driving records.
testifies that he truthfully provided the insurance agent who procured the policy with all of the facts
at the time of application. The plot takes another twist when the EUO further reveals that the
named insured was unaware that the agent was misstating the facts in the application, because the
named insured could not read or write English. When the application is presented to the named
insured during his EUO and he is questioned about its content, he denies providing the agent with
false information – and his testimony appears truthful. Meanwhile, the agent will not return SIU’s
repeated calls.
insurance company might opt to rescind the insurance policy and refund the named insured his
premiums, on the ground of material misrepresentations in the application. Perhaps the named
insured accepts that result quietly, or perhaps he or the insured child sues the company on various
theories – possibly breach of contract, or possibly equitable reformation of the contract – and he
also might assert bad faith on the insurer’s part. Or the insurer might proactively file an action for
declaratory judgment, in order to adjudicate whether it has the right to rescind the policy.
42
HOLDING THE BAG:
AN INSURER’S RIGHTS AGAINST AN INDEPENDENT
AGENT UNDER VIRGINIA LAW
Kevin T. Streit, Esq.*
DUNLAP BENNETT & LUDWIG, PLLC
www.dbllawyers.com
Every claim professional has probably encountered a scenario along the following lines: An
The plot thickens when, during the named insured’s Examination Under Oath (EUO), he
This increasingly common scenario can (and does) play out in any number of ways. The
* Kevin Streit is a partner in Dunlap Bennett & Ludwig’s Richmond, Virginia office, where he
specializes in representing insurance companies in casualty and property coverage disputes. Mr. Streit
has represented insurers in complex coverage matters in federal and state courts throughout the
country for two decades, at both the trial and appellate levels.
/www.dbllawyers.com
/www.dbllawyers.com
/www.dbllawyers.com
/www.dbllawyers.com
/www.dbllawyers.com
/www.dbllawyers.com
/www.dbllawyers.com
