8 Fla. L. Weekly Supp. 112a
Insurance — Automobile — Insurer’s motion for summary judgment on ground that policy was void ab initio because of material misrepresentations on policy application granted — Omission of name of member of household over age fourteen residing in insured’s home was material misrepresentation — Insurer did not contract away its right to void policy for material misrepresentation — Application not ambiguous
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a/s/o JANICE C. WHITNEY, Plaintiff, vs. HATTIE BELL, JANIE HOOKS and WILA F. ROOKARD, Defendants/Third-Party Plaintiffs, vs. PEACHTREE CASUALTY INSURANCE COMPANY, Third-Party Defendant. County Court, 10th Judicial Circuit in and for Polk County, Civil Division. Case No. 2000-CC11-0116. October 12, 2000. Michael E. Raiden, Judge. Counsel: Gary S. Rabin, Lakeland. John D. Maldowski, Tampa. David A. Finlay, Brandon.
ORDER ON MOTIONS FOR SUMMARY JUDGMENT
This cause came on for hearing on the Motions for Summary Judgment by Defendants/Third-Party Plaintiffs HATTIE BELL, JANIE HOOKS, and WILA F. ROOKARD, and by Third-Party Defendant PEACHTREE CASUALTY INSURANCE CO. Upon a review of the motions, the files and records in this case, the arguments and submissions of counsel, and the applicable law, the Court finds as follows:
1. On August 21, 1998, Ms. Bell’s car was involved in an accident with another car driven by JANICE C. WHITNEY, an insured of Plaintiff STATE FARM MUTUAL AUTOMOBILE INSURANCE CO. Ms. Bell’s vehicle was driven at the time by her granddaughter, Ms. Rookard, a seventeen-year-old licensed driver and a resident of the Bell household. The present motions for summary judgment ask this Court to determine the obligation, if any, of PEACHTREE CASUALTY INSURANCE CO. to provide insurance coverage for the Defendants. Peachtree admits that it issued a policy to Ms. Bell, but states that it has relied upon its right under Fla. Stat. § 627.409(1) to declare the policy void ab initio. Specifically, Peachtree maintains that Ms. Bell, on more than one occasion, failed to disclose that Ms. Rookard was a resident of her household and/or a potential driver of the insured vehicle.
2. Peachtree’s claim of misrepresentation is supported by two documents filled out and signed by Ms. Bell. The first is her initial application for insurance submitted in August, 1995. Near the top of this form the applicant is instructed to “[l]ist all drivers of the vehicle including ALL persons in the household who have reached the age of 14 years” (emphasis in original). Here Ms. Bell listed herself and stated there were “no other drivers.” Farther down the form reads, “I understand that all drivers and all persons who live in my household who have reached the age of 14 years must be listed on the application. Failure to disclose a driver or a member of the household will be considered a material misrepresentation and will constitute grounds for denial of coverage.” Ms. Bell signed immediately below this entry. The second document is a 1997 renewal application, also signed by Ms. Bell, which includes the following request: “Please list below all members of your household over the age of 14 and any others who drive regularly.” Ms. Bell did not complete this portion of the form. It is undisputed that Ms. Rookard, at the time of the 1995 application, was over fourteen and residing in Ms. Bell’s home. Further, by 1997 Ms. Rookard had obtained her driver’s license and occasionally was permitted to operate Ms. Bell’s vehicle.
3. Fla. Stat. § 627.409(1) provides that an insured may be denied recovery, including the voiding of a policy, for any “misrepresentation, omission, concealment of fact, or incorrect statement” made in an application for insurance coverage if such misstatements are “fraudulent,” “material either to the acceptance of the risk or to the hazard assumed by the insurer,” or if, having knowledge of the true facts, the insurer “in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.” The need for an automobile insurance company to know about teenaged drivers requires no discussion. The failure to disclose Ms. Rookard is unquestionably material, at least by the time of the renewal application in 1997.1
4. Ms. Bell responds to Peachtree’s contentions as follows: First, she maintains that the language on the applications is ambiguous and that she actually answered the questions truthfully. Second, she claims that Peachtree has “contracted out” its statutory right to void the policy, even if the misrepresentations were otherwise found to be material. The Court is aware of its obligation to interpret insurance contracts liberally in favor of coverage and strictly against the insurer who prepares the contract. Harris v. Carolina Life Insurance Co., 233 So. 2d 833 (Fla. 1970). This policy applies to applications for insurance coverage as well. Williams v. General Insurance Co., 468 So. 2d 1033 (Fla. 3d DCA 1985). Be that as it may, the Court cannot conclude that the application or renewal forms in the present case are ambiguous. The Court does accept that the first salient entry on the application (“List all drivers of the vehicle including ALL persons in the household who have reached the age of 14 years”) may be susceptible to two different interpretations if considered in isolation. However, any ambiguity in this sentence is clarified immediately by the next entry on the form, wherein the applicant attests that s/he understands “all drivers and all persons who live in my household who have reached the age of 14 years must be listed.”2 Moreover, Ms. Bell’s claim that the 1997 renewal form can be construed two ways is simply a forced conclusion and, in the view of this Court, not reasonable.3
5. Neither is the Court satisfied that Peachtree, by virtue of other language in its policy, has at most the right to cancel Ms. Bell’s insurance. Again, the Court is mindful of well-established holdings to the effect parties generally are free to contract out or around state or federal law with regard to insurance policies. Green v. Life and Health of America, 704 So. 2d 1386 (Fla. 1998). Ms. Bell points to two instances in which Peachtree, in her estimation, has done this. The first is a caveat in the renewal application having the following language:
Any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete or misleading information is guilty of a felony of the third degree.
