Bad Faith Insurance Lawyers understand the law in Texas, at least as of the date of this post, requires that an insurer show that any misrepresentation made in an application for insurance be shown to have been made intentionally for the insurance company to be able to rescind the policy based on that misrepresentation.
This issue came up in a 2022, case from the Fort Worth Court of Appeals. The case is styled, Maria Robles, J.S. and Jose Almaguer Vazquez v. Cox Insurance Group, LLC and Old American County Mutual.
This is an appeal from a summary judgment granted in favor of the insurer by the trial court.
The undisputed facts are:
On August 11, 2020, Robles’s minor son, J.A., was driving Robles’s automobile
when he was involved in a traffic accident. J.A. was unlicensed and provided to the
responding police officer an insurance policy issued by Old American County Mutual under policy number ****80.
The application for policy number ****80, which Robles signed electronically
on January 22, 2020, sought a one–month automobile insurance policy from Cox. On the application, Robles listed herself and Vazquez as the only household drivers and answered “no” to the following questions:
(1) “Are there any residents of the household age[d] [fourteen] [and] over who
are not listed as drivers or as excluded drivers?” and
(2) “Does anyone else regularly drive your vehicle (other than those listed?).”
Robles certified with her electronic signature that the answers to these
questions were true and correct and that she understood them to be given to induce Cox into issuing the policy. Further, the policy documents, which Robles also acknowledged by electronic signature, stated that Cox could void the policy in the event of a material misrepresentation made on the application.
Upon receipt of the completed application, Cox issued the policy to Robles. The policy was subsequently renewed seven times and was in effect on the day of
J.A.’s accident.
While investigating the accident, a Cox representative spoke with Robles, who provided J.A.’s birthdate. Robles further stated that J.A. had always lived in her
household but that she did not include his name on the 2020 application “because he was a minor.” Cox concluded that Robles had made material misrepresentations on her application and rescinded her policy.
Texas Insurance Code, Section 705.004(b), allows an insurer to avoid an insurance policy due to false statements on policy applications if it is shown that “the matter misrepresented: (1) was material to the risk; or (2) contributed to the contingency or event on which the policy became due and payable.” Additionally, the Supreme Court of Texas has long held that an insurer must prove five elements to be entitled to avoidance of an insurance policy on misrepresentation grounds: (1) the making of the representation; (2) the falsity of the representation; (3) reliance thereon by the insurer; (4) the intent to deceive on the part of the insured making the same; and (5) the materiality of the representation.
Did Appellants raise a genuine issue of material fact related to whether Robles made a misrepresentation on the 2020 application with Cox? Appellants contend that three such issues were raised: whether (1) Robles was actually asked about additional household residents aged fourteen years or older; (2) Robles misrepresented J.A.’s age; and (3) J.A. qualified as a “Regular Driver.” Because the Court held there were no fact issues on counts one and two, count three was not considered.
Appellees attached a copy of the 2020 application signed electronically by Robles, which included this question and Robles’s answer of “no.” The burden, then, was on the Appellants to present competent evidence that raised an issue of fact as to whether Robles was actually asked the question.
Robles’s affidavit, however, is wholly silent concerning the 2020 application—it
neither affirms nor denies she completed it. Instead, it attests only to facts concerning a separate application from 2013 submitted by Robles to a company she refers to as “ACCC” and states that, in that application, she was never asked about children in the household. It is true that Appellants asserted in their summary judgment response that they never submitted an application to Cox, but this assertion is not supported by Robles’s affidavit, and her response itself is not competent summary judgment evidence.
Additionally, Appellants conceded in their appellate brief that the 2020 application “was completed via a phone call between Appellants and a representative of Appellees.” The Court accepts this fact as true. It is also undisputed that, at the accident scene, J.A. produced an Old American insurance policy bearing the same policy number as that found on the 2020 application. These facts further establish that Robles completed the 2020 application, to include answering all questions therein.
Relatedly, to the extent that Appellants contend that they were unaware of the
questions asked in the 2020 application, the law presumes otherwise because it is undisputed that Robles signed the application.
The Court concluded that Appellants failed to raise a fact issue as to whether Robles was asked about household residents over the age of fourteen.
Appellants again point to Robles’s affidavit as supportive of their argument, but
the Court failed to see how any attestations therein raised a question about J.A.’s age at the time the 2020 application was completed. If anything, Robles’s statement that J.A. was eight years old when the 2013 application was submitted supports the contention that he was at least fourteen in 2020 when Robles submitted her application to Cox.
The Court upheld the grant of summary judgment.