As a personal injury attorney in Stuart and Port St. Lucie, Florida, for the past 17 years, I have read hundreds of cases concerning automobile accidents and insurance issues. One recent case demonstrated the lengths insurance companies will go to deny coverage to a policyholder.
In the case of Mercury Insurance v. Markham, Mr. Markham filled out an insurance coverage application that asked if the vehicle was “rebuilt, salvaged, modified, altered or specifically customized.” Mr. Markham answered “No” even though he had put bigger tires and a “lift-kit” on his truck.
After Mr. Markham injured another person in an accident while driving the truck, Mercury rescinded his policy and refused to defend the claim. Mercury’s position was that Mr. Markham made a material misrepresentation in his application.
Florida Statute 627.409 allows an insurance company to deny coverage if a misrepresentation is: (1) fraudulent; (2) material to the risk being assumed; or (3) the insurer in good faith either would not have issued the policy or would have done so only on different terms had the insurer known the true facts.
The question in this case was what type of change or alteration of the truck amounted to a modification. Mr. Markham’s attorney argued before the court that the term “modify” was ambiguous and subject to more than one interpretation so that he could not tell from the application what he was required to disclose.
Mercury’s attorney responded that the bigger tires and lift kit should have been disclosed; that information would have affected the company’s decision to insure the truck.
The trial ended in favor of Mr. Markham, but a state appeals court reversed that decision. The higher court concluded that the bigger tires and lift-kit were significant enough modifications that Mr. Markham should have disclosed them to Mercury.
As I look at this case, I think a more prudent approach for Mr. Markham would have been to ask Mercury if the modifications to his truck required disclosure on the application. It’s risky not to disclose information to an insurance company when you are applying for coverage.
So what amounts to a modification? A trailer hitch? Running boards? Different headlights? I suggest anytime you do anything that changes your car or truck from its factory configuration, you should notify your insurance company, — in writing. That way, if something happens, you have written proof you informed your insurance company.