(emphasis in original). She asks this Court to conclude from this that Peachtree has imposed upon itself a higher threshold than is required by § 627.409(1) — that is, that Peachtree “contracted out” its right to cancel or void the policy for unintentional misrepresentations.4 The Court cannot agree. The mere fact that Peachtree chooses to warn its customers that certain false statements may be prosecuted criminally in addition to whatever private sanctions are appropriate does not mean that Peachtree has in any way altered its rights under the law. Instead, this warning merely impresses upon the customer the seriousness of failing to answer questions truthfully.
6. Ms. Bell also points to that portion of a document entitled “Amendment of Policy Provisions-Florida,” which is intended to modify Part F of the policy, specifically the subsection labeled “III — GENERAL PROVISIONS — TERMINATION.” This document gives Peachtree the right to cancel a policy for several reasons, not all germane to the case at bar but including “misrepresentation in the application” and “any reason which would result in this policy being void from its inception.” As the Court interprets the former (reason “c” on the form), Peachtree may cancel for any misrepresentation, not just one that it considers material. It would not, however, allow Peachtree to void the policy for such a non-material misrepresentation, and therefore is not directly dispositive of the present controversy. As to the latter (reason “d”), Peachtree argues that this language gives them the option of canceling or voiding, while Ms. Bell argues that Peachtree has thereby limited its options to cancellation.5
7. In the view ofthis Court the latter interpretation represents an unwarranted leap of faith. Construing the Addendum in its entirety, there is simply no basis for concluding that Peachtree intends to relax the standards whereby it may deny coverage to a customer who falls under the ambit of Fla. Stat. § 627.409(1). As indicated in footnote 5, infra, the inclusion of the word “Florida” in the Addendum is significant. We have discussed how § 627.409(1) affords a remedy to insurance companies upon discovery of misinformation, intentional or not, provided by a customer. Case law indicates that an insurance company may contract away these statutory rights by stipulating a more forgiving standard (e.g., calling for an insured to answer questions only to the best of his/her knowledge, or requiring the insurer to prove willful misrepresentation, whereas § 627.409(1) does not impose these requirements). Nothing in the law states that an insurer may not contract to give itself more options than are enumerated in the statute, nor that an insured cannot agree to such a proposal. Here Peachtree seems to have reserved to itself the right to cancel for reasons above and beyond what § 627.409(1) would permit, including non-material misrepresentations. This is the only significance the Court can attach to the Addendum.
Accordingly, it is hereby ORDERED and ADJUDGED that the Third-Party Plaintiffs’ Motion for Summary Judgment is DENIED. It is further ORDERED and ADJUDGED that the Third-Party Defendant’s Motion for Summary Judgment is GRANTED.
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1Because there is no evidence Ms. Rookard was driving the car in 1995 when her grandmother initially sought insurance coverage, it is doubtful that the failure to disclose her status as a resident of the household materially affected Peachtree’s interests at that time. Adifferent conclusion is demanded once Ms. Rookard actually began to drive the car.
2Ms. Bell also points to the following line from near the bottom of the application: “I hereby certify that all drivers in the household are listed in the application and the percentage of use and the addresses are correct.” While this sentence, alone, suggests Peachtree is primarily interested in learning the names of actual drivers, its inclusion does not change the Court’s opinion that overall the form clearly calls for listing both actual drivers and other residents over fourteen.
3Bell argues that the relevant sentence in this application can be construed two ways: either the insurance company wants to know about (1) all household members over 14 and (2) all other persons who may drive the insured’s car regularly, or they want (1) all residents who drive regularly and (2) all others who drive regularly.
4Under the statute it is not necessary to prove that clearly incorrect and material statements were made with knowledge of their falsity. Life Insurance Co. of Virginia v. Shifflet, 201 So. 2d 715 (Fla. 1967). In the present case there is apparently no evidence that Ms. Bell intentionally failed to disclose her granddaughter. To require such evidence would, in the view of this Court, present insurers with a virtually impossible burden in any case wherein the insured did not actually admit s/he had acted willfully. Similarly, to require an insurer to rule out that a customer failed to understand something in the contract would be to require them in most instances to prove a negative. Instead, the law appears to place at least some responsibility upon insurance customers to understand what they are reading and signing, so long as it is not ambiguous or misleading. Cf. American Motorists Insurance Co. v. Farrey’s Wholesale Hardware Co., Inc., 507 So. 2d 642 (Fla. 3d DCA 1987) (fact that an insurance policy requires analysis to comprehend its scope does not mean it is ambiguous).
5Bell appears also to argue that the Court should look to language in Part F of the policy stating that once the policy is in effect for sixty days, Peachtree will cancel it only for certain limited reasons, which do not include misrepresentations. However, the document entitled “Amendment of Policy Provisions — Florida” is clearly intended to supersede contradictory provisions in the policy itself. The notation “Florida” indicates Peachtree’s intent to avail itself of remedies created by our legislature which may not exist in other jurisdictions.
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