Truth in Litigation

Telling the truth in litigation is very, very important. Examples which I have in mind are telling your lawyer about any prior medical condition as well as giving a full and complete description of how an accident occurred.

Today I want to speak about another entity to whom you have to tell the truth and that is to the insurance company who insures your cars. There is language in bold on the back of any Coverage Selections Page. The language has been present for years. What it is says is that we will not pay for various coverages if a car is operated by a household member who is not listed as an operator on the policy. Payment will be withheld if that household member, had they been listed, would require a payment of a larger premium. They go on to describe the various scenarios whereby someone might fail to list the household member, such as if they are classified as an inexperienced operator or have surcharge points.

Directly from the insurance policy, the language reads:

“We will not pay for a collision or limited collision loss for an accident which occurs while your auto is being operated by a household member who is not listed as an operator on your policy. Payment is withheld when the household member, if listed, would require the payment of an additional premium on your policy because the household member would be classified as an inexperienced operator or would require payment of an additional premium on your policy under the Merit Rating Plan.”

It’s not too hard to come up with a devastating situation. Let’s say someone is in a serious accident, assume further that they are driving in a car with a lot of insurance, but the person who is driving the car was not listed for one of the above reasons. The policyholder failed to list them to avoid an increased premium. Now, if that occurs, the insurance company is within its rights to refuse to pay most of its coverages, certainly all of its optional coverages. The result is that the innocent victim would lose access to a lot of insurance. That’s not the only party hurt. It is also to the disadvantage of the person operating the vehicle as well as the owner of the vehicle because the lawsuit could result in an excess judgment for which there is no insurance.

A failure to tell the truth may seem comfortable for a while when the premiums are paid in a lesser amount than they would be if the truth were told. But when the unhappy eventuality occurs, if it does occur, that failure to tell the truth will really come back to haunt a number of people – the driver and the owner of the vehicle. These people are often related as they are typically family members living in the same household.

I cannot emphasize enough, not only from an ethical standpoint, but from a standpoint of good common sense, good business sense, that you need to be honest. If you really want insurance, tell the truth fully and completely. If a bad situation occurs, that failure to tell the truth will come back to haunt you. On the other hand, your honesty will have served you well.

Those of us who are parents of inexperienced drivers would do well to bear the burden of the increased premium, along with a contribution from the young driver. But I do have a thought: it’s far better to cut premium costs on the collision coverage, also a very expensive aspect of the auto insurance policy. With an older car, it doesn’t make economic sense to have full collision coverage. Far better to have “limited collision,” not very expensive, and if your driver isn’t deemed at fault, you will recover the value of the car. To my way of thinking, I’d rather see the savings on the premium come from lessening the coverage on the vehicle’s value than by trying to save on the high-stakes injury coverage of the policy.