410_C025
APPLICANT "FORGOT" PREVIOUS ACCIDENT, LICENSE SUSPENSION, AND TRAFFIC VIOLATIONS

On April 10, 1992, Lowell Morris, Jr. applied for auto insurance with Motorists. In his application, Morris "forgot" that he had been in an accident about two hours before, that his driver's license had been suspended three separate times and that he had been convicted of several traffic violations.

Motorists stated that, had Morris revealed his driving history, it would not have issued to him that same day the policy involved in this action.

Eight days later, on April 18, Morris was driving his car when it collided with one owned and driven by Billy McNamara. The latter, and his passenger, Freda Steelman, were injured. McNamara had a policy issued by Farm Bureau which provided for UM/UIM protection.

Motorists then filed this action to rescind its policy because of fraud. Farm Bureau counterclaimed for subrogation to recover the $14,000 which it had paid in settlement of claims filed by McNamara and Steelman.

The trial court decided that Farm Bureau could recover from Motorists under its right of subrogation, and Motorists could not rescind its policy as to Farm Bureau. Motorists appealed.

The higher court decided that the procurement of the policy from Motorists by Morris could not be considered as compliant with the Indiana financial responsibility law. On the other hand, Farm Bureau had issued to McNamara its policy providing for UM/UIM coverage with the knowledge of the risks posed by uninsured motorists. Farm Bureau had been compensated, by payment of premium, for taking that risk.

Under such circumstances, the court ruled that Motorists could rescind its policy, ab initio, so that Morris, at the time of the accident, was an uninsured motorist.

The judgment entered in the trial court against Motorists was reversed and remanded with instructions that the trial court enter judgment in favor of Motorists.

(Motorists Mutual Insurance Company, Appellant v. Lowell D. Morris, Jr., United Farm Bureau Mutual Insurance Company, et al--No. 89A01--9502-CV-48--Court of Appeals of Indiana--August 28, 1995--654 North Eastern Reporter 2d 861.)