PRESENT: Hassell, C.J., Keenan, Koontz, Kinser, Goodwyn, and
Millette, JJ., and Stephenson, S.J.
RIGOBERTO PORTILLO
OPINION BY
v. Record No. 072504 SENIOR JUSTICE ROSCOE B.STEPHENSON, JR.
January 16, 2009
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Gaylord L. Finch, Jr., Judge
The issue in this appeal is whether the trial court erred in
declaring void an insurance policy issued by Nationwide Mutual
Fire Insurance Company (Nationwide).
I
The facts are not in dispute. In February 2004, Anael Lopez
Portillo filed an insurance application (the Application) with
Nationwide, seeking insurance coverage for his newly purchased
motor vehicle. The Application required the applicant to "list
all household members of driving age and non-resident operators."
Only Anael and his sister are listed on the Application. Under
the heading "Financial Responsibility/Relationship," the
Application poses the following question: "Have all drivers who
have access to the vehicles been indicated on this application?"
In response, the Application bears a "Y," indicating an
affirmative answer. Just before Anael's signature on the
Application, there appears the following statement: "I have
disclosed all drivers who have access to the vehicles indicated on
the application." To further indicate compliance with this
disclosure requirement, to the right of the statement there is a
check mark next to "Yes." In the Application's "Closing
Statement," the applicant certifies, "I hereby declare that the
facts stated in the above application are true." Nationwide
issued a policy based upon the Application.
In July 2004, Jose C. Lopez, Anael’s nephew, was operating
the vehicle when it was involved in a single-vehicle collision.
Rigoberto Portillo, another of Anael’s nephews, was a passenger in
the vehicle and was seriously injured.
Following the collision, Anael reported the loss to
Nationwide. A representative from Nationwide sent Anael a letter
stating that the policy was void because Anael had not disclosed
in the Application that Lopez was a member of Anael’s household
who was of driving age.
II
Rigoberto filed a declaratory judgment action seeking to
compel Nationwide to provide insurance coverage under the policy.
At trial, portions of Anael’s deposition were read into evidence.
In the deposition, Anael admitted that, at the time he completed
the Application, Lopez was twenty-one years of age, licensed to
drive, and a full-time resident of his household. Anael stated,
however, that he had never given Lopez permission to drive his
vehicle and that he had never seen Lopez driving his vehicle.
2
A representative of Nationwide testified that, when Anael
reported the loss following the July 2004 collision, he told her
that he had permitted Lopez to borrow his car to run an important
errand. Another Nationwide representative testified that
Nationwide did not learn until after the July 2004 collision that
Lopez was a resident of Anael’s household. According to this
representative, if Nationwide had known that Lopez was a full-time
resident of Anael’s household when Nationwide issued the policy,
the insurance premium would have been 74% greater than the premium
charged for the policy issued.
The trial court held that Nationwide clearly proved that
Anael had made four misrepresentations in the Application that
were material because they would have "cause[d] the insurer to
reject the risk or accept it only at a higher premium rate." The
court, therefore, ruled that the policy was void. We awarded
Rigoberto this appeal.
III
Rigoberto contends that materiality is determined only by
whether Nationwide would have issued the policy and that
Nationwide, had it known of Lopez, would have issued the policy,
but at an increased premium. Nationwide contends that an increase
in premium, in itself, is sufficient to support a finding of
materiality. It also points out that it was denied the
opportunity to conduct a full "eligibility investigation."
3
A misrepresentation is material to the risk to be assumed by
an insurance company if the representation would reasonably
influence the insurer's decision whether to issue the policy.
Time Ins. Co. v. Bishop, 245 Va. 48, 52, 425 S.E.2d 489, 492
(1993); Mutual of Omaha Ins. Co. v. Echols, 207 Va. 949, 953-54,
154 S.E.2d 169, 172 (1967). The insurer has the right to know the
full truth in order to permit it to make inquiries and assess
whether to assume the risk. Hawkeye-Security Ins. Co. v.
Government Empl. Ins. Co., 207 Va. 944, 947, 154 S.E.2d 173, 176
(1967); Chitwood v. Prudential Ins. Co. of Am., 206 Va. 314, 318,
143 S.E.2d 915, 918 (1965); Fidelity Bankers Life Ins. Corp. v.
Wheeler, 203 Va. 434, 437-38, 125 S.E.2d 151, 153 (1962); Inter-
Ocean Ins. Co. v. Harkrader, 193 Va. 96, 100-01, 67 S.E.2d 894,
897 (1951). It is the insurer's "opportunity to estimate the risk
under its contract" that is taken away by an applicant's
misstatement of material facts. Inter-Ocean Ins. Co., 193 Va. at
101, 67 S.E.2d at 897. As we have explained, "[a] knowledge or
ignorance of such [material] facts would naturally and reasonably
influence the judgment of the insurer in making the contract or in
establishing the degree or character of the risk or in fixing the
rate of premium." Id.
IV
In the present case, the Application required Anael to "list
all household members of driving age." There is no dispute that
4
Anael failed to list Lopez, who was 21 years old, a licensed
driver, and a full-time resident of his household. ∗ This
misrepresentation deprived Nationwide of the opportunity to make
inquiries and assess whether to assume the risk of issuing a
policy to Anael. The knowledge of an additional potential driver
would reasonably have influenced Nationwide's judgment. In
addition, knowledge of the fact of an additional household
resident of driving age would have influenced Nationwide's fixing
of the rate of premium. As the Nationwide representative
testified, Nationwide would have charged a higher premium had it
known of this fact. The misrepresentation also was relevant to
the claim made against the policy. Therefore, the
misrepresentation was material, and the trial court did not err in
declaring void the Nationwide policy issued to Anael.
V
Accordingly, we will affirm the judgment of the trial court.
Affirmed.
∗
In his first of two assignments of error, Portillo
contends that the trial court erred in finding a material
misrepresentation because Lopez "did not meet Nationwide's own
definition of a driver." The Application, however, required
Anael to list all "household members of driving age." This
assignment of error, therefore, is without merit.
5